Must Balance Cyber Fraud Probe With Interest Of Innocent Account Holder: Gauhati HC Permits Conditional Operation Of Frozen Bank Account

The Gauhati High Court has held that a blanket freezing of a bank account pursuant to a cyber crime complaint cannot continue indefinitely and that the interest of investigation must be balanced with the rights of a bona fide account holder. Justice Sanjay Kumar Medhi, presiding over the case, observed, “After giving an anxious thought to the rival contentions, this Court is of the opinion that the equities would be balanced and interest of justice would be served if a direction is given to allow the petitioner to operate the aforesaid current bank account with certain conditions. This Court is also of the view that in a given case, a balance is required to be struck between the interest of the investigation on cyber fraud which is creating a menace and the interest of a bona fide and innocent account holder.” The above ruling was made in a civil writ petition as per the factual matrix of which, the petitioner - M/S Nepali Cutting Meat Shop - a micro enterprise was engaged in selling meat at Maligaon, Gauhati, and has been maintaining a current account with the respondent bank since October 2024. The petitioner stated that despite having a credit balance of over ₹12 lakhs, it was unable to carry out debit transactions from January 2025 onwards. Upon enquiry, the petitioner was informed that the account had been frozen on the basis of a complaint received through the National Cyber Crime Reporting Portal (NCCRP). The petitioner further approached the Banking Ombudsman, RBI, but the complaint was rejected by an email. The petitioner contended that it was running a lawful business and that the freezing of the account was done without any notice, causing serious prejudice to its day-to-day operations. It was also pointed out that, as reflected in the bank's own affidavit, the amount allegedly involved in the complaint was only a small sum. The bank, on the other hand, submitted that the action was taken pursuant to NCCRP inputs and that the exact magnitude of the alleged fraudulent transaction could not be conclusively determined at that stage. It was argued that any relief, if granted, should be subject to conditions. The Court noted that the freezing of the account was triggered by the NCCRP complaint and that, as per the bank's affidavit, the amount reflected was ₹17,040, though it was later stated to be ₹20,176. Taking note of the rival submissions, the Court held that a complete freezing of the account was not justified in the facts of the case and proceeded to issue specific directions. It ordered: “This Court, accordingly directs that while the petitioner would be allowed to operate the aforesaid account, an amount of Rs. 1 lakh (Rupees One Lakh) only be kept in lien till a period of 6 months. If in this period of 6 months, there is no material to link the petitioner either with the cyber crime or with any fraudulent transactions, the aforesaid lien on the amount of Rs. 1 lakh would cease and the petitioner would be allowed to operate the aforesaid account without any restriction.”“The petitioner is also required to give a Bond to indemnify the respondent-Bank for any loss which may be suffered because of any illegal or fraudulent activity of the petitioner involving the aforesaid bank account,” it further ordered. The writ petition was disposed of in the above terms. Case Number: WP(C) No. 2288 of 2025 Case Title: M/s Nepali Cutting Meat Shop v. Bank of Maharashtra & Ors.Citation: 2025 LiveLaw (Gau) 73Click Here To Read Judgement

Must Balance Cyber Fraud Probe With Interest Of Innocent Account Holder: Gauhati HC Permits Conditional Operation Of Frozen Bank Account

Bhavya Singh

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Bhavya Singh

Must Balance Cyber Fraud Probe With Interest Of Innocent Account Holder: Gauhati HC Permits Conditional Operation Of Frozen Bank Account

Bhavya Singh

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Bhavya Singh

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