A blanket notice to freeze bank accounts under suspicion of cyber crime, without indicating the amount on which lien is being sought, is illegal and arbitrary, said the Lucknow bench of the Allahabad High Court.
Stating that five key principles ought to be laid down regarding freezing such an account, the bench said as soon as information to block, put on hold, or mark a lien is forwarded to a bank or any financial intermediary, it shall simultaneously be sent to the jurisdictional judicial magistrate within 24 hours.
The bench made the observation while quashing a notice issued by a Cyber Crime police station in Telangana to freeze the bank account of a leading medicine trader in Lucknow, directing the bank concerned to de-freeze it immediately.
A division bench of Justice Shekhar B Saraf and Manjive Shukla, while disposing of the petition challenging the Telangana Police notice, stated, “We are unable to sustain and countenance the mechanism that has been used by the investigating officer, wherein the entire account of the petitioner has been frozen. No information has also been provided to the bank with regard to the court wherein the particular case is pending.”
“In light of the same, the impugned notice is quashed and set aside with a direction upon the bank concerned to immediately de-freeze the account of the petitioner and allow the petitioner to carry on his normal banking activities,” the bench ordered on January 19.
Giving immediate relief to the petitioner, the court also directed, “Liberty is also granted to the petitioner to inform the bank for immediate de-freezing of the account in the course of the day today.”
The case
The petition was filed by Khalsa Medical Store, through its proprietor Yashwant Singh. He was informed on November 25, 2025, that his account had been frozen by bank officials.
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The plea said his accounts were frozen by way of a communication, issued in the form of a notice under BNSS sections by an investigating officer, with regard to an FIR lodged at the Cyber Crime police station in Rachakonda, Hyderabad.
During the hearing on January 5, bank officials communicated to the court, indicating that a direction to debit freeze the petitioner’s account had been issued. But the communication did not reveal the order of seizure and whether the police officer concerned communicated the order to the jurisdictional magistrate, as required under BNSS sections.
The court had then directed the Registrar (Compliance) to issue notice to the Telangana cyber crime police station concerned.
During the January 5 hearing, the court had also stated, “We make it clear that if no one appears on behalf of respondent no. 4 (Telangana police station) on the next date, we shall proceed to pass necessary orders in the matter.”
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The notices were sent by the court through letter, e-mail, speed post, but no one appeared before the bench. Then, on January 19, the HC ordered quashing of the notice to freeze the bank accounts.
What the bench said
In its order, the bench observed, “In the present case, it is clear that no amount has been indicated in the notice… issued to the bank. Furthermore, [neither] a copy of the FIR… nor any seizure order has been provided to the bank, despite the bank having written to the investigating officer to provide the same.”
“In our view, this entire action is unjustified and illegal. One may understand a situation wherein there is a requirement for freezing an account for a limited period so that proceeds of crime are not removed. However, even in these extreme cases, it is incumbent upon the investigating officer to provide the bank, within three-four days, the seizure order passed for putting a lien on the bank account, the case number on the basis of which such lien/freezing is being conducted, [and] the amount on which the lien is sought to be created,” the division bench stated.
Quoting certain judgments by the Supreme Court and High Courts, the Lucknow bench in its order stated that key principles ought to be laid down regarding freezing a bank account under suspicion of cyber crime.
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These include:
- BNSS Section 106 (power of police officer to seize certain property) should not be interpreted as empowering police officers to intervene in money disputes by seizing property, especially based on mere suspicion, but it must be bolstered by reasonable belief.
- The police officer must furnish information with relation to the alleged crime and share a copy of the FIR or information received. The bank or payment system operator (PSO) may decline a request if it is received without a copy of any complaint or FIR.
- Notice under Section 106 BNSS may require to mark lien on a specific amount (money allegedly transferred from or to the bank account of accused). But in no case can the police ask or request any bank or PSO, including payment aggregator, to block or suspend the entire financial account.
- As soon as information to block, put on hold, or mark a lien is forwarded to a bank or any financial intermediary, including a PSO, then the information shall simultaneously be sent to the jurisdictional judicial magistrate within 24 hours. Failure to inform may render such an action as void.
- If any bank puts on hold any bank account or escrow account maintained by any entity/citizen on the request of the police without following the proper procedure, then the bank shall be personally liable for civil and criminal consequences for the loss, including financial and reputational damage of such entity/citizen.
