Courts may permit operation of frozen accounts while retaining liens over disputed cyber-fraud amounts.

The petitioner, proprietor of R.S.R. Fashion Enterprise, operated a cyber café and book stall and maintained Current Account No. 258638296403 with IndusInd Bank, Amingaon Branch.

The account was frozen pursuant to complaints received through the National Cyber Crime Reporting Portal concerning alleged fraudulent transactions connected with police authorities in Gujarat, Karnataka and Maharashtra.

The disputed transactions totalled Rs.2,22,500/-: Rs.1,00,000/-, Rs.49,500/-, Rs.25,000/-, Rs.20,000/- and Rs.28,000/- respectively.

The petitioner claimed that the account had a credit balance of Rs.4,78,971/- and that the blanket freeze impaired the operation of his business and livelihood.

On 11 February 2026, he requested the Bank to lift the lien except to the extent of the disputed amount, but no action was taken.

The Bank defended the freeze as an action taken in accordance with directions issued by the competent authorities and submitted that the petitioner’s involvement and the ultimate extent of the fraud were not yet fully ascertainable.

1. Whether the petitioner’s entire bank account could continue to remain frozen in connection with cyber-fraud complaints when the disputed amount had been specifically quantified.

2. Whether a balance could be struck between the requirements of investigation into alleged cyber fraud and the petitioner’s right to operate his otherwise legitimate business account.

3. Whether the account should be defreezed subject to retention of the disputed amount by way of lien.

The Court applied the principle that a blanket freezing of a bank account, without appropriately quantifying the amount required to be secured, may disproportionately infringe the account holder’s fundamental rights and business operations.

It relied on the balancing approach adopted in Mohammed Saifullah v. Reserve Bank of India & Ors., WP No. 25631/2024 (Madras High Court), Neelkanth Pharma Logistics Pvt. Ltd. v. Union of India & Anr., WP(C)/17905/2024 (Delhi High Court), and Mr. Kartik Yogeswar Chatur v. Union of India & Ors., Criminal Writ Petition No. 321/2025 (Bombay High Court), concerning proportionality in freezing bank accounts and the operation of Section 106 of the Bharatiya Nagarik Suraksha Sanhita, 2023.

The governing principle was that the interests of cyber-fraud investigations and complainants must be balanced against the rights of a bona fide account holder facing hardship from a blanket freeze.

The Court accepted that the account had been frozen pursuant to cyber-fraud complaints received through the NCCRP and that the investigation required protection of the disputed funds.

However, because the disputed amount had been identified as Rs.2,22,500/-, continued freezing of the entire account was considered disproportionate to the investigative purpose.

Following the balancing approach in the cited authorities, the Court held that the petitioner could be permitted to operate the account while preserving the complainants’ and investigating authorities’ interests through a lien over the quantified disputed amount.

The Court therefore preferred a limited restraint over a blanket account freeze.

The Bank was directed to maintain a lien of Rs.2,22,500/- until further directions were issued by the authorities that had instructed the freeze.

No order as to costs was made.