Lucknow, Aug 14 : The Lucknow bench of the Allahabad High Court has ruled that investigating agencies cannot impose a blanket debit freeze on a person’s bank account when the alleged cybercrime transaction involves a specific amount.
Restraint must remain proportionate to the suspected proceeds of crime, it held.
A bench of Justice Shekhar B Saraf and Justice Abdhesh Kumar Chaudhary, while disposing of a petition filed by Lucknow-based businessman Ritesh Yadav, on Thursday directed banks to de-freeze his accounts and permit their operation beyond the disputed amount of Rs 36,000, while retaining a lien over the said amount.
The court said the power to freeze bank accounts during a cybercrime investigation cannot be treated as an unfettered power to bring an individual’s entire financial life and legitimate business activity to a standstill.
The petitioner, a construction material supplier, had approached the court after his accounts with several banks, including Bandhan Bank, ICICI Bank and Axis Bank, were frozen.
He claimed that the freezing originated from a cybercrime investigation in Karnataka after Rs 36,000 was allegedly credited into his Bandhan Bank account in a disputed transaction.
The court relied on its January 19 judgment in Khalsa Medical Store vs RBI, in which it had held that a notice seeking freezing of a bank account in a cybercrime case should specify the amount for which a lien was sought.
A blanket direction to block or suspend an entire account, the court had held, could not ordinarily be sustained.
The bench asserted that the investigating officer furnish the concerned bank with the FIR or crime-case particulars, the basis of the restraint, and the specific amount for which the lien is sought.
The officer must also comply with the statutory requirement of informing the jurisdictional Judicial Magistrate, it said.
The court took note of the Ministry of Home Affairs’ Standard Operating Procedure governing grievances relating to account seizures and suspension of digital banking services under the National Cybercrime Reporting Portal (NCRP)-Citizen Financial Cyber Fraud Reporting and Management System (CFCFRMS).
It directed all banks and financial institutions within its territorial jurisdiction to follow the prescribed mechanism, maintain appropriate nodal arrangements and prominently display information about the procedure at branches and on their websites.
The court said the mechanism must provide an effective and time-bound remedy to account holders whose banking facilities have been suspended, while protecting the amount actually under investigation.
The bench directed that a copy of the order be sent to the RBI for circulation to banks and financial institutions, so that their officers and staff are made aware of the grievance mechanism.
The court emphasised that its directions were not intended to dilute the statutory powers of investigating agencies but to ensure that such powers are exercised in a transparent, proportionate, and legally compliant manner.
“An innocent account holder ought not to be subjected indefinitely to a complete deprivation of access to his legitimate funds merely because a disputed transaction of a specified amount has passed through his account,” the court observed.
