No Blanket Freezing of Bank Accounts in Cyber Crime Cases: Allahabad High Court

The Allahabad High Court recently set aside a debit-freeze imposed on the bank account of Khalsa Medical Store, holding that cyber crime investigators cannot order a blanket freezing of an entire bank account without following the procedure mandated under the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023.

A division bench of Justice Shekhar B. Saraf and Justice Manjive Shukla quashed a notice issued by the Cyber Crime Police Station, Rachakonda, Hyderabad, which had directed Axis Bank to freeze the petitioner’s account under Sections 94 and 106 of BNSS in connection with a cyber crime FIR lodged in 2025.

The petitioner, Khalsa Medical Store, represented through its proprietor Yashwant Singh, had approached the court after its Axis Bank account was completely debit-frozen based on a notice dated November 21, 2025. The notice alleged that the account had been used for fraudulent transfers of money from a victim’s account and sought extensive banking and digital transaction details from the bank.

During the hearing, Axis Bank informed the court that while it had received the freeze notice, it had not been supplied with any seizure order, copy of the FIR, or even an indication of the specific amount alleged to be linked to the offence. The bank also placed on record that it had written several times to the Investigating Officer seeking clarification, but no response was received.

Notably, despite repeated notices issued by the court, no one appeared on behalf of the Investigating Officer from the Cyber Crime Police Station.

After a detailed examination of Sections 94 and 106 of BNSS, which correspond to the powers of seizure and production of documents and relying on Supreme Court precedents, including State of Maharashtra v. Tapas D. Neogy, court reiterated that a bank account constitutes “property” and can be seized or its operation restricted during investigation. However, it emphasised that such power cannot be exercised arbitrarily or on mere suspicion.

Court also referred to later Supreme Court judgments, including Teesta Atul Setalvad v. State of Gujarat (2018) and Nevada Properties (P) Ltd. v. State of Maharashtra (2019), which clarify that while prior notice to an account holder is not mandatory before freezing an account, a post facto intimation to the jurisdictional magistrate is compulsory. Further, the power of freezing must be guided by “reasonable belief” and not be used as a tool to indiscriminately interfere with financial transactions.

Drawing from decisions of the Rajasthan High Court and Kerala High Court in cybercrime-related account freezing cases, the bench laid down clear principles governing such actions.

Court held that bank accounts cannot be frozen on mere suspicion; such action must be backed by reasonable belief linking the account to a cyber crime. Investigating officers must clearly mention the specific amount suspected to be proceeds of crime and may seek a lien only to that extent, court directed. 

Court stressed that a blanket freeze of the entire bank account is impermissible and cannot be ordered as a routine measure.

Adding to these, court directed that Police must provide banks with basic case details, including a copy of the FIR or complaint, while seeking freezing or lien on an account.

Moreover, court clarified that banks are entitled to decline freezing requests that are vague or unsupported by proper documentation.

Court held that once a freezing or lien request is issued, the investigating officer must inform the jurisdictional magistrate within 24 hours, failing which the action may be rendered illegal and void. It cautioned that banks acting on police directions without ensuring compliance with due process could face civil and criminal liability for the financial and reputational harm caused to account holders. Court further clarified that even in urgent cases, investigators are required to furnish banks, within a few days, with the seizure order, FIR details and the exact amount sought to be frozen

Applying these principles to the facts of the present case, court found that the impugned notice suffered from multiple infirmities. It neither specified the amount allegedly connected to the offence nor enclosed the FIR. There was also no material to show that the jurisdictional magistrate had been informed within the prescribed time.

Accordingly, the High Court quashed the impugned notice and directed the banks concerned to immediately de-freeze the petitioner’s account and allow normal banking operations. Liberty was, however, granted to the investigating agency to proceed afresh in accordance with law, if warranted.

Case Title: Khalsa Medical Store Thru. Prop. Yashwant Singh vs. Reserve Bank Of India Thru. Governor And 3 Other

Judgment Date: January 19, 2026

Bench: Justice Shekhar B. Saraf and Justice Manjive Shukla