Bhopal: The Madhya Pradesh High Court has ruled that authorities cannot indefinitely freeze an entire bank account when the disputed amount is identifiable and substantially lower than the total balance. The court directed two banks to restore access to a Gwalior businessman’s accounts while retaining a freeze only on Rs 42,602 allegedly linked to a cybercrime complaint.
Court Order on Account Freeze
Justice Milind Ramesh Phadke passed the order while hearing a petition filed by Vijay, a small businessman, who challenged the freezing of his accounts with the State Bank of India and India Post Payments Bank. The petitioner told the court that cyber authorities had imposed a debit freeze on his accounts in connection with cyber crime complaints registered outside Madhya Pradesh. He submitted that while the disputed amount was only Rs 42,602 — Rs 33,000 in the SBI account and Rs 9,602 in the India Post Payments Bank account — the action had blocked his access to the entire balance in both accounts.
Impact on Business and Livelihood
Vijay argued that the restrictions had disrupted his business, livelihood and day-to-day financial affairs. He also informed the court that he had approached the authorities and expressed willingness to cooperate with the investigation. The state opposed the plea, saying the freezing action was taken on the basis of communications received from investigating agencies probing alleged cyber fraud transactions and that the investigation was still underway.
Court’s Observations
The court observed that a complete freezing of a bank account carries serious civil consequences as it deprives an account holder of access to legitimate funds and affects business and financial activities. It held that such restrictions must meet the tests of necessity, proportionality and reasonableness. Noting that the disputed amount was clearly ascertainable, the court said there was no material to show that continued freezing of the entire accounts was necessary for the investigation.
Directions Issued
It directed the banks to de-freeze the accounts and permit the petitioner to operate them freely, while retaining a lien only on the disputed amount. The court clarified that the investigating agency would remain free to continue the probe and seek appropriate orders regarding the disputed funds. The petition was accordingly allowed.
