HC urges MHA to frame uniform policy on freezing a/cs during criminal probe

Cuttack: Orissa high court has urged the Ministry of Home Affairs (MHA) to evolve a uniform national policy and standard operating procedure on freezing bank accounts during criminal investigations, noting the growing number of cases where entire accounts are blocked, causing hardship to individuals and businesses.In a judgment dated Feb 13 and uploaded on March 5, a single-judge bench of Justice S K Panigrahi said a clear framework was needed to balance investigative powers with the rights of account holders whose funds are frozen without clarity about the alleged amount involved in illegal transactions.“In light of frequent filing of such matters concerning blanket freezing of the accounts, this court feels that the Ministry of Home Affairs, Government of India, should take proactive steps to address the same,” Justice Panigrahi observed.

“It (MHA) 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 judge said.The observations came while hearing a petition filed by an authorised LPG distributor operating under Bharat Petroleum Corporation Limited in Gajapati district.

The distributor challenged the freezing of its current account by a nationalised bank at its Paralakhemundi branch.The bank had frozen the account on Sept 2, 2025 following receipt of an email from the cybercrime police station in Thiruvananthapuram in connection with a cyber fraud case. While recognising the authority of police to freeze accounts under Section 106 of the Bharatiya Nagarik Suraksha Sanhita, the court cautioned against blanket action.“This court holds that the power of the police to freeze the account under Section 106 BNSS cannot be declared illegal per se. However, freezing the entire current account of a running LPG distributorship business, without identification or quantification of the alleged suspect amount, is disproportionate,” Justice Panigrahi noted.Directing the cybercrime police to identify and communicate within two weeks the specific amount suspected to be linked to the offence, the court asked the bank to place on hold that amount and allow the distributor to operate the remaining balance for lawful business purposes.“The investigative interest can be adequately protected by marking the specific amount suspected to be connected with the offence,” he said, clarifying that the order would not affect the ongoing investigation.