Judicial Remedies Against Bank Account Freezing in Alleged Cyber Crimes: The Role of High Courts in India

Abstract
This article critically examines the evolving judicial perspective on the freezing of bank accounts in India following allegations of cyber crime. Drawing from landmark rulings of the Gauhati, Kerala, Delhi, and Madras High Courts, it highlights the emerging legal standards that aim to protect the fundamental rights of individuals and businesses while ensuring effective investigation.
Introduction
The exponential rise in digital transactions has seen a corresponding spike in cyber frauds. As a preventive response, police authorities and cyber crime cells frequently issue requests to banks to freeze accounts suspected of receiving fraudulent proceeds. However, this power is susceptible to overreach, leading to adverse consequences for innocent recipients. Courts across India are increasingly called upon to balance law enforcement with constitutional safeguards.
1. Gauhati High Court: Judicial Restraint and Practical Relief
In M/s Yashoda and Sons Energy Station v. Punjab National Bank & Ors. [WP(C)/1401/2025], Hon'ble Mr. Justice Arun Dev Choudhury of the Gauhati High Court addressed the freezing of a bank account due to a suspected fraudulent transaction of Rs. 1,32,700/-. Acknowledging that the bank did not dispute the amount in question and was agreeable to a lien, the Court permitted the petitioners to operate their account subject to retaining a lien of Rs. 1,32,700/-. The judgment represents a fair middle ground between investigative imperatives and the rights of the account holder.
2. Kerala High Court: Advocating Policy Reforms and Proportionality
Justice Devan Ramachandran’s batch ruling in Dr. Sajeer & Others v. Reserve Bank of India & Others [2023 SCC OnLine Ker 9087] dealt with multiple petitions where accounts were frozen based on third-party transfers through UPI. The Court found such actions excessive, particularly when the amount involved was identifiable. It recommended preserving only the suspected amount and allowing operational use of the rest. This decision also encouraged the formulation of Standard Operating Procedures (SOPs) to protect small businesses and individual account holders.
3. Delhi High Court: Emphasizing Due Process and Fundamental Rights
In Neelkanth Pharma Logistics Pvt. Ltd. v. Union of India [W.P.(C) 17905/2024], the Delhi High Court examined a case where a corporate account with over Rs. 93 crore was frozen due to a Rs. 200 transaction under investigation. Justice Manoj Jain noted the disproportionate impact of freezing entire accounts and emphasized the need for investigating agencies to apply discretion, provide justifications, and consider less intrusive alternatives like marking a lien.
4. Madras High Court: Limiting Overreach by Investigating Authorities
In Mohammed Saifullah v. Reserve Bank of India [2024 SCC OnLine Mad 5604], the Madras High Court reiterated that indefinite or total freezing of accounts violates Articles 14, 19(1)(g), and 21 of the Constitution. The Court permitted the petitioner to operate the account while maintaining a lien of Rs. 2,50,000 — the amount suspected to be involved. The judgment emphasized adherence to prior circulars and judicial directions while executing such intrusive actions.
Judicial Trends: A Synthesis
From the above rulings, a few common doctrines are beginning to crystallize:

- Proportionality Principle: Only the amount reasonably suspected to be tainted should be frozen.
- Due Notice: Account holders should be informed of the reasons for freezing.
- Judicial Review: Remedies under Article 226 ensure accountability of administrative actions.
- Rights-Conscious Policing: Investigating agencies must balance crime control with individual liberties.
Conclusion
The intervention of High Courts in account-freezing cases marks a necessary judicial evolution in India’s response to cyber crime. While law enforcement must act swiftly to prevent financial loss, this cannot be at the cost of fundamental rights. Going forward, the Ministry of Home Affairs and the Reserve Bank of India must work collaboratively to develop unified protocols that codify the principles laid down in these judgments, ensuring procedural fairness while securing financial systems from abuse.