In a recent ruling, the Madras High Court made an important decision regarding the freezing of bank accounts during financial fraud investigations. The court stated that the police or investigating agencies cannot freeze an entire bank account as it would violate a person’s right to livelihood. Instead, they can only freeze the specific amount of money that is linked to the alleged fraud.
Background of the case
This ruling came while the court was handling a case involving a man named Mohammed Saifullah. His bank account with HDFC Bank in Villivakkam, Tiruvallur district, had been frozen for over a year. The Telangana State Cyber Security Bureau (TSCSB) had requested the freeze as part of an investigation into a cryptocurrency-related fraud case.
Saifullah claimed that he had no idea why his account had been frozen for so long. The bank explained that they had acted based on the TSCSB’s request, which was linked to a cybercrime case from May 2023.
Citizens Facing Unexplained Account Freezes
The court highlighted a common problem: many people are facing issues where their bank accounts are frozen without clear explanations. This happens when local police or the National Cyber Crime Reporting Portal (NCCRP) get involved in financial fraud cases. Citizens often remain in the dark about why their accounts have been frozen, and by the time they figure it out, their financial activities and business operations are already severely affected.
Legal Power and Proper Use
The judge acknowledged that the law does give investigative agencies the power to freeze accounts. However, this power must be used correctly. The law also requires that the police inform both the account holder and the jurisdictional court about why and how much of the account is being frozen. Unfortunately, this process is often not followed properly.
Justice G. Jayachandran expressed frustration that courts across the country repeatedly remind the police that they cannot indefinitely freeze bank accounts without giving proper reasons. However, people still come to court seeking help to unfreeze their accounts, as the investigative agencies often fail to communicate adequately with the account holders or courts.
Legal Requirements Under Cr.P.C. and BNSS
The judge pointed out that under Section 102 of the Code of Criminal Procedure (Cr.P.C.), which was updated to Section 106 of the Bharatiya Nagarik Suraksha Sanhita (BNSS) in July 2024, the police must report the freezing of any property, including bank accounts, to the relevant judicial magistrate.
Final Decision in the Case
In Saifullah’s case, the judge agreed with his lawyer’s argument that the case being investigated was linked to an amount of ₹2.48 lakh. However, the bank had frozen his entire account balance of ₹9.69 lakh. Since this was unfair, the judge allowed Saifullah to access his account again, on the condition that he keep at least ₹2.48 lakh in it while the investigation continued.
The court emphasized that freezing an entire account without specifying the amount involved in the fraud is unjustified. This ruling helps clarify the limits of what the police and investigation agencies can do in financial fraud cases, protecting the rights of individuals while still allowing investigations to proceed.
I am Brij nath pal a small business man a telecom releted work my Shop name NISHU TELECOM in Kanpur Nagar.I recived a payment by customer in my Shop Paytm marchant scanner and this payment settelment next day my Saving STATE BANK OF INDIA , IN date 05/04/2022. my ac freez by crime branch last 5th month, I know that why freez my
ac? if do was freez this ac received a particular amount by take customer any froud , then do stop my account for on particular amount, but my ac fully freez by crime branch. it is wrong behave by crime branch. pls show this case. thanks sir