Bank Accounts Frozen for Cybercrime Investigations Must Be De-freezed Except for the Disputed Amount Under Suspicion

The Petitioner, a resident of Bilaspur, maintains a savings bank account (A/c No. 052750700000145) with Yes Bank (Respondent Nos. 1 & 2), which she also utilizes as a demat account for share market investments.

On June 23, 2025, the bank informed the Petitioner via email that her account had been frozen following notices from the Cyber Crime Police Stations in Gurugram, Haryana, and Bangalore, Karnataka (Respondent Nos. 3 & 4), regarding two alleged online financial fraud cases involving a disputed amount of Rs. 49,000/-.

The Petitioner asserted she had no involvement in any cybercrime, had no FIR registered against her, and submitted representations for de-freezing on January 14, 2026.

During the proceedings, the Respondent-Bank expressed willingness to de-freeze the account provided the disputed amount of Rs. 49,000/- remained withheld.

1. Whether the entire bank account of the Petitioner should remain frozen when the suspected fraudulent transaction involves only a specific, limited amount.

The Court applied the principle of proportionality in administrative and investigative actions, particularly concerning the freezing of bank accounts under the Code of Criminal Procedure.

The core legal doctrine established is that an investigative freeze should be restricted to the "disputed amount" or the "amount under suspicion" to prevent undue financial hardship to the account holder, rather than debit-freezing the entire account.

The Court evaluated the submissions from both parties, noting that the Respondent-Bank did not oppose the partial de-freezing of the account.

The Court reasoned that since the investigation concerned a specific sum of Rs. 49,000/-, freezing the entire account caused "serious prejudice" and "financial losses" to the Petitioner that were unnecessary for the purposes of the investigation.

By directing the bank to withhold only the specific amount under suspicion while allowing the Petitioner to operate the remainder of the balance, the Court balanced the state's interest in investigating financial fraud with the Petitioner's right to access her undisputed funds for daily transactions and lawful purposes.

The Petitioner was granted liberty to freely operate the account for all lawful purposes, and the Bank was ordered to comply within 10 days without closing the account, while the Petitioner was directed to cooperate with the ongoing investigation.