The Rajasthan High Court has issued important guidelines to prevent the blanket and indefinite freezing of bank accounts during investigations into cybercrime cases.
The Court emphasised that while investigating agencies have the power to freeze or place restrictions on bank accounts connected with suspected cyber fraud, such powers must be exercised carefully and proportionately. A person’s entire bank account cannot be paralysed merely because a disputed or suspicious transaction has passed through it.
The Court observed that freezing a bank account can have serious consequences for an account holder, particularly where the person is not directly involved in the alleged cyber offence.
The Court therefore stressed the need for investigating agencies to distinguish between the amount allegedly connected with the offence and the legitimate balance belonging to the account holder.
According to the Court’s approach, where only a particular amount is suspected to be linked to a cybercrime, the investigating agency should ordinarily restrict its action to that amount rather than freezing the entire account.
The Court also emphasised the importance of informing the concerned bank and following the prescribed legal procedure while seeking restrictions on an account.
The guidelines are intended to ensure that investigative powers are not converted into a mechanism for causing unnecessary hardship to innocent account holders.
The Court recognised that cybercrime investigations often require immediate action because money can quickly move through multiple accounts. However, urgency in investigation does not mean that constitutional and procedural safeguards can be ignored.
The judgment therefore seeks to strike a balance between effective investigation of cyber financial fraud and protection of the property and livelihood interests of persons whose accounts become connected with suspicious transactions.
The Court’s approach reinforces the principle that:
Bank accounts cannot be frozen mechanically or indefinitely.
Investigating agencies must have a reasonable basis for restricting an account.
The alleged suspicious amount should be distinguished from the account holder’s legitimate funds.
Procedural safeguards must be followed while freezing or restricting accounts.
Innocent account holders should not suffer disproportionate consequences merely because their accounts appear somewhere in the transaction trail.
Investigative action must remain proportionate to the suspected offence.
The ruling is particularly significant in the growing number of cybercrime investigations where victims’ money passes through several intermediary accounts before being traced by the police.
The Rajasthan High Court’s guidelines therefore reinforce an important principle:
”the power to freeze a bank account is an investigative tool, not a licence to indefinitely deprive an account holder of access to his or her legitimate money.“
