Allahabad High Court on Cyber Crime Investigations and Freezing of Bank Accounts

Background of the Writ Petition

The matter in Marufa Begum Vs Union of India And 5 Others (Allahabad High Court) arose from a challenge under Article 226 of the Constitution to the freezing of a savings bank account held with Bank of Baroda. The assessee, who was working as a Shikshamitra (Teacher), maintained her salary account with Bank of Baroda, Branch Imamganj, Mooratganj, District Kaushambi.

An amount of ₹35,000 was credited on 01.09.2022 to this account from an account maintained with Federal Bank. Immediately thereafter, the assessee’s bank account was frozen. On making inquiries with the bank officials, she was orally informed that:

  • The remittance of ₹35,000 had been made by one Mustaq Ali from a Federal Bank account in Gujarat, and
  • The Anand Cyber Crime Branch, Gujarat Police had instructed the bank to block her account in connection with the said transaction.

The assessee asserted that she had no acquaintance with the remitter and no connection with the underlying transaction that triggered the police action.

She submitted written representations to the Bank of Baroda, asserting her lack of involvement and requesting that her account be de-frozen so she could operate it and withdraw her lawful funds. She also personally approached bank authorities for redress, but the freeze continued.

In response, the assessee filed a writ petition before the Allahabad High Court seeking:

  • A writ of mandamus directing Bank of Baroda to de-freeze Savings Bank Account No. 43390100002893,
  • Permission to withdraw the funds standing to her credit in the said account.

Stand of the Respondent Bank

Counsel representing the respondent bank stated, on the basis of instructions, that:

  • The freezing of the account was not a unilateral act of the bank. It was done pursuant to a formal request and direction from the Cyber Crime Department, Anand, Gujarat.
  • The account was treated as “property” related to an ongoing criminal investigation.
  • Without either:
    • Prior clearance or specific instruction from the Cyber Crime Department, or
    • An order from a competent court of law,
      the bank was not in a position to de-freeze the account.

Thus, Bank of Baroda took the position that it was legally constrained from acting on the assessee’s request in isolation, given that the account had been brought within the scope of an active investigation.

Position of the State Respondents

The State authorities, represented by the learned Additional Chief Standing Counsel, opposed the reliefs prayed for in the writ petition. They emphasised that in matters where a bank account is blocked in connection with a criminal investigation, the core legal test is whether the investigating officer’s action aligns with the procedure laid down under Section 106 of the Bharatiya Nyaya Suraksha Sanhita, 2023 (BNSS), which corresponds to Section 102 of the Code of Criminal Procedure, 1973 (CrPC).

The State relied heavily on the judgment of the Supreme Court in Teesta Atul Setalvad vs. The State of Gujarat (2018) 2 SCC 372, wherein the Court had clarified that:

  • If the investigating officer complies with the statutory procedure under Section 102 CrPC (now Section 106 BNSS),
  • Then the consequent freezing of a bank account is a legally sustainable measure.

Thus, the State contended that so long as the police had material raising suspicion of an offence and they had duly acted under the said provision, the High Court should not interfere in writ jurisdiction merely because the assessee’s account had been frozen during the course of investigation.

Issues Considered by the High Court

Upon hearing counsel for the assessee, the bank and the State, and after examining the records, the Allahabad High Court recorded that the basic facts were not disputed:

  • The assessee’s salary account had indeed been frozen.
  • The freeze was on the strength of directions from the investigating agency dealing with a transaction viewed as suspicious.
  • The transaction appeared to have originated from an account unknown to the assessee.