Why Allahabad HC struck down blanket cyber crime bank account freezing orders

The court said police must furnish information about the alleged offence and share a copy of the FIR or complaint, failing which banks or payment system operators may decline the request. (Representative image)

• Allahabad HC: Blanket freezing of bank accounts in cyber crime cases is illegal
• Police must specify amount and follow due process when seeking account freeze
• Banks may face liability if accounts are frozen without proper legal procedure

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The Lucknow bench of the Allahabad High Court has held that issuing blanket notices to freeze bank accounts in cyber crime investigations, without specifying the amount on which a lien is sought, is illegal and arbitrary. The court ruled that such sweeping actions violate procedural safeguards and cannot be sustained.

A division bench of Justice Shekhar B Saraf and Justice Manjive Shukla made the observation while quashing a notice issued by a Cyber Crime police station in Telangana that led to the freezing of a bank account belonging to a medicine trader in Lucknow.

The bench observed, “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.”

Setting aside the notice, the court directed immediate restoration of banking operations. It ordered, “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 also granted interim relief, stating, “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.”

Facts behind the petition

The case arose from a petition filed by Khalsa Medical Store through its proprietor, Yashwant Singh. According to the plea, Singh was informed on November 25, 2025, by bank officials that his account had been frozen.

The freeze was based on a communication issued in the form of a notice under provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS), in connection with an FIR lodged at the Cyber Crime police station in Rachakonda, Hyderabad.

During a hearing on January 5, bank officials told the court that a direction to debit-freeze the petitioner’s account had been received. However, the communication did not disclose whether any seizure order existed or whether such an order had been sent to the jurisdictional magistrate, as required under law.

The court then directed the Registrar (Compliance) to issue notice to the concerned Telangana cyber crime police station. It also said, “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.”

Despite notices being sent by letter, e-mail, and speed post, no appearance was made on behalf of the Telangana police. This led the bench, on January 19, to quash the freezing notice.

Principles laid down for future cases

In its order, the court noted serious procedural lapses. It 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.”

While acknowledging that limited freezing may sometimes be required to prevent dissipation of alleged crime proceeds, the bench said safeguards are mandatory.

It stated, “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.”

Relying on earlier Supreme Court and High Court rulings, the bench laid down five key principles. Among them, it clarified that BNSS Section 106 does not empower police to seize property based on mere suspicion and must be supported by reasonable belief.

Police must furnish information about the alleged offence and share a copy of the FIR or complaint, failing which banks or payment system operators may decline the request.

The court further held that police can seek lien only on a specific amount and not block an entire account. It also mandated that any information sent to banks or financial intermediaries for blocking or marking a lien must simultaneously be forwarded to the jurisdictional magistrate within 24 hours, failing which the action may be void.

Finally, the bench warned that if a bank freezes an account at police request without following due process, it may face personal civil and criminal liability for resulting financial and reputational loss.