Court mandates specific amount-based restraint, establishes structured grievance redressal mechanism for affected account holders
In a significant ruling aimed at safeguarding the rights of bank account holders while enabling effective investigation of cyber crimes, the Allahabad High Court, in the case of Ritesh Yadav v. Reserve Bank of India, has set forth new guidelines for freezing bank accounts suspected of involvement in cyber crimes. The court emphasized the need for proportional restraint, mandating that any freezing of bank accounts must be limited to the specific amount involved in the alleged fraudulent transaction.
The case arose when Ritesh Yadav, engaged in construction-related business, found his bank accounts frozen due to a cyber crime investigation concerning a disputed transaction of ?36,000. Despite the limited nature of the alleged fraudulent transaction, Yadav's entire financial operations were brought to a standstill, prompting him to seek relief from the court.
The Division Bench, comprising Justices Shekhar B. Saraf and Abdhesh Kumar Chaudhary, clarified that blanket freezing of accounts is illegal unless it specifies the disputed amount and follows due procedure. The court stressed that investigating agencies must act transparently and proportionately, balancing effective investigation with the legitimate rights of account holders.
In its judgment, the court cited the principles laid down in the earlier case of Khalsa Medical Store v. RBI, emphasizing that any restraint on bank accounts should correspond to the amount connected with the alleged offence. The court directed that banks must prominently display grievance redressal information as per the Standard Operating Procedure (SOP) issued by the Ministry of Home Affairs to ensure time-bound relief for affected account holders.
Further, the court ordered banks to immediately de-freeze Yadav's accounts, maintaining a lien only on the disputed ?36,000, thereby allowing him to resume normal business operations. The court also highlighted the importance of the SOP grievance redressal mechanism, which provides an accessible and structured process for account holders to seek redressal.
This ruling is a crucial development in the realm of cyber crime investigations, ensuring that the legitimate business activities of individuals are not unduly hampered while still allowing for effective law enforcement action.
Bottom Line:
Freezing of bank accounts in cases of suspected cyber crime must be proportional to the alleged disputed amount. Investigating agencies and banks are required to follow a structured grievance redressal mechanism as per the Standard Operating Procedure (SOP) issued by the Ministry of Home Affairs.
Statutory provision(s): Section 106 of Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023
Ritesh Yadav v. Reserve Bank of India, (Allahabad)(DB)(Lucknow : Law Finder Doc id # 2961220
