Freeze amount, not account: Rajasthan HC
In a significant ruling on the scope of police powers during financial investigations, the Jodhpur bench of the Rajasthan High Court has held that banks cannot impose a blanket freeze on accounts at the behest of investigating agencies.
The court stated that any restriction must be proportionate and confined to the amount under dispute.
The observations were made during a hearing on March 19 in a case involving filmmaker Vikram Bhatt and co-petitioner Shwetambari Bhatt, whose accounts were fully frozen during a fraud probe.
Allowing partial relief to them, the court directed that only the disputed sum of Rs 30 crore should be under restriction, as it permitted all other legitimate transactions to continue unhindered. The proceedings arise from an FIR registered in Udaipur on a complaint by Ajay Murdiya, alleging a Rs 30-crore fraud.
The banks had blocked all savings accounts of the petitioners at the instruction of the investigating officer in the case.
The petitioners challenged the freeze and contended that the funds were legitimate professional earnings and that the police had bypassed due process by directing a complete freeze.
They argued that the move crippled their financial functioning, leaving them unable to meet routine expenses, honour business commitments, or pay salaries and loan instalments.
Justice Farjand Ali, after reviewing the material on record, emphasised that freezing a bank account is an extraordinary step that must be exercised with caution.
The court held that mechanically freezing entire accounts without establishing a prima facie nexus between the funds and a cognisable offence violates fundamental rights, including the right to life and personal liberty under Article 21 and the freedom to carry on business under Article 19(1)(g).
It cited Supreme Court principles to stress that any procedure affecting personal liberty must be just, fair and non-arbitrary.
In the modern economy, a bank account represents the lifeline of an individual’s financial existence, it said.
The court also instructed the police to immediately communicate the order to the banks involved.
In addition, HDFC Bank’s Lokhandwala Circle branch and IDFC First Bank’s Andheri West branch were directed to promptly defreeze two accounts each belonging to the petitioners without any technical delays.
