The Delhi High Court has held that freezing bank accounts in a blanket or disproportionate manner—especially when the account holder is neither an accused nor a suspect in an investigation—is clearly arbitrary and violates the fundamental right to livelihood as well as the freedom to carry on trade and business.

Justice Purushaindra Kumar Kaurav observed that indiscriminate freezing of bank accounts cripples the day-to-day business operations of an otherwise innocent entity, leading to loss of commercial goodwill and serious financial repercussions.

The remarks were made while hearing a petition filed by Malabar Gold and Diamonds, which sought directions to the Centre and the Indian Cyber Crime Coordination Centre (I4C) to withdraw any communication or instructions issued to the State Bank of India and HDFC Bank to place its bank accounts “on hold”.

Established under the Ministry of Home Affairs (MHA), the Indian Cyber Crime Coordination Centre (I4C) functions as the national nodal agency for combating cybercrime.

The petitioner’s bank accounts were frozen after a cyber complaint of cheating was registered against one of its customers, following which the police issued directions to the banks to place the accounts on hold. By March 2025, around ₹80 lakh lying in the petitioner’s accounts had been frozen.

In its judgment dated January 16, the Delhi High Court directed I4C to immediately instruct the State Bank of India and HDFC Bank to defreeze the petitioner’s bank accounts, noting that there was no complaint against the petitioner and that the authorities had failed to establish any complicity on its part.

The court further held that in the absence of any such involvement, the continued freezing of funds was unjustified and caused serious prejudice to the petitioner, as it prevented the company from using its own money to pay employees’ salaries and meet day-to-day operational expenses necessary for the smooth conduct of its business.

"Any blanket or disproportionate freezing of bank accounts, particularly where the account holder is neither an accused nor even a suspect in the offence under investigation, is manifestly arbitrary, and in the teeth of the fundamental rights under Articles 19(1)(g) and 21 and of the Constitution, which encompass the right to livelihood and freedom to carry on trade and business," the court said.

"Such indiscriminate debit freezing, without any finding of complicity, has the inevitable effect of paralysing the day-to-day business operations of an otherwise innocent entity, resulting in loss of commercial goodwill and financial consequences, thereby subjecting a non-complicit account holder to punitive consequences," it added.

The Court held that there was no justification for allowing the petitioner to suffer due to an “indefinite and unreasoned” freezing of its bank accounts. It clarified that if any investigating agency possesses material indicating the petitioner’s complicity, it is free to initiate appropriate action strictly in accordance with law.

According to the plea, the petitioner is engaged in the business of buying and selling gold ornaments, gold items and precious stones. In the ordinary course of business, Dallas Ecom Infotech Private Limited approached the petitioner in July 2024 for the purchase of gold items such as gold bars and coins. The transactions were carried out after following all standard procedures, including compliance with the ‘know your customer’ (KYC) norms.

The plea further stated that a cyber complaint alleging fraudulent transactions was later filed by third parties against the buyer firm, despite the petitioner having no involvement whatsoever. However, the authorities allegedly proceeded in a mechanical manner to attach or place the petitioner’s bank accounts on hold, effectively bringing its business operations to a standstill and infringing upon its fundamental rights.