Court orders immediate de-freezing of accounts; emphasizes need for proportionate action and due process in cyber crime investigations.
In a significant judgment, the Allahabad High Court has ruled that the blanket freezing of bank accounts by cyber crime investigators without specifying the amount of lien or providing necessary documentation is illegal and arbitrary. The court has ordered the immediate de-freezing of the bank account belonging to Khalsa Medical Store, which had been frozen by the Cyber Crime Police Station in Rachakonda, Hyderabad.
The judgment was delivered by a division bench comprising Justices Shekhar B. Saraf and Manjive Shukla, who heard the petition filed by Khalsa Medical Store against the Reserve Bank of India and other respondents. The petitioner challenged the freezing of its account without any seizure order, FIR copy, or case details being provided to the bank by the Investigating Officer.
The court emphasized that the action taken by the Investigating Officer must be proportionate to the alleged crime proceeds and supported by the necessary documentation. It ruled that merely issuing a notice under Sections 94 and 106 of the Bharatiya Nagarik Suraksha Sanhita, 2023, to freeze an entire bank account without specifying the amount for lien, or failing to inform the jurisdictional Magistrate within 24 hours, renders the action void and unjustified.
The bench referred to several precedents, including judgments from the Supreme Court and other High Courts, that highlight the necessity of reasonable belief and due process in such cases. Notably, the court cited the Supreme Court's ruling in State of Maharashtra v. Tapas D. Neogy, which recognizes a bank account as property that can be seized under suspicion of an offence. However, it stressed that such actions must be backed by concrete evidence and proper procedure.
The court laid down specific guidelines for freezing bank accounts in cyber crime investigations. These include the requirement for the Investigating Officer to specify the amount for lien in the notice, provide a seizure order and FIR copy to the bank, and inform the jurisdictional Magistrate promptly. It also underscored that banks and financial institutions must not freeze accounts without receiving the necessary documentation from law enforcement agencies.
In the present case, the court found that the Investigating Officer failed to furnish any documents to the bank, leading to the freezing of the entire account of the petitioner. This was deemed a violation of due process and the petitioner's rights. The court quashed the impugned notice and directed the concerned banks to immediately de-freeze the accounts, allowing the petitioner to resume normal banking activities.
This judgment reinforces the importance of adhering to legal procedures in cyber crime investigations and safeguards individuals and businesses from arbitrary actions that could impact their financial operations and rights.
Bottom Line:
Cyber Crime - Blanket freezing of entire bank account without specifying the amount of lien or providing seizure notice, FIR copy, or case details to the bank is illegal and arbitrary.
Statutory provision(s): Bharatiya Nagarik Suraksha Sanhita, 2023 Sections 94 and 106
