Bank accounts should be defrozen when alleged fraudulent transactions lack supporting details, subject to indemnity.

The petitioner’s State Bank of India account no. 30406713474, maintained at the Mawsynram Branch, was frozen without prior notice.

The petitioner stated that he was a businessman engaged in the sale of betelnut and that ₹7,00,000 had been credited to his account in connection with such a transaction.

The bank received complaints concerning allegedly doubtful transactions from the Delhi North East Cyber Police Station involving ₹45,000 and from the Cyber Crime Police Station, Raniya, Khunti District, Jharkhand, involving ₹5,60,000, resulting in the freezing of the entire account.

The petitioner sought defreezing of the account, offering to furnish an indemnity bond, while agreeing that ₹45,000 could remain under lien.

The Delhi police filed a status report confirming that ₹45,000 had allegedly been illegally transferred from the complainant’s Canara Bank account.

The Jharkhand police did not file any status report or provide details concerning the alleged ₹5,60,000 fraudulent transaction despite service of notice.

The bank stated that it had no objection to defreezing the account subject to an indemnity bond.

Whether the petitioner’s entire bank account should remain frozen when only ₹45,000 was supported by material indicating a disputed transaction and no supporting details were furnished regarding the alleged ₹5,60,000 transaction?

Whether the account could be defreezed subject to retention of ₹45,000 under lien and furnishing of an indemnity bond for the remaining balance?

The Court applied the principle that freezing of a bank account must be confined to the amount supported by concrete material showing a disputed or allegedly fraudulent transaction, rather than continuing against the entire account in the absence of adequate particulars or a status report from the investigating agency.

The Court also accepted the procedural safeguard of retaining the substantiated disputed amount under lien and requiring an indemnity bond as a condition for permitting operation of the account.

The Court distinguished between the two alleged transactions.

The Delhi police’s status report specifically identified ₹45,000 as an amount allegedly illegally transferred from the complainant’s account; accordingly, that amount was treated as disputed and directed to be retained under lien.

In contrast, the Jharkhand police neither identified the complainant nor explained the basis for treating ₹5,60,000 as fraudulent, despite notice from the Court.

Since the material before the Court did not substantiate the continued freezing of the entire account, and the bank itself had no objection to defreezing subject to an indemnity bond, the Court considered it appropriate to restore the petitioner’s ability to operate the account while preserving safeguards against future claims.

The amount of ₹45,000 was to be treated as disputed and kept under lien, while the petitioner was required to furnish an indemnity bond for the remaining amount lying in the account, or such amount as determined by the bank.

The writ petition was accordingly closed and disposed of.