Freezing of entire bank account for a specific suspect transaction is disproportionate and violates constitutional rights.

The petitioner, Jinat Bano, maintained a bank account with the State Bank of India (Respondent No. 1). Upon being unable to operate the account, she discovered it had been frozen by the bank.

The freeze was initiated due to a suspicious transaction involving a nominal amount of ₹560/-.

No FIR or formal notice was served to the petitioner regarding her involvement in any criminal activity.

The petitioner argued that freezing the entire account for a small disputed amount was arbitrary and violated her right to livelihood.

The respondents contended that the freeze was a necessary investigative measure to prevent the movement of funds suspected to be connected to cybercrime.

Whether the respondent bank’s action of freezing the entire bank account of the petitioner for an alleged suspicious transaction of ₹560/- was arbitrary and disproportionate.

Whether the investigating agency must establish a prima facie nexus between the account and the alleged offence before exercising the power to freeze.

The Court applied the Doctrine of Proportionality, requiring State actions affecting individual rights to adopt the least restrictive measure to achieve an objective.

It relied on the constitutional safeguards under Article 21 (Right to Life and Livelihood) and Article 19(1)(g) (Freedom of Trade).

The Court followed the precedent set in Shwetambari Vikram Bhatt v. State of Rajasthan (S.B. Criminal Writ Petition No. 1081/2026), which held that freezing an entire account when only a specific amount is under investigation is an "excessive exercise of power" and a "colourable exercise of authority".

It clarified that while investigative agencies have the power to freeze accounts, such power must be balanced against the account holder's proprietary rights.

The Court reasoned that a bank account is an "indispensable instrument" for daily financial affairs and livelihood.

While investigative agencies possess the power to preserve proceeds of crime, this power is not "unqualified" and must satisfy the tests of legality, necessity, and proportionality.

In this case, the court found a gross lack of proportionality: the bank froze the entire account over a mere ₹560/- transaction.

The Court observed that where a disputed amount is identifiable and segregatable, there is no justification for rendering the entire account inoperative.

It concluded that the "indiscriminate freezing" of accounts disrupts business and statutory duties, effectively "throttling the financial breath" of the citizen without a proven nexus to a crime.

The Court directed Respondent No. 1 to immediately remove the debit freeze on the petitioner's bank account, allowing her to operate it normally.

The bank was directed to maintain a lien/restraint specifically on the disputed amount of ₹560/-.

The petitioner was ordered to cooperate with the investigation and maintain the account in active status until the probe concluded, and all pending applications were disposed of.