Safiya Malik

The Allahabad High Court at Lucknow, Division Bench of Justice Shekhar B. Saraf and Justice Manjive Shukla has quashed a police direction that led a bank to place a debit freeze on an account in a cyber-fraud probe and ordered the bank to immediately de-freeze it and allow normal operations. The dispute arose after the investigating officer sent a freeze request alleging the account had received fraudulent transfers from a victim, but the communication did not specify any sum for which a lien was sought. The Court held that such an undifferentiated freeze request, without stating the amount, is illegal and arbitrary, and added that the officer must notify the jurisdictional Magistrate within 24 hours and provide the bank the registered case reference on which the freezing is sought.

The petitioner challenged a debit freeze imposed on its bank account pursuant to a notice issued under Sections 94 and 106 of the Bharatiya Nagarik Suraksha Sanhita, 2023. The respondent bank placed before the Court that it had received a notice directing debit freeze but had not been supplied with any seizure order, copy of the FIR, or indication of the amount alleged to be linked with the offence. Despite repeated communications from the bank seeking clarification and supporting documents, no response was received from the investigating officer.

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The notice issued to the bank directed a complete debit freeze of the account and sought extensive account-related information, including transaction history and identity documents. The dispute centered on whether such a blanket freeze without specifying the alleged amount, without a seizure order, and without intimation to the jurisdictional magistrate, complied with statutory requirements governing seizure of property during investigation.

The Court examined the scope of Sections 94 and 106 of the BNSS and noted that seizure of property during investigation must conform to statutory safeguards. It recorded that “till date, they have neither received any seizure order… nor received any indication as to the amount that is required to be put in lien with regard to the petitioner’s bank account.”

Relying on Supreme Court precedent, the Court reiterated that a bank account constitutes property capable of seizure but only when statutory conditions are met. Referring to State of Maharashtra v. Tapas D. Neogy, the Court quoted that “the bank account of the accused or any of his relations is ‘property’… and a police officer in course of investigation can seize or prohibit the operation of the said account if such assets have direct links with the commission of the offence.”

On procedural safeguards, the Court cited Teesta Atul Setalvad v. State of Gujarat and recorded that “there is nothing in Section 102 which mandates giving of prior notice to the account-holder… but a post facto report is mandatorily required to be submitted to the jurisdictional magistrate.”

The Court further relied on Nevada Properties (P) Ltd. v. State of Maharashtra to state that “Section 102… should not be interpreted to empower police officers to intervene in money disputes… based on mere suspicion but it must be bolstered by ‘reasonable belief’.”

The Court held: “"One may understand a situation wherein there is a requirement for freezing an account for a limited period...However, even in these extreme cases, it is incumbent upon the Investigating Officer to provide the bank within three to four days the seizure order...as well as, provide the amount on which the lien is sought to be created."

In this context, the High Court set out five guiding principles to be followed when an investigating officer seeks to freeze a bank account in connection with suspected cybercrime:-

1. Section 106 of BNSS should not be interpreted to empower police officers to intervene in money disputes by seizing property especially based on mere suspicion but it must be bolstered by reasonable belief.

2. Information for freezing the bank account by the investigating officer shall be sent immediately to the nodal officer of the bank of the beneficiary or payment service system, including the payment aggregator, so as to take action at their end. The police officer must furnish information with relation to the alleged crime and should accompany a copy of the FIR or information received. The bank or the payment system operator (PSO) may decline a request, if it is received without a copy of any complaint or FIR.

3. The notice under Section 106 of the 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 the police may ask or request any bank or payment system operator (PSO) including payment aggregator, to block or suspend entire financial account.

4. As soon as information to block or put on hold or marking of a lien is forwarded to a bank or any financial intermediary, including a payment system operator (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.

5. 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 the Civil and Criminal consequences for the loss including financial and reputational damage of such entity / citizen.

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The Court ordered that “the impugned notice is quashed and set aside with a direction upon the banks concerned to immediately de-freeze the accounts of the petitioner and allow the petitioner to carry on his normal banking activities.”

“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 writ petition was disposed of in these terms.

Advocates Representing the Parties

For the Petitioners: Shri Jalaj Kumar Gupta, Learned Counsel
For the Respondents: Shri Amit Jaiswal Ojus, Learned Counsel for Axis Bank

Case Title: Khalsa Medical Store Thru. Proprietor v. Reserve Bank of India & Ors.
Neutral Citation: 2026:AHC-LKO:3701-DB
Case Number: Writ – C No. 12211 of 2025
Bench: Justice Shekhar B. Saraf, Justice Manjive Shukla