Allahabad High Court Declares Blanket Bank Account Freezing in Cyber Crime Cases Illegal
The Lucknow bench of the Allahabad High Court has delivered a landmark judgment, declaring that blanket notices to freeze bank accounts under suspicion of cyber crime, without indicating the specific amount on which lien is being sought, are illegal and arbitrary. This significant ruling came while quashing a notice issued by a Cyber Crime police station in Telangana that had frozen the bank account of a prominent medicine trader in Lucknow.
Court Orders Immediate De-Freezing of Account
A division bench comprising Justice Shekhar B Saraf and Justice Manjive Shukla, while disposing of a petition challenging the Telangana Police notice, ordered the concerned bank to immediately de-freeze the petitioner's account and allow normal banking activities to resume. The bench made this directive on January 19, 2026, providing immediate relief to the petitioner.
The court observed that no amount had been indicated in the notice sent to the bank, and neither a copy of the FIR nor any seizure order had been provided to the financial institution, despite the bank's written request to the investigating officer. "In our view, this entire action is unjustified and illegal," the bench stated emphatically.
Key Principles Established by the Court
Quoting judgments from the Supreme Court and various High Courts, the Lucknow bench laid down several crucial principles regarding freezing bank accounts in cyber crime investigations:
- Specific Amount Requirement: Police must indicate the exact amount on which lien is being sought and cannot request freezing of entire bank accounts.
- FIR and Documentation: Investigating officers must furnish information about the alleged crime and share a copy of the FIR or complaint with the bank.
- Judicial Magistrate Notification: As soon as information to block, put on hold, or mark a lien is forwarded to a bank or financial intermediary, it must simultaneously be sent to the jurisdictional judicial magistrate within 24 hours.
- Bank's Right to Decline: Banks or payment system operators may decline requests received without proper documentation.
- Limited Freezing Period: Even in extreme cases requiring temporary freezing, investigating officers must provide the seizure order and case details within three to four days.
Background of the Case
The petition was filed by Khalsa Medical Store through its proprietor Yashwant Singh, who discovered on November 25, 2025, that his account had been frozen by bank officials. The freezing occurred through a notice issued under BNSS sections by an investigating officer from the Cyber Crime police station in Rachakonda, Hyderabad.
During hearings on January 5, 2026, bank officials informed the court about the freeze directive but revealed that the communication did not include the seizure order or indicate whether the police officer had communicated the order to the jurisdictional magistrate as required under BNSS provisions.
The court had issued notices to the Telangana cyber crime police station through various means including letter, email, and speed post. When no representative appeared before the bench, the High Court proceeded to quash the freezing notice on January 19.
Interpretation of BNSS Section 106
The bench clarified that BNSS Section 106, which grants police officers the power to seize certain property, should not be interpreted as empowering them to intervene in money disputes by seizing property based on mere suspicion. Such actions must be bolstered by reasonable belief and follow proper procedural safeguards.
The court emphasized that in no circumstance can police request any bank or payment system operator, including payment aggregators, to block or suspend entire financial accounts. The notice under Section 106 BNSS may only require marking lien on specific amounts allegedly transferred from or to the bank account of an accused.
Consequences for Procedural Violations
The judgment establishes significant consequences for failure to follow proper procedures:
- Failure to inform the jurisdictional magistrate within 24 hours may render such freezing actions void.
- If any bank puts on hold any bank account or escrow account on police request without following proper procedure, the bank shall be personally liable for civil and criminal consequences for the resulting financial and reputational damage.
This ruling represents a significant step toward protecting citizens' banking rights while balancing law enforcement needs in cyber crime investigations. The court's establishment of clear guidelines ensures that freezing actions are targeted, transparent, and subject to judicial oversight, preventing arbitrary exercise of power that could severely impact legitimate businesses and individuals.
