SBI ordered to pay Rs 40,000 after freezing Rs 9,000 in police officer’s account

4 min readNew DelhiJun 17, 2026 12:30 PM IST

The complaint was originally filed by a police officer whose salary was credited through an SBI account.

(Image generated using AI)

A consumer commission in Manipur has directed the State Bank of India’s (SBI) Thoubal branch to release Rs 9,000 frozen in a customer’s account and pay Rs 40,000 in compensation and litigation costs after finding deficiency in service in freezing the amount without sufficient justification.

A bench of president R K Sumitra Devi and member A C Netrajit Singh observed that the complainant had to suffer a great deal of helplessness, disappointment and mental harassment.

“Considering all these facts, we have awarded a sum of Rs 30,000 as the compensation in favour of the complainant for causing mental agony and harassment,” the bench noted in its order dated May 26.

Bank freezes Rs 9,000

The complaint was originally filed by a police officer whose salary was credited through an SBI account.

The complainant alleged that the bank froze Rs 9,000 in his account in September 2025 without prior notice or explanation.

The complainant stated that he had requested the bank and sent a legal notice informing the bank to release the same. It was alleged that the bank refused the complainant’s claim.

After unsuccessful requests to have the amount released, he approached the District Consumer Disputes Redressal Commission, Thoubal, seeking relief.

During the pendency of the proceedings, the complainant passed away and his wife was substituted as his legal representative in the case.

The bank defended its action by citing Reserve Bank of India guidelines and laws relating to cyber fraud and money laundering.

It argued that accounts may be frozen when fraudulent transactions are reported.

It stated that the complainant’s account had been linked to complaints of fraudulent transactions reported from Tamil Nadu and Maharashtra in September 2025.

The bank submitted that it had not committed any deficiency in service.

‘Mental harassment’

At the outset, the commission noted that the complainant availed banking services from the bank and therefore held that he was a consumer within the meaning of Consumer under Section 2(7) and 2(4) of the Consumer Protection Act 2019.

“As per Section 2(24) of the Consumer Protection Act 2019, the term service could be understand in three ways (i) main part i.e. any description which is made available to potential users; (ii) inclusionary parts i.e. such as banking, financing, insurance, transport, processing, supply of electrical or other energy, telecom, boarding, lodging, housing construction, entertainment, amusement, provision of news or other information,” the commission observed.

The commission noted that the bank failed to produce evidence showing that the complainant’s account had been declared a non-performing asset or that he was involved in any financial fraud.

It observed that the bank had not substantiated the grounds on which the amount was frozen and concluded that the customer had suffered because of the bank’s mistake.

Story continues below this ad

“The OP has unable to produce NPA declaration and financial fraudulent in the account of the Complainant. The Complainant suffered due to mistake of the OP,” it remarked.

The commission found a deficiency in service on the part of the bank.

“Failure of the OP Bank to release the freezed amount is deficiency in service on the part of the OP,” the commission held.

The commission noted that the freezing of funds could cause panic and helplessness for any consumer and held that the complainant had suffered mental harassment and disappointment.

Story continues below this ad

While awarding the compensation, it also took into account the prevailing situation in Manipur and the challenges faced by residents in a remote region.

The commission awarded a sum of Rs 30,000 compensation to the complainant and Rs 10,000 as litigation costs.

Takeaway

This ruling highlights that while banks have a duty to comply with anti-fraud and anti-money laundering regulations, they must be able to justify freezing a customer’s funds with credible evidence.

The decision affirms that arbitrary restrictions on a customer’s access to their own money amount to deficiency in service and that consumers can be granted compensation for the mental agony, and inconvenience caused by such actions.

Story continues below this ad

For consumer-related grievances, individuals may contact consumer helpline in their respective states (Manipur helpline: 18003453821) or call the National Consumer Helpline at 1915 for assistance.

Ashish Shaji is a Senior Sub-Editor at The Indian Express, where he specializes in legal journalism. Combining a formal education in law with years of editorial experience, Ashish provides authoritative coverage and nuanced analysis of court developments and landmark judicial decisions for a national audience.

Expertise

Legal Core Competency: Ashish is a law graduate (BA LLB) from IME Law College, CCSU. This academic foundation allows him to move beyond surface-level reporting, offering readers a deep-dive into the technicalities of statutes, case law, and legal precedents.

Specialized Legal Reporting: His work at The Indian Express focuses on translating the often-dense proceedings of India's top courts into clear, actionable news. His expertise includes:

Judicial Analysis: Breaking down complex orders from the Supreme Court and various High Courts.

Legal Developments: Monitoring legislative changes and their practical implications for the public and the legal fraternity.

Industry Experience: With over 5 years in the field, Ashish has contributed to several niche legal and professional platforms, honing his ability to communicate complex information. His previous experience includes:

Lawsikho: Gaining insights into legal education and practical law.

Verdictum: Focusing on high-quality legal news and court updates.

Enterslice: Working at the intersection of legal, financial, and advisory services. ... Read More

Tags:

consumer court