Court Upholds Proportionality in Account Freezing, Protects Fundamental Rights under Article 21
In a significant judgment, the Gujarat High Court has directed the defreezing of a bank account held by Arjun Kuruveetil Peethambaran, which was entirely frozen by the HDFC Bank, Infocity Branch, Gandhinagar, following instructions from cyber crime authorities. The court found the action of freezing the entire account, due to a small disputed amount of Rs. 1,100, to be disproportionate and unreasonable.
The case, presided over by Justice Niral R. Mehta, revolved around the freezing of Peethambaran's primary bank account, which he uses for salary deposits, household expenses, and other financial transactions. The account was frozen after two small credit transactions of Rs. 500 and Rs. 600, respectively, were flagged during a cyber crime investigation.
Peethambaran's counsel argued that he had no involvement in any alleged cyber crime and was neither an accused nor a suspect in any proceedings. Despite repeated representations, the entire account was frozen, causing him undue hardship by restricting access to his lawful earnings.
The High Court acknowledged the power of investigating agencies to freeze bank accounts during investigations but emphasized that such power must be exercised reasonably, proportionately, and lawfully. It was noted that freezing the entire account without a proper quantification of the suspected amount or establishing Peethambaran’s involvement in criminal activity violated his fundamental rights under Article 21 of the Constitution of India.
The court ordered the bank to defreeze the account, allowing operations on the remaining balance while maintaining a lien on the disputed amount of Rs. 1,100. The judgment stressed that the freezing of accounts must not cause undue hardship and should be limited to the extent necessary to safeguard the integrity of the investigation.
The decision is seen as a reinforcement of the principles of proportionality and reasonableness in exercising investigative powers, ensuring citizens' rights to livelihood and dignity are not unduly infringed upon during investigations.
Bottom line:-
Bank account freeze during investigation - Entire account cannot be frozen for a small disputed amount without establishing involvement in criminal activity - Freezing must be reasonable and proportionate to avoid undue hardship and safeguard fundamental rights under Article 21 of the Constitution.
Statutory provision(s): Article 21 of the Constitution of India
Arjun Kuruveetil Peethambaran v. Police Inspector, (Gujarat) : Law Finder Doc id # 2919639
