Kiran Raj

The Delhi High Court Single Bench of Justice Manoj Jain heard a petition filed by Neelkanth Pharma Logistics Pvt. Ltd. challenging the freezing of its bank account by HDFC Bank. The petitioner contended that the account had been frozen based on a communication received from the Vartaknagar Police Station, Thane, Maharashtra, without any prior notice or justification. The court examined the procedure followed by law enforcement agencies in such cases and the implications of account freezing on individuals and businesses.

The petitioner stated that its bank account was frozen following a police communication dated November 29, 2024, instructing HDFC Bank to implement a debit freeze. The petitioner claimed that it was not named as a suspect or accused in any criminal case and that the freezing of its entire account balance of ₹93,50,05,208 for a transaction of ₹200 was disproportionate. The court issued notice to the respondents, including the Union of India, HDFC Bank, and the State of Maharashtra, seeking a response.

During the proceedings, it was submitted that a subsequent communication dated January 29, 2025, was issued by the investigating agency, directing the bank to remove the debit freeze while marking a lien of ₹200. The petitioner stated that this development had addressed its primary grievance and sought liberty to pursue further legal action regarding certain claims in the petition. The court granted the liberty and disposed of the petition.

Despite the resolution of the immediate dispute, the court examined broader concerns regarding account freezing in criminal investigations. It stated, “The issue raised in the present petition has been a matter of recurring concern as many such like petitions are flooding the Courts.” The court further observed, “It is, therefore, high time that the investigating/law enforcement agencies, in context of freezing bank accounts, act with requisite care, caution and yes, compassion as well.”

The judgment recorded that law enforcement agencies have the authority to direct banks to freeze accounts as part of an investigation but noted, “Undeniably, there is no qualm about competence of any such investigating agency to issue such direction to the bank. But, what this Court finds, is lack of exhibiting any reason while exercising the same.” The court observed that, in the present case, the petitioner’s account had been frozen due to the credit of ₹200, despite there being no material to suggest that the petitioner was a suspect or accused in the investigation.

It was noted that, “Instead of directing preservation of disputed amount, which was mere ₹200/-, the bank was directed to freeze the entire account. Such action of freezing the account, in its entirety, has, reportedly, left the petitioner high and dry.” The court stated that such actions lead to financial hardships, including the dishonoring of cheques and disruption of business operations.

Referring to a previous judgment in Pawan Kumar Rai v. Union of India & Anr., 2024 SCC OnLine Del 8936, the court recalled, “Indubitably, passing of an order of freezing the entire bank account of the petitioner has a serious and adverse implication and invades and encroaches upon his invaluable right to earn and live with dignity.” The judgment further stated, “The impugned action, in essence, amounts to a violation of fundamental right of the petitioner, as it directly undermines his right to livelihood, which is integral part of the Right to Life guaranteed under Article 21 of the Constitution.”

The court noted that investigating agencies have the authority to freeze accounts but stated, “When it resorts to above, it must assign reasons.” It further noted, “Such discretion vests with investigating agency, its better left to them to decide as to when such blanket freezing needs to be ordered. However, once it chooses to do so, it must offer some justification.” The judgment pointed out that indiscriminate freezing of accounts, especially for individuals and small vendors, can “disrupt prospects of their mere existence, even.”

In addressing potential solutions, the court observed, “Therefore, possibility of marking a lien on disputed amount, whenever it is identifiable, should be explored as a more appropriate interim measure. Ideally, it should be the first and foremost option.” The court noted that such a measure would “mitigate the undue hardship being caused on account of blanket freezing of account and would also ensure that the alleged cheated money remains secured and intact.”

The judgment also referenced the Kerala High Court’s decision in Dr. Sajir v. Reserve Bank of India & Others, 2023 SCC OnLine Ker 9087, stating, “When the requisitions in these cases—by various Police Authorities in several States of India mention the exact amount suspected to have been credited to the accounts of the petitioners herein, one fails to fathom why their bank accounts in full, should remain frozen.” The Kerala High Court had also observed that, “even when the sums in question may have found credit in the accounts of the petitioners, unless the investigation eventually reveals that they were complicit in the Cyber Crime, or had received the same being aware of it, they could never be construed to be accused.”

The court took note of submissions made by counsel representing the Indian Cybercrime Coordination Centre (I4C) and the Reserve Bank of India (RBI), which suggested that law enforcement agencies could implement structured guidelines for handling cybercrime-related financial transactions. It was submitted that a uniform approach could include “a graded response criterion for fraud cases based on factors like transaction amount and account nature, periodical review of lien, creating a nodal agency etc.”

The judgment noted that similar concerns had been raised before other high courts, including the Jharkhand High Court in Court on its own motion v. State of Jharkhand & Others, W.P. (PIL) 6086/2023, where the court had directed the preparation of a Standard Operating Procedure (SOP) for handling cyber-fraud cases. It was submitted that the Ministry of Home Affairs was reviewing the matter and considering formulating guidelines in consultation with state agencies.

The court concluded that in view of the increasing number of such cases, “the Ministry of Home Affairs, Government of India should take proactive steps to address the same.” The judgment stated that the Ministry may “consider consulting all concerned stakeholders, including respective States/UTs and then, with consensus of everyone, to chalk-out a uniform policy, standard operating procedures and guidelines to ensure that such matters are handled with requisite consideration and compassion.”

The court held that “The aim should be to balance the rights of a complainant in any such criminal investigation vis-a-vis the right of innocent and unwary account-holder, made to face unwarranted hardship on account of blanket freezing of account, despite being completely innocent and unaware of commission of any crime.”

The court directed that a copy of the order be sent to the Secretary, Ministry of Home Affairs, Government of India, for necessary action.

Case Title: Neelkanth Pharma Logistics Pvt. Ltd. v. Union of India & Anr.
Case Number: W.P. (C) 17905/2024 & CM APPL. 2640/2025
Bench: Justice Manoj Jain

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