Order Freezing Entire Bank Account Without Quantifying Amount & Period Violates Fundamental Right Of Trade: Telangana High Court

The High Court was considering a writ petition filed under Section 528 of the BNSS seeking a direction for the respondents to defreeze the bank account of the petitioner.

The Single Bench of Justice E.V.Venugopal held, “The freezing of a citizen’s bank account, in the absence of any cogent reasons and without establishing even a prima facie nexus of such account with the commission of any cognizable offence, amounts to a grave and unwarranted intrusion into the fundamental rights guaranteed under the Constitution. Such an action, taken in a mechanical and arbitrary manner, not only cripples the financial autonomy of an individual but also directly impinges upon the right to life and personal liberty enshrined under Article 21 and the freedom to carry on trade, occupation and business under Article 19(1)(g) of the Constitution of India.”

“Under the guise of investigation, order freezing the entire account without quantifying the amount and period cannot be passed. Such order will be construed as violation of the fundamental rights of trade and business as well as violation of livelihood. This court is of the considered opinion that keeping only the disputed amount on hold would serve the interest of the parties”, it added.

Factual Background

The bank account of the petitioner was frozen on account of certain allegations relating to fraudulent transactions.

Reasoning

Considering that the statutes empower the investigation agency to request the Bank to freeze the account pending investigation and intimate it forthwith to the jurisdiction Court, the Bench held that there cannot be freezing of account perpetually without intimating the account holders what for their account is freezed and what extent it has to be freezed because great inconvenience and hardship is caused to the day to day financial life of the persons concerned.

As per the Bench, the very lifeline of the business gets severed by such unilateral orders of account freezing passed by the Police. Coming to the facts of the case, the Bench noted that although only a certain amount was disputed, due to the blanket order to freeze the account, the respondent Banks had frozen the account in their entirety, because of which the petitioner was unable to operate his account and deal with the money lying therein.

The Bench further explained, “The power to interdict the operation of a bank account is an exceptional one, to be exercised sparingly, with circumspection and strictly in accordance with law, and only upon recording reasons demonstrating a live and proximate link between the account and the alleged criminal activity. Any freezing order passed dehors such safeguards betrays a colourable exercise of power, is manifestly arbitrary, and cannot be sustained in the eyes of law.”

Directing that the amount in dispute should remain frozen, the Bench permitted the petitioner to operate the said bank account for all other lawful transactions. “The respondent-bank shall ensure that only the debit operations to the extent of the disputed amount in the account bearing the number mentioned herein below remain interdicted, while the account shall otherwise remain fully operational for all remaining purposes”, it ordered.

Disposing of the Petition, the Bench ordered the Superintendent of Police to communicate the order to the concerned Branch Manager and ensure that the account in question is unfrozen immediately.

Cause Title: M/s. The Bottle Restaurant and Bar v. The Union of India (Case No.: W.P.No.7500 of 2026)

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