Indefinite freezing of bank accounts without inquiry or establishing complicity is arbitrary and violates fundamental rights.

The petitioner’s two bank accounts (Ujjivan Small Finance Bank and IndusInd Bank) were frozen following a complaint (NCCP No. COMPLT-32907250044664-27-2025) registered on the National Cyber Crime Reporting Portal.

The complaint pertained to a transaction of Rs. 20,000 received by the petitioner from one Mr. Danabalan for visa-related services, which subsequently became the subject of a dispute.

Despite the passage of six months, no criminal case was registered against the petitioner, nor was he summoned for investigation.

1. Whether the indefinite freezing of bank accounts without an active investigation or inquiry is legally permissible.

2. Whether the total freezing of accounts for a disputed transaction of a specific, smaller amount is proportionate under the Constitution of India.

The Court applied the principles enshrined in Articles 19(1)(g) and 21 of the Constitution of India, which protect the right to livelihood and the freedom to carry on trade and business.

It further relied on the precedent set in Malabar Gold and Diamond Limited Ors. v. Union of India Ors. (W.P.(C) 4198/2025), which holds that blanket or disproportionate freezing of bank accounts belonging to individuals who are neither accused nor suspects is "manifestly arbitrary" and serves to paralyze legitimate business operations.

The Court observed that while the petitioner admitted to receiving Rs. 20,000 from the complainant, his complicity in any criminal offense had not surfaced in any investigation.

The Court reasoned that freezing entire bank accounts indefinitely without contemplating an inquiry or investigation is impermissible in law.

Applying the doctrine of proportionality, the Court found that a "blanket" freeze was unwarranted given that the petitioner was not currently a suspect.

Consequently, the Court determined that the freeze should only correspond to the disputed amount rather than the entire account balance, thereby balancing the interests of the investigating agency with the petitioner’s fundamental rights.

It directed the respondents to immediately lift the freeze on both bank accounts, subject to a lien of Rs. 20,000 maintained in the respondent no. 4-Bank.

The Court granted the investigating agency liberty to carry out investigations if material surfaces and to take fresh decisions on freezing if legally permissible.

The petition was disposed of with a direction to the petitioner to cooperate with any future investigation.