Indian Court Bars Police From Freezing Entire Bank Accounts in Crypto Fraud Probes

An Indian Supreme Courtroom has dominated that police can not freeze whole financial institution accounts throughout fraud investigations. OSolely fraud-related quantities in financial institution accounts may be frozen. The choice adopted a case during which an account was frozen as a consequence of a cryptocurrency investigation. The courtroom emphasised that freezing accounts utterly disrupts livelihoods and referred to as on investigative companies to tell each account holders and the courts.

India’s Supreme Courtroom limits the freezing of whole financial institution accounts in fraud investigations

The Madras Excessive Courtroom of India has dominated that police can not freeze whole financial institution accounts throughout monetary fraud investigations; solely the quantity concerned within the alleged fraud may be frozen. The courtroom’s determination got here after a petitioner’s account was frozen for greater than a yr in reference to a cryptocurrency case.

Justice G. Jayachandran emphasised that freezing whole accounts deprives people of their livelihood and monetary stability. He famous that account holders typically have no idea why their accounts have been frozen, and by the point they discover out, vital harm has already been performed to their every day funds and enterprise transactions. The decide was quoted as saying:

Little doubt, the statutes give the investigating companies the facility to request the involved financial institution to freeze the accounts pending investigation and instantly ahead the identical to the competent courts, however whether or not the facility is exercised correctly or not is the large query which now looms.

The ruling was issued on a petition filed by Mohammed Saifullah, whose account at HDFC Financial institution’s Villivakkam department in Tiruvallur district was frozen by the Telangana State Cyber ​​Safety Bureau (TSCSB). Saifullah claimed he was unaware of the rationale behind the motion. The financial institution’s counsel knowledgeable the courtroom that the freeze was associated to a cryptocurrency investigation that started in Could 2023, with Saifullah’s account containing ₹9.69 lakh (roughly $11,680) on the time. The TSCSB requested the freeze primarily based on a fraud case associated to cryptocurrency transactions.

Justice Jayachandran additionally highlighted that regardless of authorized provisions requiring investigative companies to inform account holders and courts when accounts are frozen, that is typically missed. He referred to Part 102 of the Prison Process Code, now changed by Part 106 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), which mandates well timed reporting of such actions. The decide described:

Day in and time out, this courtroom comes throughout petitions for freezing of financial institution accounts, declaring the shortcoming of the investigating authorities not solely to speak the explanations to the account holders but in addition to tell the competent courtroom concerning the freezing of the accounts.

On this case, the decide allowed Saifullah entry to his account, offered he maintained a minimal stability of ₹2.48 lakh (roughly $2,990), the quantity underneath investigation. He concluded that “no order may be issued underneath the guise of investigation to freeze the whole account with out quantifying the quantity and interval.”

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