Allahabad HC directive to state police: Adopt 5-point protocol to prevent blanket freezing of bank accounts

The high court ruled that police cannot freeze entire bank accounts solely on a whim or a simple request, terming a blanket freeze illegal. Only the exact, specific amount, suspected of being proceeds of crime can be frozen, and police must inform the magistrate within 24 hours, the court said.

Taking a serious view of arbitrary freezing of bank accounts by police in cases of cyber frauds or UPI transactions with a person involved in any fraud or crime, the Lucknow bench of the Allahabad high court has directed the state police to adopt a five-point protocol to prevent blanket freezing of bank accounts solely on informal police requests by email or letters.

dThe high court has also directed the banks to inform account holders within 24 hours of the account freezing. (REPRESENTATIVE IMAGE )

The high court ruled that police cannot freeze entire bank accounts solely on a whim or a simple request, terming a blanket freeze illegal.

Only the exact, specific amount, suspected of being proceeds of crime can be frozen, and police must inform the magistrate within 24 hours, the court said.

Justice Shekhar B Saraf and Justice Manjive Shukla gave the ruling in January 2026 while hearing the ‘Khalsa Medical Store v. State of U.P., 2026’ case.

The high court has directed the Centre to file an affidavit addressing procedural anomalies in freezing bank accounts.

The court has also directed the banks to inform account holders within 24 hours of the account freezing.

The State Level Bankers’ Committee (SLBC), Uttar Pradesh, has received complaints, in large numbers, about cases of bank accounts being frozen solely on informal requests of police through email or letters.

According to Gyan Singh Chauhan, senior advocate of the Lucknow bench of the Allahabad high court, bank accounts cannot be frozen in an arbitrary manner just on an informal request by the police.

“There is a specific procedure for freezing of bank accounts laid down by the high court. It should be followed,” Chauhan added.

In another order passed on February 10, a division bench of the Allahabad high court comprising Justice Atul Sreedharan and Justice Siddharth Nandan took serious note of the issue and pointed out that the court has received several complaints in this regard.

The high court said that there cannot be any discrimination or high handedness in the freezing of bank accounts on the instructions of investigating agencies probing cyber fraud cases.

The division bench was examining the procedure adopted by authorities in relation to the freezing of bank accounts linked to cyber fraud cases.

Hearing a writ petition filed by Tarkeswar Tiwari, the court observed, “Various writ petitions before us disclose that banks have frozen the bank accounts and when the account holders approach them, they are only informed that the accounts have been frozen on the letter either by the police authorities or the cyber crime.”

“However, the said letters till date have not been brought on record in spite of the specific instructions on the previous dates,” the court said. Consequently, the court directed the Union government to address such concerns. It added that though various courts have dealt with the issue, procedural anomalies continue to exist.

“We find that courts have dealt with issues with respect to powers of the investigating agencies to examine, under Section 106 of the BNSS; but the issue which is being considered in the present batch of writ petitions, needs to be addressed to settle the said procedural anomaly, for the contingencies under which the bank account are being frozen and which is a necessary step towards ensuring that the banks concerned and the bank account holders, may continue to operate and retain the mutual trust, with their hard-earned money, and the only exception to such a procedure, will be a procedure prescribed by law, with no element of discrimination and element of high handedness,” the court said.

THE FIVE-POINT PROTOCOL

The high court mentioned the following five-point protocol:

No blanket freezing: Police cannot request the freezing of an entire bank account. They must specify the exact amount suspected to be “proceeds of crime” and only that specific amount may be freezed or blocked.

Documentation: Investigating officers must provide banks with a copy of the FIR or a formal complaint and a valid seizure order.

24-Hour magistrate rule: Amount to be frozen should be specifically indicated in each of said orders, failing which the bank concerned will be at liberty to seek instructions, and then only would they proceed to freeze the account, only to the extent of the amount indicated.

Police must inform the jurisdictional Judicial Magistrate within 24 hours. Failure to do so renders the freezing action legally void.

Bank Liability: The court warned that banks and payment system operators (PSOs) may face civil and criminal liability for damages if they comply with illegal or vague freezing requests that bypass due process.

Reasonable belief required: Actions must be supported by reasonable belief and evidence linking funds to a crime, rather than mere suspicion.