Chandigarh. The Punjab and Haryana High Court on Monday questioned the legal basis of letters issued by Chandigarh Police seeking release of frozen bank accounts in the alleged ₹700 crore IDFC First Bank fraud case, despite the investigation having already been transferred to the Central Bureau of Investigation. The court directed the Union Territory administration to explain the communications and clarify the authority under which they were issued.
High Court Questions Police Role After CBI Transfer
During the hearing, the Bench orally observed that once an investigation is formally handed over to the CBI, the role of the local police becomes limited. The court expressed concern that correspondence continued from Chandigarh Police and the Union Territory administration regarding the lifting of restrictions on certain bank accounts.
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The matter came under scrutiny after it was argued that multiple accounts were allegedly involved in large-scale financial transactions linked to suspected fund diversion of nearly ₹700 crore. The court was informed that Chandigarh Police had issued communications dated May 2 and May 8 to banks and other institutions recommending release of liens or freezes on certain accounts.
Letters Issued After April 27 Transfer Under Scanner
The letters were reportedly issued after April 27, when the case had already been transferred to the CBI. Taking note of the timeline, the High Court questioned the UT administration on the legal authority behind the communications.
Counsel representing the bank argued that large-scale suspicious transactions had taken place through multiple accounts and that the alleged fraud involved systematic diversion of funds. It was submitted that any parallel administrative action after the transfer of investigation could risk affecting the integrity of the central probe.
The court directed the UT administration to submit a detailed explanation specifically regarding the letters issued on May 2 and May 8. It said any administrative action taken after the transfer of investigation must be legally justified and properly documented.
CBI Examining Transactions and Money Trail
The investigation is currently being handled by the CBI, which is examining digital transactions, banking records and suspected money trails. Preliminary assessments suggest that the alleged fraud may involve multiple layers of financial manipulation across different states, with funds routed through several bank accounts.
During the hearing, references were also made to recent Supreme Court directions concerning cyber fraud and financial crime cases, including standard operating procedures for freezing suspicious transactions and supporting recovery of defrauded amounts.
The High Court has indicated that it will examine related documents and correspondence exchanged between agencies and banks at the next hearing. The case has now raised wider questions over inter-agency coordination, jurisdictional clarity and administrative conduct in large-scale financial investigations.
