Indiscriminate Freezing Of Bank Accounts Of Non‑Accused Violates Articles 19(1)(g), 21: Delhi High Court

The Delhi High Court has held that blanket and disproportionate freezing of bank accounts, especially where the account holder is neither an accused nor even a suspect, is “manifestly arbitrary” and violates Articles 21 and 19(1)(g) of the Constitution of India.“….any blanket or disproportionate freezing of bank accounts, particularly where the account holder is neither an accused nor even a suspect in the offence under investigation, is manifestly arbitrary, and in the teeth of the fundamental rights under Article 19(1)(g) and 21 and of the Constitution of India, which encompass the right to livelihood and freedom to carry on trade and business,” Justice Purushaindra Kumar Kaurav said. “Such indiscriminate debit freezing, without any finding of complicity, has the inevitable effect of paralysing the day-to-day business operations of an otherwise innocent entity, resulting in loss of commercial goodwill and financial consequences, thereby subjecting a non-complicit account holder to punitive consequences,” the Court held. Justice Kaurav was dealing with a plea filed by Malabar Gold and Diamond Limited challenging the Union Government's action of issuing communications to two banks whereby the bank accounts of the company were directed to be put on hold or frozen.In 2024–25, Malabar Gold dealt with a customer called Dallas E‑com Infotech Pvt. Ltd., doing gold transactions of about Rs. 14.2 crore. Later, some people complained against the said customer for fraud or cyber‑crime, but there was no FIR or complaint against Malabar Gold.The agencies then told the two banks to put certain amounts in Malabar Gold's accounts “on hold” or freeze them, treating them as suspected proceeds of crime.By March 28 last year, about Rs. 80,10,857 in Malabar Gold's bank accounts had been frozen, even though the company was not shown as accused or even a suspect. Because of the said action, Malabar Gold said it could not use its own money to pay salaries or meet daily business expenses.Granting relief to Malabar Gold, the Court noted that there was no complaint against Malabar Gold and that the authorities were not been able to demonstrate any complicity to the said company.“In the absence of any complicity of the petitioners, the continued freezing and withholding of various amounts have caused prejudice to the petitioners and have disabled the petitioner No. 1 from using its funds for paying requisite salaries of employees and meeting their other day-to-day expenses to ensure the smooth running of their business,” the judge said. It directed that Malabar Gold's bank accounts be defeeezed forthwith. The Court said it any enforcement or investigating agency proposes to initiate or is conducting an investigation against the company, it shall be at liberty to do so in accordance with the provisions of the BNSS, noting that Malabar Gold undertook to fully cooperate with such investigation.Title: MALABAR GOLD AND DIAMOND LIMITED & ORS v. UNION OF INDIA & ORSCitation: 2026 LiveLaw (Del) 166Click here to read order

Indiscriminate Freezing Of Bank Accounts Of Non‑Accused Violates Articles 19(1)(g), 21: Delhi High Court

Nupur Thapliyal

This is a premium content
Available exclusively to
Our subscribers

INR 1099+GST

Tags

Indiscriminate Freezing Of Bank Accounts Of Non‑Accused Violates Articles 19(1)(g), 21: Delhi High Court

Nupur Thapliyal

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

Tags

This is a premium content
Available exclusively to
Our subscribers