One of my clients recently had a case which I am explaining below and if you are stuck in such similar situation, here is what to do.

Note: Due to attorney-client privilege, I cannot disclose complete case details or identify the actual parties involved. However, I am sharing the essential facts and legal approach so that if you find yourself in a similar situation, you can understand the available solutions and legal remedies.

Mr.X, a resident of City A, received ₹1,500 in his bank account through UPI by mistake in DD/MM/YYYY. The amount was sent by Mr.Y who contacted Mr.X the next day explaining the error. Being an honest citizen, Mr.X immediately refunded the entire amount through UPI transfer. However, within a few days, Mr.X discovered that his bank, XYZ Bank, had placed a lien of ₹1,500 on his account, effectively freezing that amount. Despite showing proof of the refund transaction, the bank refused to lift the lien, citing internal investigation procedures. Mr.X approached our office when the bank continued to hold his funds without any legal basis, causing him financial hardship and preventing him from accessing his own money.

Advice in Such Cases

Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation to come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

• Document all UPI transactions including original receipt and refund with screenshots and bank statements
• Contact bank’s nodal officer immediately with written complaint and demand lien removal
• File complaint with Banking Ombudsman if bank doesn’t respond within stipulated time frame

Applicable Sections of Law

This case involves wrongful appropriation of funds and banking malpractice. Under BNS Section 316 (Criminal breach of trust), banks cannot arbitrarily hold customer funds without legal justification. Section 318 BNS covers dishonest misappropriation of property. BNSS Section 35 provides procedures for complaints against financial institutions. Section 104 BNSS deals with attachment of property and its conditions. The Banking Regulation Act also governs such disputes where banks exceed their authority in account operations.

If You Are the Complainant

• File formal written complaint with bank’s grievance cell with all transaction proofs attached
• Escalate to Banking Ombudsman within 30 days if no satisfactory response received
• Approach Consumer Court for deficiency in banking services and seek compensation
• File police complaint under BNS sections for wrongful detention of funds
• Demand interest on wrongfully held amount and compensation for mental harassment caused

If You Are the Victim

• Immediately gather all digital evidence including UPI transaction IDs and bank notifications
• Contact bank manager and demand written explanation for lien placement within 48 hours
• File complaint with RBI if bank violates banking norms and customer rights
• Seek legal notice through advocate demanding immediate lien removal and damages
• Consider approaching High Court for writ petition if constitutional rights are violated

How the Police Behave in Such Cases

Police typically treat these as civil banking disputes initially. However, when criminal elements like wrongful appropriation are involved, they register FIR under relevant BNS sections. Officers may require detailed documentation of all transactions and bank communications. They often coordinate with bank security departments and may seek technical evidence from UPI service providers to establish the transaction trail.

FAQs People Normally Have

• Can banks place lien without notice? No, banks must inform customers before placing any lien with proper justification
• How long can lien remain? Maximum 180 days as per RBI guidelines, subject to ongoing investigation
• Is interest payable on lien amount? Yes, banks must pay interest if lien is found wrongful or unjustified
• Can I close account with active lien? No, account cannot be closed until lien is resolved or lifted by bank

What Evidence Is Required?

• Original UPI credit transaction receipt showing mistaken payment received
• UPI refund transaction confirmation with successful completion status
• Bank account statements showing both incoming and outgoing transactions
• Screenshots of all UPI app transaction history and details
• Bank’s lien notice or communication regarding account freeze
• Email correspondence with bank regarding the dispute resolution
• Identity proof and account ownership documents for verification

How Long Will the Investigation Take?

Banking Ombudsman cases typically resolve within 30-45 days. Police investigations may take 60-90 days depending on technical evidence collection. Consumer Court proceedings can extend 6-12 months. Court cases may take 1-2 years. However, interim relief for lien removal can be obtained within 2-4 weeks through proper legal representation and urgent applications.

Advocate Sudhir Rao, Supreme Court of India