Delhi High Court: A petition was filed by aggrieved by Neelkanth Pharma Logistics Pvt Ltd (petitioner) the way its account has been frozen by respondent No.2 Bank (HDFC Bank) arguing that such an indiscriminate freeze had significantly disrupted its business operations. Manoj Jain, J.
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The bank’s action was based on a communication dated 29-11-2024, received from Vartaknagar Police Station, Thane, which instructed the bank to debit-freeze the petitioner’s account. As a result of this freezing, the petitioner, which had a significant withdrawable balance of INR 93,50,05,208, faced severe financial difficulties, including the dishonouring of issued cheques and complete disruption of business operations.
The freezing of the petitioner’s account stemmed from a cyber-crime investigation being conducted by the police. The communication from the police mentioned an amount of INR 200 credited to the petitioner’s account, which was under suspicion. However, the petitioner contended that it was neither an accused nor a suspect in any cyber-crime case and that the freezing of the entire account, instead of merely preserving the disputed sum, was an extreme and unjustifiable measure.
During the pendency of the petition, the investigating agency issued a subsequent communication on 29-01-2025, directing the bank to remove the debit-freeze on the account while marking a lien of INR 200. Considering this development, the petitioner submitted that its primary grievance had been addressed and expressed its intention not to press the petition further, reserving its right to seek appropriate legal remedies concerning specific aspects of the case.
The Court noted a broader issue of indiscriminate bank account freezing by investigating agencies. The Court highlighted the recurring nature of such disputes and emphasized the need for law enforcement agencies to exercise discretion with care, caution, and compassion.
The Court acknowledged that investigating agencies have the legal authority to direct the freezing of bank accounts during investigations. However, it found that in many instances, these agencies fail to provide adequate justification for their actions, leading to disproportionate hardships for account holders who may not even be accused of any wrongdoing.
The Court particularly criticized the blanket freezing of accounts based on minuscule transactions linked to cyber-crimes. It pointed out that instead of freezing entire accounts, law enforcement should explore alternative measures such as marking a lien on the specific disputed amount. Relying on Pawan Kumar Rai v. Union of India, 2024 SCC OnLine Del 8936, where it had previously ruled that freezing an entire account without any indication that the account holder was complicit in cyber-crime violated fundamental rights, including the right to livelihood under Article 21 of the Constitution.
The Court remarked that “the possibility of marking a lien on disputed amount, whenever it is identifiable, should be explored as a more appropriate interim measure. Ideally, it should be the first and foremost option. This would, naturally, mitigate the undue hardship being caused on account of blanket freezing of account and would also ensure that the alleged cheated money remains secured and intact.”
Additionally, the Court referred to similar observations made by the Kerala High Court in Dr. Sajir v. Reserve Bank of India, 2023 SCC OnLine Ker 9087 and Abdul Basith v. Cyber, Economic & Narcotic Crime, 2025 SCC OnLine Ker 83, wherein it was held that unless an account holder was proven to be complicit in a crime, their entire bank account should not be frozen merely because a suspicious transaction was traced to it.
Recognizing the increasing frequency of such cases, the Court recommended that the Ministry of Home Affairs, Government of India, formulate a uniform policy and standard operating procedures (SOPs) in consultation with all stakeholders, including State/UT law enforcement agencies.
Thus, the Court directed that a copy of its order be forwarded to the Secretary, Ministry of Home Affairs, for necessary action. The Court disposed of the petition as not pressed, granting the petitioner liberty to seek appropriate legal remedies regarding unresolved concerns.
[Neelkanth Pharma Logistics Pvt Ltd v. UOI, W.P.(C) 17905/2024, decided on 20-02-2025]
Advocates who appeared in this case :
Mr. Preetam Singh, Advocate for petitioner
Mr. Premtosh K. Mishra, CGSC for UOI with Mr. Manish Vashist, Ms. Ms. Sanya Kalsi, Advocates and Gokul Sharma, G.P. Ms. Ritika Sisodiya, Advocate for respondent No.2/HDFC.
Mr. Ramesh Babu with Ms. Tanya Choudhary and Mr. Rohan Srivastava, Advocates for RBI.
