Banks must restrict account freezes to the suspected amount and permit operation of remaining funds.

The petitioner, a businessman running a footwear shop, maintained Current Account No. 10190000521713 with Bandhan Bank, Chalantapara Branch, Bongaigaon.

The account had been entirely blocked/debit-freezed since December 2020 without prior notice. The Bank informed the petitioner that the freeze arose from a cyber-crime complaint concerning a suspicious credit of ₹1,700 made on 18 August 2020.

The petitioner contended that a total freeze was disproportionate and that the Bank ought to have retained a lien only over ₹1,700 while permitting operation of the remaining balance.

The Bank submitted that it had acted pursuant to information received from the Cyber Crime Incident Response Unit, Ahmedabad, and had not independently imposed the restriction.

Whether a bank may keep the entire customer account blocked or debit-freezed when the investigating authority’s suspicion concerns only a specific credit of ₹1,700.

Whether the Bank was required to restrict the freeze to the disputed amount by placing a lien over ₹1,700 and permit the petitioner to operate the account in respect of the remaining balance.

Whether the petitioner’s operation of the account could be made subject to submission of KYC documents and further lawful directions of a competent authority.

The Court applied Section 106 of the Bharatiya Nagarik Suraksha Sanhita, 2023, which is analogous to Section 102 of the Code of Criminal Procedure, 1973, and permits seizure or restraint of property only where it is alleged or suspected to be stolen, constitutes the object of the offence, or has a direct link with the offence under investigation.

Relying on State of Maharashtra v. Tapas D. Neogy, [1999] 7 SCC 685, the Court recognised a bank account as “property” that may be seized or its operation prohibited where it has a direct nexus with the offence.

It further relied on M.T. Enrica Lexie v. Doramma, [2012] 6 SCC 760, for the principle that only property falling within the statutory scope of seizure may be restrained, and property not connected with the alleged offence cannot be seized.

A total freeze affecting livelihood and business operations is unjustified where suspicion relates only to a part of the account balance; in such circumstances, the Bank must ordinarily impose a lien limited to the specified amount, unless the investigating authority expressly directs a complete freeze or a statutory mandate requires it.

The Court held that the Bank’s power was not independent but arose from the direction or information received from the investigating authority.

Since the alleged suspicious transaction was confined to ₹1,700, the restriction could not lawfully extend to the entire account merely because the Bank apprehended that further complaints might arise.

A complete debit freeze seriously interfered with the petitioner’s ability to earn a livelihood and conduct business, whereas the investigative objective could be achieved by securing only the amount allegedly connected with the cyber complaint.

As there was no assertion that the petitioner had been arraigned as an accused and no direction for complete freezing was shown, the proportionate course was to retain a lien over ₹1,700 and allow operation of the account for the remaining balance, subject to KYC compliance and any subsequent lawful direction.

Bandhan Bank was directed to place a lien over ₹1,700 in Current Account No. 10190000521713 and permit the petitioner to operate the account with respect to the balance amount.

This relief was subject to submission of the KYC form and compliance with any further instructions issued by a competent authority in accordance with law.

No costs were awarded.