Cyber fraud investigation - Innocent account holder allowed to operate bank account partially

Gauhati High Court Directs Conditional Operation of Petitioner’s Frozen Bank Account Balance Between Cyber Crime Investigation and Rights of Innocent Account Holder Achieved

In a significant judgment aimed at balancing the rights of an innocent account holder with the ongoing investigation into cyber fraud, the Gauhati High Court has allowed M/S Nepali Cutting Meat Shop to operate its frozen bank account under specific conditions. The order came in response to a writ petition filed by the shop after its account was frozen following a complaint from the National Cyber Crime Reporting Portal (NCCRP).

Presided over by Mr. Justice Sanjay Kumar Medhi, the court directed that while the petitioner can resume operations of its current bank account, a sum of Rs. 1 lakh must be kept in lien for six months. The court emphasized that if, during this period, no evidence links the petitioner to cyber crime or fraudulent transactions, the lien would be lifted, allowing full access to the account.

The court's decision stems from the need to uphold the rights of individuals engaged in legitimate business activities while acknowledging the importance of investigating cyber fraud. The petitioner, a micro enterprise in Guwahati, had argued that its operations were severely impacted due to the blanket freeze on its account, which held a balance of over Rs. 12 lakhs. The freeze was initially placed due to a suspected fraudulent transaction amounting to Rs. 17,040, later clarified to be Rs. 20,176.

Justice Medhi, while recognizing the possible hardship faced by the petitioner, ruled that a balance must be struck between the ongoing investigation and the rights of a bona fide account holder. The court referenced similar cases adjudicated by other high courts, where it was held that entire accounts should not be frozen without quantifying the involved amounts or periods.

In addition to allowing conditional access, the court mandated the petitioner to provide a bond indemnifying the Bank of Maharashtra against any potential losses stemming from alleged fraudulent activities. This decision is seen as a crucial step in ensuring that while cyber crimes are thoroughly investigated, innocent account holders are not unduly penalized.

The judgment has been welcomed by legal experts and business owners alike, who see it as a precedent for cases where the rights of individuals and the need for thorough investigation must be carefully balanced.

Bottom Line:

Cyber Crime - Freezing of bank account - Balancing the interest of investigation and the rights of a bona fide account holder - Partial restriction on bank account operation with conditions until allegations are resolved.

Statutory provision(s): Cyber Crime, Banking, Section 106 of the Bharatiya Nagarik Suraksha Sanhita (BNSS)

M/S Nepali Cutting Meat Shop v. Bank of Maharashtra, (Gauhati) : Law Finder Doc Id # 2821783