If you are stuck in such a situation, here is what to do.

Mr. Sameer Khanna, a resident of Pune, was reviewing his bank statement from “Nationwide Bank” when he noticed an unexpected credit of ₹85,000. Assuming it might be a pending payment, he moved a small sum of ₹5,000 to his other account to check if the funds were accessible. A few days later, he received a notification from Nationwide Bank that a lien for ₹85,000 had been placed on his account. Soon after, he received a call from a Ms. Anjali Desai, who explained that she had mistakenly transferred the funds to his account instead of her vendor’s. Ms. Desai and her bank, “Trustwell Bank,” both insisted that Sameer should directly transfer the ₹85,000 back to her to avoid a “long and tedious” official bank reversal process that could take months. Sameer was now in a dilemma. He was worried that the official process might lead to his account being frozen entirely, especially since he had already transferred a part of the money. On the other hand, he was unsure if the lien would be lifted if he settled the matter directly with Ms. Desai.

Advice in such cases

Receiving money by mistake can be confusing, but it’s crucial to handle it correctly to avoid legal complications. Here is what you should do:

• Do not spend or use the money under any circumstances. It does not legally belong to you.
• Immediately inform your bank in writing (via email for a record) about the erroneous credit. Provide the transaction details if possible.
• Do not agree to a direct or “mutual” settlement. The suggestion to transfer the money back to the sender personally is risky. There is no guarantee that the sender will withdraw their complaint with their bank, and you will be left without an official paper trail, making it difficult to get the lien removed.
• Insist on following the official banking channel for the reversal. This ensures that the transaction is properly documented and the lien is lifted by the bank upon successful reversal.
• Maintain a record of all communication with your bank and the person who sent the money.
• 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 of 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

Applicable Sections of Law

Such situations are primarily governed by banking regulations and general principles of Indian law.

• Reserve Bank of India (RBI) Guidelines: The RBI has laid down clear procedures for banks to follow in cases of erroneous transactions. Banks are required to reverse such credits after due diligence.
• Indian Contract Act, 1872: Section 72 of the Act states that a person to whom money has been paid by mistake must repay it. This creates a legal obligation on the recipient to return the funds.
• Bharatiya Nyaya Sanhita, 2023 (BNS): If the recipient, knowing the money is not theirs, dishonestly uses it for their own purposes, it could potentially amount to “dishonest misappropriation of property” under Section 314 of the BNS. This is why it is critical not to touch the funds.

If you are the complainant

If you have mistakenly transferred money to the wrong account, you are the complainant. Here are the steps you should take:

• Immediately notify your bank about the incorrect transaction. Provide the date, amount, transaction ID, and details of the incorrect beneficiary.
• File a formal written complaint with your bank and obtain an acknowledgement.
• Provide any necessary documents, such as screenshots or bank statements, to support your claim.
• Allow the bank to follow its official procedure. Pressuring the recipient for a direct payment complicates the matter and removes the formal safeguards.
• 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 of 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

If you are the victim

If you have received money by mistake, you are the recipient, often referred to as the victim in this procedural context. Follow these steps to protect yourself:

• Do not panic. As long as you act honestly, you are protected.
• Do not spend the money. If you have already used a portion, as in Sameer’s case, immediately deposit that amount back into the account to make the full sum available for reversal.
• Inform your bank in writing that you have received an unknown credit and authorize them to reverse it after their verification.
• Politely decline any requests for direct payment. State clearly that you will only cooperate through official banking channels to ensure the process is documented and the lien is removed correctly.
• 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 of 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

How the police behave in such cases

Typically, the police do not get involved in genuine cases of mistaken bank transfers, as it is considered a civil matter to be resolved by the banks. However, police intervention can occur if the complainant alleges criminal intent. For instance, if the recipient refuses to return the money or becomes uncontactable after receiving the funds, the sender might file a police complaint for criminal misappropriation under Section 314 of the BNS. The police would then investigate whether the recipient had a dishonest intention to keep the money. By proactively informing the bank and cooperating, the recipient can demonstrate their good faith and avoid any such criminal allegations.

FAQs people normally have

Will the bank freeze my entire account?
In most cases, the bank will only place a lien or a hold on the specific amount that was credited by mistake. They will not freeze the entire account or affect your other funds. However, if fraud is suspected or if the recipient is uncooperative, the bank may take stricter measures, including freezing the account pending investigation.

Why would the bank or the sender suggest a direct settlement?
They might suggest this to bypass internal banking procedures, which can sometimes be slow. For the sender, it seems like a faster way to get their money back. For the bank officials, it reduces their workload. However, this informal route offers no legal protection to the recipient and is not advisable.

What happens if I have already spent some of the money?
You are legally obligated to return the full amount. You should immediately arrange to deposit the spent portion back into your account and inform the bank that the total sum is now available for the official reversal process.

What evidence is required?

Maintaining proper documentation is key.

• For the Sender: Bank statements showing the debit, the transaction reference number, and any proof of the intended recipient’s correct account details.
• For the Recipient: Your bank statement showing the erroneous credit, copies of all written communication (especially emails) with your bank where you have reported the transaction and authorized its reversal.

How long will the investigation take?

The timeline for an official reversal through banking channels can vary. It depends on the efficiency and coordination between the sender’s bank and the recipient’s bank. While it might take anywhere from a few working days to a few weeks, it is the safest and most legally sound method. It ensures that the transaction is properly accounted for and the lien on your account is officially removed, leaving no room for future disputes.

Advocate Sudhir Rao, Supreme Court of India