Recently, the Delhi High Court addressed a petition challenging the freezing of a small vendor’s bank account after a minimal amount linked to a cyber fraud was deposited. The petitioner, a vendor selling food items in Ashok Vihar, Delhi, argued that the freezing of his entire account was unjustified, as he had no involvement in the fraud and was unaware of the deposit. The Court observed that freezing an entire bank account without clear evidence of complicity violated the petitioner’s fundamental right to livelihood and directed the bank to defreeze the account with a lien only on the disputed amount.
The petitioner, a small-time vendor in Ashok Vihar, Delhi, was shocked to find his savings bank account frozen on October 1, 2024. Upon inquiry, he learned that a sum of Rs. 105 had been deposited into his account, which was linked to an ongoing cyber-fraud investigation. He claimed no knowledge or involvement in the fraud and was distressed that the bank had frozen his entire account without prior notice or hearing. At the time of freezing, the account had a balance of Rs. 1,22,556, leaving the petitioner unable to access his funds for his daily needs. The petitioner argued that the freezing of the entire account, without a proper investigation or following principles of natural justice, was illegal.
The petitioner contended that the bank’s action was a violation of his rights as no prior notice was issued to him before freezing the account. He further argued that the Investigating Agency had not informed the concerned Magistrate or Court about the freezing of the account, as required by Section 102 of the Cr.P.C. (now Section 106 of the Bharatiya Nagarik Suraksha Sanhita, 2023). The petitioner also stated that the bank could have only placed a lien on the Rs. 105 credited to his account, rather than freezing the entire balance, which caused severe hardship in his daily livelihood. Additionally, the petitioner pointed out that he had not been contacted by the Investigating Agency to join the investigation. Whereas, the respondent bank submitted that they had frozen the account based on a communication received from the Anantapur IV Town Police Station, Andhra Pradesh, regarding a UPI-related fraud. The bank's counsel admitted that no further communication had been received from the police. While the bank confirmed the freezing order, it acknowledged that only Rs. 105 was linked to the fraud, and the rest of the amount in the account appeared unconnected to the investigation.
The Court acknowledged the petitioner’s hardship due to the freezing of his account, particularly as he was a small-scale vendor dependent on daily earnings. The Court emphasized that the freezing of an entire bank account, without clear evidence of the petitioner’s involvement in the cybercrime, was excessive and violated the petitioner’s right to livelihood under Article 21 of the Constitution of India. The Court noted that the Investigating Agency had flagged only a sum of Rs. 105 deposited in the petitioner’s account, yet the entire account was frozen. There was no evidence at this stage indicating that the petitioner was involved in the fraud or was a part of any conspiracy. The Court observed that while the Investigating Agency had the power to freeze accounts in appropriate cases, the freezing of an entire account was unjustified, especially when only a small sum was involved and no complicity had been proven.
The Court emphasised that such actions not only affected the petitioner’s right to earn his livelihood but also created unnecessary hardship. It noted that freezing the full account was disproportionate, as the petitioner was likely an unintended beneficiary of the deposit, and there was no indication that the petitioner had knowingly received the money as part of any illegal activity.
The Court, in light of the above observations, directed the respondent bank to lift the freeze on the petitioner’s entire account, allowing him to access his funds. However, the Court imposed a lien on the disputed sum of Rs. 105, ensuring that the amount connected to the fraud remained secured. This decision was made to safeguard the petitioner’s right to livelihood while also addressing the concerns of the Investigating Agency. The Court ordered the bank to inform the concerned Investigating Agency and send a copy of the order. The petition was disposed of with this direction, allowing the petitioner to resume his business and access his bank account without unnecessary encumbrances.
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