Freeze Bank Accounts During Investigation: High Court Clarifies Police Powers

Case Title: Marufa Begum v. Union of India (Neutral Citation: 2025:AHC:190289-DB).

Introduction

In a notable reaffirmation of investigative authority, the Allahabad High Court has determined that police officials are entirely authorised to instruct banks to freeze accounts believed to be involved in criminal activities. The Court additionally specified that a dissatisfied account holder should obtain relief from the Magistrate, rather than through writ jurisdiction under Article 226 of the Constitution.

A Division Bench led by Justice Swarupama Chaturvedi and Justice Ajit Kumar rejected a writ petition submitted by a government school teacher whose savings account at Bank of Baroda was frozen following a suspicious transaction that caught the Cyber Crime Department's attention. The petitioner requested the prompt defreezing of her account and authorisation to access her funds.

Police Can Freeze Bank Accounts Under Statutory Powers

The Bench clearly stated that police officers can direct the freezing of bank accounts during an investigation if they suspect the funds are linked to a crime.

The Court noted:

“If during investigation the police concludes that a bank account is connected with a suspicious transaction, it can always direct the bank to freeze such account.”

The Court observed that this authority comes directly from Section 102 CrPC, which has now been re-enacted as Section 106 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), permitting the confiscation of property during investigations. As a bank account is regarded as "property," law enforcement can freeze it without prior Magistrate orders—only notifying the Magistrate of the seizure is required.

The judgement additionally depended on the Supreme Court’s ruling in Teesta Atul Setalvad v. State of Gujarat (2018), which affirmed comparable freezing measures as legitimate uses of investigative power.

Suspicious Transaction Triggered Action

The petitioner claims she worked as a teacher at Prathmik Vidyalaya in Sakhadha, District Kaushambi, and her salary was consistently deposited into her savings account at Bank of Baroda. On September 1, 2022, ₹35,000 was deposited from an unidentified account held at Federal Bank, Gujarat.

Soon after, the bank froze her account at the request of the Cyber Crime Department, which found the transaction questionable. The petitioner asserted unfamiliarity with the sender and contested the freezing via a writ petition.

Bank Acted Lawfully, Says High Court

The Bench ruled that the Bank of Baroda only followed the legitimate directives of the investigating authorities and did not act autonomously or capriciously.

The Court observed:

“The respondent bank acted in accordance with law pursuant to the request made by the Cyber Crime Department.”

Since the freezing was associated with a continuing investigation, the High Court noted that the appropriate action for the petitioner would be to pursue a remedy from either the investigating officer or the Magistrate, especially after the chargesheet is submitted.

Writ Jurisdiction Not Invocable When Remedies Exist

Emphasising that writ jurisdiction is an exceptional and discretionary remedy, the Court chose not to intervene.

It mentioned that: 

• The petitioner had appropriate legal remedies accessible. 

• The freezing wasn't inherently unlawful or capricious. 

• The High Court cannot replace investigative or judicial authorities. 

Consequently, the Court determined "no basis to invoke the extraordinary jurisdiction" per Article 226 and filed the petition, allowing the option to seek remedies permitted by law.

Way forward: A Well-Reasoned Reinforcement of Investigative Powers, Lawttorney’s Perspective

From a legal-tech and procedural clarity perspective, this ruling reinforces a vital principle: investigative effectiveness must not be hindered by procedural obstacles, particularly in the age of digital finance and swift cybercrime growth.

Lawttorney’s Viewpoint

This ruling corresponds with the contemporary requirement to strengthen investigative bodies while maintaining the individual’s entitlement to due process. What is notable is the Court’s measured stance, while recognising the police’s legal power to freeze accounts, it explicitly safeguards the citizen's right to pursue relief before a Magistrate.

In cases of cyber fraud, questionable transactions, and online financial crimes, promptly freezing accounts can mean the difference between recovering funds and permanent loss. Simultaneously, procedural protections allow innocent account holders to contest these actions.

Lawttorney.ai asserts that this ruling offers essential clarity for lawyers, fintech companies, cybercrime divisions, and banks. Through accurate legal interpretation and a reaffirmation of investigative authority under the BNSS framework, it establishes a definite guideline for comparable cases going forward.

By utilising AI-driven tools to examine these judgements daily, Lawttorney guarantees that legal experts obtain immediate summaries, legal references, and comparisons to case law, improving both precision and effectiveness in legal strategy.

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