Judgment Intelligence
OtherShree Balaji Enterprises v. Reserve Bank of India & Ors.
2026:RJ-JP:33344
S.B. Civil Writ Petition No. 2679/2026 (with 104 connected writ petitions)
- Court
- Rajasthan High Court
- Date of Decision
- 20 August 2026
- Bench
- Justice Anand Sharma
- Relevant Acts & Sections
- Bharatiya Nagarik Suraksha Sanhita, 2023 — Sections 106, 107; Constitution of India — Article 226; MHA (I4C) Standard Operating Procedure for NCRP and CFCFRMS dated 02.01.2026
Final Outcome
All petitions disposed of with general directions binding across Rajasthan: banks and investigating officers to review each restraint; the DGP to issue a circular within four weeks; the RBI to direct bank training; compliance reports within eight weeks (paras 45-62).
Key holdings
- Where the disputed amount is identifiable, the ordinary course is a lien on that amount, not a freeze of the whole account (paras 31, 45).
- Seizure of an account under Section 106 BNSS must be reported forthwith to the Magistrate; attachment of proceeds of crime needs an order under Section 107 (para 36).
- Expressions like 'mule account' or 'suspicious transaction' are not reasons for indefinitely immobilising an account (para 28).
- A freeze must be lifted once the account holder is exonerated or the investigation no longer needs it (paras 38-39).
Brief Facts
The petitioners, individuals, firms and companies, had their bank accounts frozen, debit-frozen or liened on communications from investigating agencies about suspected cyber financial fraud (paras 1-2). Sometimes the disputed credit was under Rs 100 while the whole account was blocked; sometimes there was no FIR or NCRP complaint, the amount was never specified, or the account holder had been exonerated, yet the freeze continued and representations went unanswered (paras 2-4). The State stressed the speed of cyber fraud; the banks said they act on police instructions and their own KYC and AML duties (paras 8-10).
Court's Findings
Investigative power remains subject to legality, reasonableness and proportionality, and a bank account is property and a means of livelihood (paras 13-14). Seizure under Section 106 BNSS must be reported forthwith to the Magistrate, while attachment of proceeds of crime needs a court order under Section 107; labelling a restraint a 'freeze' or 'lien' cannot bypass that procedure (paras 15-17, 36). Following Neelkanth Pharma and its own Jinat Bano ruling, the Court held that where the disputed amount is identifiable, a lien on that amount should ordinarily suffice (paras 18-20, 29, 31). A blanket freeze may be justified in exceptional cases such as deliberate mule accounts, but reasons must be recorded and reviewed (para 32). A restraint needs lawful authority, a prima facie nexus, identification of the amount and proportionality, and labels like 'mule account' are not reasons (paras 27-28). Freezes must end once the investigation no longer needs them (paras 38-39).
Legal Principle
In cyber fraud cases, a bank account restraint needs lawful authority, a prima facie nexus with the offence, identification of the disputed amount and proportionality. Ordinarily only the disputed amount may be held; a whole-account freeze needs recorded reasons and periodic review, and seizure or attachment must follow Sections 106 and 107 of the BNSS (paras 27, 31-32, 36).
Precedents Relied Upon
- Neelkanth Pharma Logistics Pvt. Ltd. v. Union of India & Anr. 2025 SCC OnLine Del 1055
Where the disputed amount in an account is identifiable, a lien on that amount should ordinarily be explored rather than freezing the entire account, and reasons must be furnished for freezing the whole account.
- Jinat Bano v. State Bank of India & Anr. S.B. Civil Writ Petition No. 5036/2026 (Rajasthan High Court, decided 30.06.2026)
On the doctrine of proportionality, a debit freeze on the whole account was lifted and a lien maintained only for the disputed amount, with conditions of cooperation with the investigation.
