Allahabad High Court limits banks from freezing entire accounts over small cyber fraud sums

The Allahabad High Court ruled that banks may not immobilise an entire deposit when a cyber-fraud case concerns a limited sum, directing them to freeze only the disputed Rs 36,000. The order, issued by Justices Shekhar B. Saraf and Abdhesh Kumar Chaudhary, arose after a Lucknow-based trader of Vrinda Traders discovered a lien on his account and was unable to conduct routine business. Investigations by a Karnataka cyber-crime unit had triggered freezes at UCO Bank, Bandhan Bank, ICICI Bank and Axis Bank.

The court emphasized that investigative powers should not cripple a person’s legitimate financial activities and required banks to display clear instructions for filing complaints via the Ministry of Home Affairs’ grievance mechanism. It also clarified that the directive does not impede future lawful freezes if warranted.