M/S S. A. Enterprises Thru. Its Proprietor Rameshvar Singh And Another vs Reserve Bank Of India Thru. Its Governor Mumbai And 2 Others

A.F.R.
RESERVED ON: April 15, 2026
PRONOUNCED ON: April 29, 2026
UPLOADED ON: April 29, 2026
HIGH COURT OF JUDICATURE AT ALLAHABAD
LUCKNOW
WRIT - C No. - 1866 of 2026
M/S S. A. Enterprises Thru. Its
Proprietor Rameshvar Singh And
Another
…..Petitioner(s)
Versus
Reserve Bank Of India Thru. Its
Governor Mumbai And 2 Others
…..Respondents(s)
Counsel for Petitioner(s) : Shrikant Mishra, Mansi Saxena
Counsel for Respondent(s) : Vinay Shankar
Court No. – 3
HON'BLE SHEKHAR B. SARAF, J.
HON'BLE ABDHESH KUMAR CHAUDHARY, J.
ABDHESH KUMAR CHAUDHARY, J.: Heard Sri Shrikant
Mishra, learned counsel appearing on behalf of the
petitioners and Sri Vinay Shankar, learned counsel
appearing on behalf of the respondents No. 2 and 3.

2
WRIT-C No. 1866 of 2026
2. This is a petition seeking de-freezing of the bank
account. However, interestingly the present bank account
has not been frozen due to any cyber-crime as had been
vogue these days but due to the metamorphosis of the
current Bank into an Investigating agency. The act of the
Bank in casually freezing the bank account of an
individual besides being a serious breach of trust with its
account holder also amounts to demoralizing business
sentiment, loosing faith in the financial system and most
importantly having adversarial impact on the economic
prosperity of any country.
3. The facts of the present case lie in a narrow
compass in as much as the petitioner claims to be the
sole proprietor of M/s S.A. Enterprises and is engaged in
lawful business of sale and purchase of machineries
relating to fisheries and allied works, and the firm is
registered for Goods and Service Tax with the
Government of India and also maintains a valid Bank
account number 381702000000301 in the name of his
firm in the Respondent-Indian Overseas Bank, Alambagh
branch, Lucknow.
4. During the business activities of the firm, it is stated
that on or about 16th January, 2026, an amount of 23 ₹
lakhs came to be transferred through R.T.G.S. by one
Mrs. Anita to the petitioner, allegedly for purchasing of
machineries. On the same day the petitioner withdrew an
amount of 5 lakhs from the said bank account. It is the ₹
case of the petitioner that subsequently on 20th January,
2026, when he attempted to withdraw further amount
from the bank account of his firm, he was informed orally

3
WRIT-C No. 1866 of 2026
by the Bank officials that the account had been frozen
and no transaction could be permitted.
5. Apparently, the petitioner visited the Bank on
several occasions, requesting them to de-freeze his
account, however, the same did not find any favour with
the Bank official, and as such the petitioner in order to
ventilate his grievance, send a text message to the Bank
Manager on 25th of January 2026 (available on record).
The text messages were followed by a Complaint and
Legal Notice to the Branch Manager on 9th of February
2026. Since the Bank officials did not oblige to de-
freeze the bank account of the petitioner, the present writ
petition has been filed before this Court, relying on a
judgment passed by this Court in Writ-C-No.12211 of
2025 ( Khalsa Medical Store Through Proprietor
Yashwant Singh versus Reserve Bank of India
Through Governor and Three others ).
6. Notice was issued to the Respondent-Bank and
accordingly, a short counter affidavit came to be filed by
th
them on 6 February, 2026 to which rejoinder was filed
by the petitioner on 17th February, 2026. Accordingly,
thereafter, the matter was taken for final disposal with
the consent of the parties.
7. Mr. Shrikant Mishra, learned counsel for the
petitioner has submitted that the petitioner is not
implicated as accused in any matter nor is there any
order from any competent authority to freeze the Bank
account of his firm. According to him, there is no criminal
or any other complaint raised against his bank account at
any point of time, therefore, the Authorities could not
have frozen his bank accounts and as such the very

4
WRIT-C No. 1866 of 2026
freezing of the bank account is illegal and bad in law. He
further submits that neither any written notice or order or
reason was ever communicated to the petitioner
regarding freezing of his bank account and as such the
action of the Respondent-Bank is arbitrary and in
violation of the principles of natural justice. According to
him, the illegal and arbitrary act of freezing of his bank
account without any reasons has led the petitioner firm to
suffer severe financial loss, loss of reputation, and
disruption of business operations.
8. On the other hand, Mr. Vinay Shankar, learned
counsel for the Respondent-Bank has submitted that the
bank account of the petitioner was frozen due to certain
suspicious transactions in the petitioner’s account.
According to him, the suspicion was due to the fact that
although the petitioner had declared his annual income of
₹ 5.76 lakhs while opening his current account, however,
a huge amount of 23 lakhs came to be credited in his ₹
account and apparently, on the same day, an amount of
₹ 5,00,000 was transferred/withdrawn by the petitioner.
The learned counsel relied upon the provisions of Section
12(2) of the Prevention of Money Laundering Act, 2002 to
justify the freezing of the account. He further submits
that the said freezing of the bank account has been done
to protect the interest of the petitioner as well as to
restrict further debit/transfer of any money in the said
bank account. He also submitted that although a letter
dated 20th February, 2026 was issued by the Bank to the
petitioner to provide details of such transaction, however,
the petitioner failed to comply with the said letter and it
was on their own investigation that they came to learn

5
WRIT-C No. 1866 of 2026
that the said amount of 23 Lakhs was credited in the ₹
petitioner’s current account by Bank of Maharashtra,
under a loan extended to one Smt. Anita.
9. According to the learned Counsel, the said Bank of
Maharashtra had noticed some suspicious activity in the
account of Smt. Anita and as such has requested the
Respondent-Bank to not release the said amount and
refund the same to them as per E-mail dated 11th March,
2026. Thus, according to the learned counsel, as
fraudulent and suspicious activities were visible in the
account of the petitioner and in order to save the said
money as a precautionary measure, the Respondent-
Bank has frozen the bank account of the petitioner.
10. This Court has heard the learned Counsels for the
parties at length and perused material on records.
11. As far as the opening of the current account with the
th
Respondent-Bank on 30 of December 2025, and
declaration of annual income of 5.76 lakhs in the form ₹
for Opening of Current Bank Account by the petitioner is
concerned, the same is not under dispute. However, the
issue is whether there exists any law or regulation of the
Bank or of the Reserve Bank of India (R.B.I.) that
empowers any Bank to declare an account suspicious and
consequently, freeze the said account, if the annual
income declared in the Account Opening form is less than
the amount being credited in the said account. Although
the said issue is axiomatic as far as the disposal of the
present petition is concerned, however, keeping in mind
that the counsel for the Bank had been harping on the
said fact, this Court while hearing the present petition,
invited the learned Counsel for the Bank to bring on

6
WRIT-C No. 1866 of 2026
records any such circular or address his argument on the
said issue. However, the Respondent- Bank, neither filed
any such document in his counter-affidavit nor was able
to show any relevant provision in law relating to the said
issue. This Court also does not find any
guidelines/notification/circular/S.O.P. etc., of any Bank
which specifically bars crediting of more amount than the
annual income mentioned in the account opening form of
the Bank. Further, this Court does not find anything
unusual about the credit of 23,00,000/- into the account ₹
of the petitioner, within a period of 15 days from the
opening of the current account or having withdrawn 5 ₹
lakhs on the same day, in the absence of any complaint
of fraudulent activity from any quarter.
12. The fulcrum of the argument of the learned Counsel
for the Respondent-Bank is that the account is suspicious
and there is a requirement under law as per Section
12(2) of the Prevention of Money Laundering Act, 2002 to
freeze the bank account, in case there is any suspicious
transaction in the bank account, which according to the
Respondent- Bank has been complained of by the Bank of
Maharashtra. The said submission of the Respondent-
Bank is two-fold, viz (i) Suspicious transaction and (ii)
requirement of law under Section 12(2) of the
Prevention of Money Laundering Act, 2002.
13. This court proposes to deal with both the arguments
in seriatim.
14. First and foremost, we are unable to countenance as
to under what provision of law and as to under what
authority, the Respondent-Bank can self-authorize itself
to venture into a path of investigating the source of the

7
WRIT-C No. 1866 of 2026
amount of ₹ 23 lakhs which was credited in the
petitioner’s account. In any case we find that the
Respondent-Bank investigated to find that the said 23 ₹
lakhs had been obtained by Smt. Anita by availing loan
facility for carrying out fish business from Bank of
Maharashtra. Respondent-Bank claims that the said Bank
of Maharashtra noticed certain suspicious activity in the
account of Smt. Anita and as such requested the
Respondent-Bank to not release any amount from the
bank account of the petitioner and refund the same to
them. However, we find that there is neither any police
complaint nor any private complaint to any authority in
the present matter. Further, we also do not find any Court
order or any material brought on record to show that
there is any genuine issue relating to suspicious activity.
On the contrary, we find that the material brought on
record by the petitioner in his rejoinder-affidavit reveals
that the current bank account of the said Mrs. Anita is
functional and there had been no freezing of the said
account. It is rather strange that the basis of alleged
fraudulent or suspicious transaction in Mrs. Anita’s bank
Account i.e. the Bank of Maharashtra, had been made a
foundational fact for freezing the bank account of the
petitioner, however, the fact of the matter remains that
the account of Bank of Maharashtra maintained by the
said Mrs. Anita has not been frozen by Bank of
Maharashtra itself. Further, it is noticed from the
statement of account of the bank account of the said Mrs.
Anita maintained at Bank of Maharashtra that the said
Mrs. Anita had been carrying normal day-to-day
transactions in her said bank account and there has been
no action or complaint or for that matter any proposed

8
WRIT-C No. 1866 of 2026
recovery action whatsoever by the said Bank of
Maharashtra against the said Mrs. Anita relating to her
bank account or the loan extended to her. Thus, the very
foundation for suspecting the bank account of the
petitioner crumbles like a pack of cards. The submission
of suspicious transaction is wholly illegal, ill-conceived
and as such rejected.
15. We also find that the Respondent-Bank has heavily
relied in their counter affidavit that Bank of Maharashtra
has written some E-mail dated 11.03.2026 to the
Respondent-Bank relating to some fraudulent transaction
in the bank account of Mrs. Anita, thereby allegedly
asking the Respondent-Bank to freeze the bank account
of the petitioner. From a perusal of the aforesaid e-mail
annexed along with the counter-affidavit of the
Respondent Bank, it is clear that the said E-mail dated
11.03.2026 is in fact a reply to a query raised by the
Respondent-Bank on 09.03.2026. This Court fails to
understand, in the first instance under what law could the
Bank start a self-declared investigation without there
being any Complaint lodged by anyone, and secondly, if
at all a query is put and some adversarial observation or
request is made by a third-party Bank, then how on earth
the Respondent-Bank could have obliged on the said
request, breaching the trust between the Bank and the
account holder. Apparently, it is borne from the records
that not only the said request of Bank of Maharashtra is
in the air and without any basis, however, the whole
process is abortive as this Court is unable to find any
subsequent action taken by the said Bank of Maharashtra
pursuant to the E-mail reply dated 11.03.2026 sent to

9
WRIT-C No. 1866 of 2026
the Respondent-Bank. There is neither any complaint by
the said Bank of Maharashtra nor any order from any
Competent Authority nor any proceedings has been
initiated by the said Bank against the said Smt. Anita, for
any fraudulent transfer as is mentioned in the reply E-
mail dated 11.03.2026. Clearly, the E-mail has been self-
generated by the Bank of Maharashtra without any
complaint or order and merely to collude with the
Respondent-Bank in their illegal acts and omissions of
illegally freezing the bank account of the petitioner.
16. The learned counsel for the Bank has vehemently
tried to justify the illegal act of the Bank by relying on
Section 12(2) of the Prevention of Money Laundering Act,
2002 which again is misconceived and illegal. The learned
counsel reiterated his submission as made in paragraph 4
of the counter-affidavit filed by the Respondent-Bank.
Firstly, we note that Section 12(2) as quoted and
mentioned at paragraph 4 of the Counter-Affidavit is at
stark difference to the actual Section 12(2) of the
Prevention of Money Laundering Act, 2002. Apparently,
we find that Section 12 of the Act relates to casting a
duty on reporting entity (Bank) to maintain records.
Section 12(1) enjoins upon the Bank to keep the
information confidential. Section 12(3) says that the said
records has to be maintained and preserved for five
years. This Court is rather amused as to how Section
12(2) or for that matter any of the sub-Sections of
Section 12 of the Prevention of Money Laundering Act,
2002 has been sought to be made applicable and pressed
into action. The said Section does not in any manner
authorise or remotely concerns freezing of a bank

10
WRIT-C No. 1866 of 2026
account by the banking company itself. The entire Section
12 of Prevention of Money Laundering Act, 2002 can be
perused for that reason, which is being delineated herein
below, for a better understanding:-
1
“ [12. Reporting entity to maintain records . —
(1) Every reporting entity shall—
(a) maintain a record of all transactions, including
information relating to transactions covered under
clause (b), in such manner as to enable it to
reconstruct individual transactions;
(b) furnish to the Director within such time as may
be prescribed, information relating to such
transactions, whether attempted or executed, the
nature and value of which may be prescribed;
2
(c)   [ ]*
3
(d)  [ ]*
(e) maintain record of documents evidencing identity
of its clients and beneficial owners as well as account
files and business correspondence relating to its
clients.
(2) Every information maintained, furnished or verified,
save as otherwise provided under any law for the time
being in force, shall be kept confidential.
(3) The records referred to in clause (a) of sub-section
(1) shall be maintained for a period of five years from
the date of transaction between a client and the
reporting entity.
(4) The records referred to in clause (e) of sub-section
(1) shall be maintained for a period of five years after
the business relationship between a client and the
reporting entity has ended or the account has been
closed, whichever is later.
1 Subs. by Act 2 of 2013, S. 9 (w.e.f. 15-2-2013). Prior to substitution it read as:
“12. Banking companies, financial institutions and intermediaries to maintain records.—(1) Every banking
company, financial institution and intermediary shall— (a) maintain a record of all transactions, the nature and value of
which may be prescribed, whether such transactions comprise of a single transaction or a series of transactions integrally
connected to each other, and where such series of transactions take place within a month; (b) furnish information of
transactions referred to in clause (a) to the Director within such time as may be prescribed; (c) verify and maintain the
records of the identity of all its clients, in such manner as may be prescribed: Provided that where the principal officer of
a banking company or financial institution or intermediary, as the case may be, has reason to believe that a single
transaction or series of transactions integrally connected to each other have been valued below the prescribed value so as
to defeat the provisions of this section, such officer shall furnish information in respect of such transactions to the
Director within the prescribed time. (2) (a) The records referred to in clause (a) of sub-section (1) shall be maintained for
a period of ten years from the date of transactions between the clients and the banking company or financial institution or
intermediary, as the case may be. (b) The records referred to in clause (c) of sub-section (1) shall be maintained for a
period of ten years from the date of cessation of transactions between the clients and the banking company or financial
institution or intermediary, as the case may be. ”.
2 Omitted by Act 14 of 2019, S. 28 (w.e.f. 25-7-2019). Prior to omission it read as:- “(c) verify the identity of its clients in
such manner and subject to such conditions, as may be prescribed;”.
3 Omitted by Act 14 of 2019, S. 28 (w.e.f. 25-7-2019). Prior to omission it read as:- “(d) identify the beneficial owner, if any,
of such of its clients, as may be prescribed;”.

11
WRIT-C No. 1866 of 2026
(5) The Central Government may, by notification,
exempt any reporting entity or class of reporting
entities from any obligation under this Chapter.] ”
17. Since, there had been no assistance from the
learned counsel for the Bank as to in what circumstances,
Section 12(2) has been quoted differently at paragraph 4
of the Counter-Affidavit, this Court in its quest for
reaching to the bottom of the issue took upon itself to
scan through the various provisions of the Prevention of
Money Laundering Act, 2002 and finds that as a matter of
fact, the learned counsel for the Bank was actually trying
to refer Section 12AA(2) for and in place of Section 12(2)
of the Prevention of Money Laundering Act, 2002. Having
noted the said controversy, it is the bounden duty of this
Court to also deal with the provisions of Section 12AA of
the Prevention of Money Laundering Act, 2002.
18. Apparently, Section 12AA of the Prevention of
Money Laundering Act, 2002 relates to enhanced due
diligence and lays down the compliance requirements for
reporting entities. These requirements are aimed at
preventing money laundering and terrorist financing and
promoting a culture of compliance within reporting
entities/Bank. Section 12AA(2) comes into play only
when certain conditions as mentioned in 12AA(1) is not
fulfilled. Further, it only says that the Bank would not
allow the specified transaction to be carried out and
evidently does not mention of not allowing any
transaction or for that matter freezing the account. It
should be well understood that under the provisions of
Section 12 merely a duty is cast on the Bank as a
reporting entity to maintain records and at time may not
permit a particular (specified) transaction only, because

12
WRIT-C No. 1866 of 2026
the freezing of Bank Account is always under Section 17
of the Act and that too by the Competent Authority, after
the twin test of (i) information being in possession and
(ii) reasons to believe, is satisfied to the core. Further,
this Court finds that the Respondent-Bank has failed to
show as to what was the specified transaction, it was
trying to abort and as to what conditions it failed as
enumerated under Section 12AA(1) of the Prevention of
Money Laundering Act, 2002. In any case, we are of the
view that the transaction of the petitioner does not fall in
any of the explanation of “specified transaction” as
appended to Section 12AA(4) of the Prevention of Money
Laundering Act, 2002, which inter-alia states as follows:
“ Explanation.—For the purposes of this section,
"specified transaction" means—
(a) any withdrawal or deposit in cash, exceeding
such amount;
(b) any transaction in foreign exchange,
exceeding such amount;
(c) any transaction in any high value imports or
remittances;
(d) such other transaction or class of
transactions, in the interest of revenue or where
there is a high risk or money-laundering or
terrorist financing, as may be prescribed. ”
19. Arguendo, if the Reporting Authority (Bank) is
construed to have power to freeze any bank account and
not a particular specified transaction, as is propagated to
be done in the present case, a havoc like situation would
be created and the entire financial system would come
crumbling down for the simple reasons that besides the
other investigative agency and the Courts, the Bank
would also have power to freeze account at its whims and
discretion by terming any transaction to be

13
WRIT-C No. 1866 of 2026
suspicious,without assigning any reason, which cannot be
the intent of law.
20. This Court is unable to find any rationale or any
nexus as to how the provisions of Prevention of Money
Laundering Act, 2002 can be self-invoked by the Bank to
deny the legitimate right of the petitioner to operate his
Bank Account. There ought to be some overt activity
complained of against the petitioner. The so called
suspicious or fraudulent transaction as termed by the
Respondent-Bank has also fallen flat for the reasons as
mentioned herein above.
21. Further, this Court finds that as far as reporting of
suspicious transaction is concerned, the Reserve Bank of
nd
India has issued circular dated 2 of July 2012 relating to
obligations of Banks under the Prevention of Money
Laundering Act, 2002 wherein paragraph 2.16 (2)
relating to Suspicious Transaction Reports (S.T.R.), of the
said Circular clearly mentions that the Banks should not
put any restrictions on operations in the accounts where
S.T.R. has been made. The contents of the Circular would
make for a good read, which is being delineated herein
below:
“ 2.16 Cash and Suspicious Transaction Reports:-
[*]
2. Suspicious Transaction Reports (S.T.R.)
i. While determining suspicious transactions, banks
should be guided by definition of suspicious
transaction contained in PMLA Rules as amended
from time to time.
ii. It is likely that in some cases transactions are
abandoned / aborted by customers on being
asked to give some details or to provide
documents. It is clarified that banks should
report all such attempted transactions in STRs,

14
WRIT-C No. 1866 of 2026
even if not completed by customers, irrespective
of the amount of the transaction.
iii.Banks should make STRs if they have
reasonable ground to believe that the
transaction involve proceeds of crime generally
irrespective of the amount of transaction and/or
the threshold limit envisaged for predicate
offences in part B of Schedule of PMLA, 2002.
iv.As per extant instructions, a bank should not
open an account (or should consider closing an
existing account) when it is unable to apply
appropriate CDD measures. It is clarified that
in the circumstances when a bank believes that
it would no longer be satisfied that it knows the
true identity of the account holder, the bank
should also file an STR with FIU-IND.
v. The Suspicious Transaction Report (STR)
should be furnished within 7 days of arriving
at a conclusion that any transaction, whether
cash or non-cash, or a series of transactions
integrally connected are of suspicious nature.
The Principal Officer should record his reasons
for treating any transaction or a series of
transactions as suspicious. It should be
ensured that there is no undue delay in
arriving at such a conclusion once a suspicious
transaction report is received from a branch or
any other office. Such report should be made
available to the competent authorities on
request.
vi.In the context of creating KYC/AML
awareness among the staff and for generating
alerts for suspicious transactions, banks may
consider the indicative list of suspicious
activities contained in Annex E of the 'IBA's
Guidance Note for Banks, 2005'.
vii.Banks should not put any restrictions on
operations in the accounts where an STR has
been made. Moreover, it should be ensured
that there is no  tipping off to  the customer
at any level. ”
22. In any case, this Court is clear in its mind that there
ought to be some order from a competent authority like
the investigating agency (Police), who have been
authorized to freeze bank account during investigation in
terms of Section 102 of the erstwhile Code of Criminal
Procedure, 1973. However, even in those cases, the said

15
WRIT-C No. 1866 of 2026
freeze is subject to the orders of the Criminal Court.
However, in the present case, the facts are absolutely
different, wherein there is no such complaint or order.
Even for that matter, time and again the Courts have
held that merely because certain offences may have been
committed by the customer, that cannot, by itself,
constitute a lawful basis for a unilateral freezing or
withholding of the petitioners’ bank accounts.
23. Further, the Hon'ble Supreme Court in the case of
OPTO Circuits (India) Ltd. v. Axis Bank and others ,
reported in (2021) 6 SCC 707; wherein freezing of bank
accounts was considered by the Hon'ble Supreme Court
and it was held that freezing of bank accounts cannot be
done in a casual manner. It is also pertinent to note that
any blanket or disproportionate freezing of bank
accounts, particularly where the account holder is neither
an accused nor even a suspect in the offence under
investigation, is manifestly arbitrary, and in the teeth of
the fundamental rights under Article 19(1)(g) and 21of
the Constitution of India, which encompass the right to
livelihood and freedom to carry on trade and business.
24. It should be well understood that the Respondent-
Bank acts as a trustee when it accepts deposit from an
account holder and it cannot be allowed to transform into
an archaic money lender who may accept the deposit and
refuse its return to the depositor. The bank is permitted
to freeze the account only for legitimate purposes and in
accordance with law. The Bank as a debtor cannot be
allowed to breach the faith of the depositor, which would
have serious repercussions. Admittedly, it is undisputed
that petitioner is maintaining a Current Account in the
respondent bank and there are sufficient funds available

16
WRIT-C No. 1866 of 2026
for withdrawal from its Current Account. The Petitioner is
a depositor and in terms of the banking practices it is
clearly entitled to withdraw the amount lying in its
Account. The money having been held in trust, the Bank
can deny withdrawal of such amount only in exigencies
which are permissible in law. Such exigencies do not arise
in the facts of this case, as discussed herein above. In its
absence the action of the respondent bank in refusing to
operate the account of the petitioner cannot be legally
sustained.
25. From perusal of records and the arguments
addressed before this Court, it is an admitted position on
behalf of the counsel of the Respondent-Bank that
the petitioner is not accused in any F.I.R. till date nor is
there anything on records, which would show any
involvement of the present petitioner in any criminal
activity or any alleged fraudulent suspicious activity. It is
further reflected that merely owing to a large incoming
transaction the account is under scrutiny and has been
put under as “suspicious transaction”, and therefore,
freezing of accounts has been done by the Bank itself and
not on instructions by any Authorities, as may be
permissible under the law.
26. The law with respect to freezing and de-freezing of
accounts was settled by the Hon'ble Supreme Court in a
catena of judgments. Admittedly, the Respondent-Bank
did not even bother to serve a notice of pre-freezing or
post-freezing of the bank account, causing immense
inconvenience to the petitioner. The illegal act of freezing
the bank account of the petitioner has a serious and
adverse implication and invades and encroaches upon the

17
WRIT-C No. 1866 of 2026
petitioner’s invaluable right to earn and live with dignity.
The petitioners are, at the very least, entitled to be
informed of the reasons for freezing their bank accounts,
which they are otherwise legally entitled to operate.
Thus, the illegal freezing of the bank account, 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.
27. The learned counsel for the Respondent-Bank has
prayed that in case this Court is of the opinion that the
accounts are required to be  de-freezed, then there is a
possibility that the petitioners may withdraw the entire
amount from the bank account. Therefore, some
reasonable restrictions may be put and the withdrawals
may be made subject to certain securities. However, this
Court is of the view that the said prayer does not appear
to be reasonable. The facts on record indicates that there
is neither any complaint nor F.I.R. against the petitioner.
In fact, the present freezing of bank account appears to
be vexatious and actuated with mala fides . Under these
circumstances, this Court deems it appropriate to allow
the prayer of the petitioners seeking de-freezing of their
bank account.
28. Ergo, the Respondent-Indian Overseas Bank is
directed to de-freeze the bank accounts of the petitioner
forthwith. The petitioner shall be at liberty to maintain
and continue with the operations of his Current Account
Number 381702000000301 in the name of his firm in the
Respondent-Bank in terms of the R.B.I. guidelines.

18
WRIT-C No. 1866 of 2026
29. As an afterward we would like to state that the
relationship between a banker and its customers is that
of a trustee holding money on behalf of its customers.
The duty of the bank is that of a trustee and not of any
investigative agency with a roving eye. One cannot
countenance the argument that it is the duty of the bank
to ensure that the money transaction that takes place in
the accounts of the banks are done so in a legal manner.
However, the bank is not in any manner empowered or
entitled to initiate an action against its customers without
there being any cogent material on record that has been
provided to the bank from formal entities such as the
Reserve Bank of India, Central Bureau of Investigating,
Enforcement Directorate, police authorities amongst
others. In every such instance where a designated
authority approaches the bank to take action against any
of the accounts of the customers of the bank, the
designated authority is also required to provide some
proof of certain suspicious activities.
30. A Co-ordinate Bench of this Court, in Khalsa
Medical Store v. RBI, reported in 2026 SCC OnLine
All 164; wherein one of us (Hon’ble Shekhar B. Saraf, J.)
had occasion to examine the actions of cyber-crime
investigative authorities in freezing of accounts had
summarized the principles as follows:
“12. After sifting through the ratios laid down in the
catena of judgments mentioned above, and upon
applying our mind to the issue at hand, the following
principles may be laid down for freezing a bank account
under a suspicion of cyber crime:-
A. 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.

19
WRIT-C No. 1866 of 2026
B. 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.
C. 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.
D. 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.
E. 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.
13. From a perusal of the above, we are of the view that
in case of a cyber crime, the Investigating Officer is
required to not only issue notice under Section 94/106 of
the B.N.S.S., 2023 to the banks concerned but the same
must contain the amount for which lien is sought. A
blanket notice without indicating the amount, on which
lien is being sought, would be illegal and arbitrary.
Furthermore, the Investigating Officer is required to
intimate the jurisdictional Magistrate of the said cyber
crime and inform the banks of the case number that has
been registered on basis of which said lien / freezing is
sought. ”
31. As is evident from the above judgment, any action
that is taken by any authority has to be backed up with
relevant information and must be on the basis of a
complaint lodged either before the police or by
approaching the magistrate. In any event, none of the

20
WRIT-C No. 1866 of 2026
provisions under the various legislations governing bank
accounts allow freezing of a bank account by the bank
authority on its own volition without there being an
underlying complaint. The only instance when the bank
can freeze an account in its own volition is when the bank
has a lien on the said account by virtue of certain loans
having been taken by the customer ( see: Section 171 of
the Contract Act,1872 ). In the absence of such a lien no
authority is present with a bank to stop the operation of
an account of a customer and any such action without the
authority of law is a degenerative, arbitrary, perverse and
mala fide action that is an anathema to the rule of law
and is required to be struck down heavily at the very first
instance it comes before the courts of law.
32. Accordingly, the present writ petition is Allowed in
the aforesaid terms.
33. Before we part with, this Court is constrained to
observe that there is an increasing menace these days of
freezing bank account indiscriminately. Admittedly, in the
present case the Respondent-Bank has frozen the bank
account of the petitioner, without any rhyme or reason
and the same is not permissible as per law. Since, such
indiscriminate freezing has the inevitable effect of
paralysing the day-to-day business operations of the
petitioner, resulting in loss of commercial goodwill and
financial consequences, a cost of ₹ 50,000/- (Fifty
thousand Only) is hereby imposed on the Respondent-
Indian Overseas Bank, Alambagh branch, Lucknow,
through the Branch Manager as a compensation to the
petitioner. The said cost shall be payable to the petitioner

21
WRIT-C No. 1866 of 2026
within a period of four weeks from the date a certified
copy of this judgment is served on the Respondent-Bank.
April 29, 2026
MVS/-
(Abdhesh Kumar Chaudhary, J.)
I agree
(Shekhar B. Saraf, J.)
Digitally signed by :-
MANOJ VIKRAM SINGH CHAUHAN
High Court of Judicature at Allahabad,
Lucknow Bench