Delhi High Court asks Centre to frame guidelines on freezing of bank accounts in cyber fraud cases

The Delhi High Court recently directed the Union Ministry of Home Affairs (MHA) to consider framing guidelines and standard operating procedures (SOPs) with respect to freezing of bank accounts in cyber fraud cases [Neelkanth Pharma Logistics Pvt. Ltd v. Union Of India & Anr].Justice Manoj Jain directed the MHA to ensure that such cyber fraud matters are handled with requisite consideration and compassion. “In light of the frequent filing of such matters concerning blanket freezing of the accounts, this Court feels that Ministry of Home Affairs, Government of India should take proactive steps to address the same. It may consider consulting all concerned stakeholders, including respective States/UTs and then, with consensus of everyone, to chalk-out a uniform policy, standard operating procedures and guidelines to ensure that such matters are handled with requisite consideration and compassion,” the Court stated. .The petitioner’s HDFC bank account was frozen on directions of the Vartaknagar Police Station, Maharashtra over a suspicious credit of ₹200. This prompted him to move the Court..The Court observed that it is high time that the investigating agencies act with care.“The issue raised in the present petition has been a matter of recurring concern as many such like petitions are flooding the Courts. It is, therefore, high time that the investigating/law enforcement agencies, in context of freezing bank accounts, act with requisite care, caution and yes, compassion as well,” the order stated. The Court noted that though investigating agencies have the discretion to direct freezing of bank accounts, it must justify the same. It went on to say,"Such blanket measure, if taken recourse to, without offering any reason, can certainly play havoc with the financial concerns of such account holders. In relation to small-time vendors, it can disrupt prospects of their mere existence even.".Marking a lien on the disputed amount should be explored as a more appropriate interim measure, the Court further stated. “Ideally, it should be the first and foremost option. This would, naturally, mitigate the undue hardship being caused on account of blanket freezing of account and would also ensure that the alleged cheated money remains secured and intact.".During pendency of this case, Maharashtra Police passed directions to bank for de-freezing of the bank account by marking lien of ₹200. Observing that the main issue has been solved by de-freezing account, the Court disposed of the petition..Advocate Preetam Singh appeared for the petitioner. Central Government Standing Counsel Premtosh K. Mishra with Advocates Manish Vashist, Sanya Kalsi and Gokul Sharma appeared for Centre. Advocate Ritika Sisodiya appeared for HDFC Bank.Advocates Ramesh Babu, Tanya Choudhary and Rohan Srivastava appeared for RBI..[Read Order]