Jabalpur: In a significant ruling addressing the growing practice of freezing entire bank accounts over cyber fraud complaints, the Madhya Pradesh High Court has issued 23 comprehensive guidelines for banks and investigating agencies. The Court held that freezing an entire bank account is an “extraordinary measure” that should be adopted only in exceptional circumstances. Where the allegedly fraudulent amount can be specifically identified, only that amount should be placed under lien or debit freeze, while the remaining balance should be allowed to operate normally.
The order was passed by a single bench of Justice Himanshu Joshi while hearing a petition filed by Archana, a liquor contractor from Narmadapuram. Her current account, holding approximately ₹2.51 crore, had been frozen following a cyber fraud notice issued under Section 106 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023. However, the disputed transaction amounted to only ₹980. Although the petitioner had agreed to keep the disputed amount under lien, the continued freezing of the entire account allegedly brought her business to a standstill and affected her ability to meet statutory and contractual obligations.
The petitioner argued that freezing the entire account without prior notice or an opportunity to be heard was arbitrary, disproportionate and violative of her constitutional rights under Articles 14, 19(1)(g) and 300-A. The State, on the other hand, contended that preserving the proceeds of crime is essential in view of the increasing incidence of cyber fraud and that the account could not be released solely because the disputed amount was small.
During the hearing, the High Court also took note of the Standard Operating Procedure (SOP) issued by the Union Ministry of Home Affairs on April 10, 2026, governing grievance redressal for bank accounts frozen through the National Cyber Crime Reporting Portal (NCRP) and the Cyber Fraud Complaint and Financial Fraud Risk Management System. The Court observed that across the country, numerous account holders have had their entire bank accounts frozen even when the disputed amount represents only a tiny fraction of the account balance. It stressed the need to strike a balance between the State’s investigative powers and citizens’ constitutional rights to property, livelihood and business.
The Court ruled that wherever the allegedly tainted amount is identifiable, only that amount should be placed under lien or debit freeze. An order freezing the entire account should be issued only where such a limited restriction would be insufficient to protect the investigation. In such cases, the investigating officer must record detailed written reasons explaining why a lien on the disputed amount alone would not be adequate.
To streamline the process, the High Court laid down 23 detailed guidelines governing the entire lifecycle of a frozen account. Under the directions, banks must promptly inform customers about the freezing action and assist them in filing grievances. Banks are required to forward such grievances to the investigating agency within seven days, while investigating officers must decide them within 15 days. If an order is passed to release the account, it should preferably be implemented within 48 hours.
The Court further directed that if no valid objection or decision is received within 90 days, the bank shall remove the freeze after giving 15 days’ prior notice to the investigating agency. It also cautioned that a bank account cannot remain frozen indefinitely based solely on suspicion. Investigating officers must periodically review whether the continued restriction remains necessary and proportionate.
Renowned cybercrime expert and former IPS officer Prof. Triveni Singh said that while safeguarding suspected proceeds of cybercrime is essential, the rights of genuine account holders and legitimate businesses must be equally protected. According to him, the High Court’s emphasis on lien-based restrictions, proportionality and periodic review provides a balanced framework that strengthens both cybercrime investigations and financial fairness.
Disposing of the petition, the High Court directed the respondent authorities to reconsider the petitioner’s representation strictly in accordance with the SOP and the newly issued guidelines and to pass a reasoned order if the freeze on the entire account is to continue. The State has also been directed to circulate the judgment to all banks, police stations, cybercrime cells and investigating agencies to ensure uniform implementation until formal statutory rules are introduced.
