Freezing entire bank account for single disputed transaction is disproportionate; restraint must be limited to disputed amount.

The Petitioner, a homemaker, maintained a Public Provident Fund (PPF) account with the State Bank of India.

On June 17, 2023, the Respondent Bank froze her entire account balance (approximately ₹55,000) following instructions from the Gujarat Police regarding a single disputed UPI transaction of ₹20,000.

The Petitioner contended that the ₹20,000 was a bona fide debt repayment from an acquaintance and that freezing the entire account for a partial dispute caused severe financial hardship.

The State argued that the freeze was part of a lawful investigation into a cyber complaint and involved disputed facts beyond writ jurisdiction.

1. Whether the indefinite freezing of an entire bank account for a single disputed transaction of a lesser value is arbitrary and violative of Articles 14 and 21 of the Constitution of India.

2. Whether the Court can balance the interests of a pending investigation with the fundamental rights of an account holder by restricting a freeze to the specific disputed amount.

The Court applied the principles of fairness, reasonableness, and proportionality under Articles 14 and 21 of the Constitution of India.

It recognized the statutory power of investigating agencies to preserve the subject matter of an investigation (typically under Section 102 of the CrPC/Section 106 of BNSS), but held that such power must not be exercised indefinitely or in a manner that causes disproportionate hardship.

The Court followed the doctrine of balancing competing interests—specifically, the state's interest in investigation versus the citizen's right to livelihood and property.

The Court reasoned that while investigating agencies are empowered to preserve evidence or proceeds of crime, freezing an entire account for a localized dispute has "serious civil consequences".

The Court found that if the alleged illegal transaction is limited to a specific sum (₹20,000), restraining the remaining balance (the excess of ₹35,000+) lacks justification.

By applying the test of proportionality, the Court determined that the interests of the investigation could be secured by maintaining the freeze only on the disputed amount, thereby allowing the Petitioner to access her remaining personal funds for day-to-day requirements.

It ordered the immediate de-freezing of the remaining balance to allow the Petitioner to operate the account without restriction.

The Petitioner was granted liberty to approach the competent authority to prove the legitimacy of even the frozen ₹20,000.

No compensation was awarded.