Introduction:

The Calcutta High Court has held that a bank account cannot be subjected to a blanket debit freeze when the investigating authority has only sought to secure a specific disputed amount in connection with a particular transaction. The Court accordingly directed Axis Bank to immediately de-freeze the entire bank account of a businessman, while permitting the bank to retain a lien over ₹2,253, which represented the amount specifically identified by the investigating agency.

Justice Rishad Medora passed the order while hearing a writ petition filed by Sohel Molla, a small-time businessman carrying on business as a sole proprietor under the name “ROHAN RETAIL”. The petitioner maintained a bank account with Axis Bank at its Dalhousie Branch in Kolkata. The account became the subject of a debit freeze pursuant to a notice issued by the Inspector of Police, Cyber Crime Wing, Central Branch, Tambaram Commissionerate, Tamil Nadu.

The notice, dated May 8, 2025, was issued under Section 106 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), and concerned an investigation registered as CCD-1, Cyber Crime Wing, CSR No. 259/2024. The police communication related to a transaction of ₹39,899 dated August 22, 2024. However, the amount which the police specifically directed the bank to “lien mark” was only ₹2,253.

The distinction between these two figures became central to the controversy. While the underlying transaction was valued at ₹39,899, the amount identified by the investigating authority for the purpose of securing the alleged disputed proceeds was ₹2,253. According to the petitioner, despite the limited nature of the police direction, the entire bank account was subsequently rendered incapable of being operated by way of a debit freeze.

The petitioner claimed that he had no knowledge of the criminal or cybercrime proceedings in connection with the transaction and had not been supplied with any details of the allegations against him. He also stated that he had not received any communication from the concerned Tamil Nadu police authorities explaining why his account had been frozen or why the entire account was required to remain inaccessible.

The businessman thereafter approached the bank and the concerned cybercrime authorities seeking clarification and requesting that the account be restored. His attempts, according to the case placed before the High Court, did not yield any effective response from the investigating authority. Axis Bank, for its part, informed him that it could not independently remove the freeze because the restriction had been imposed pursuant to directions received from the police authorities. The bank took the position that it would require a formal revocation or unfreezing direction from the competent authority before it could restore operation of the account.

The dispute therefore came before the Calcutta High Court in the form of a challenge to the continued freezing of the petitioner’s entire bank account. The petitioner did not dispute the investigating agency’s ability to secure the disputed sum of ₹2,253. Instead, he took a narrower position: even assuming that the police were entitled to secure the identified amount, there was no legal or factual justification for preventing him from accessing the remainder of his funds.

The case consequently raised an important question concerning proportionality in the exercise of investigative powers over bank accounts. While law-enforcement authorities must have sufficient power to preserve suspected proceeds of crime and prevent their dissipation, such powers cannot automatically translate into an unrestricted prohibition on the account holder’s access to every other legitimate amount lying in the account. The High Court was therefore required to examine whether the action taken was commensurate with the purpose for which the police intervention had originally been sought.

Arguments of the Parties:

The petitioner, Sohel Molla, challenged the debit freeze imposed on his Axis Bank account primarily on the ground that the police communication itself did not justify such a sweeping restriction. His case was that the notice issued by the Inspector of Police specifically instructed the bank to “Lien Mark” an amount of ₹2,253 in relation to a particular transaction. According to the petitioner, the language and substance of the notice indicated that the investigating authority was interested in securing a specific sum rather than disabling the operation of the entire account.

The petitioner submitted that there was an important difference between placing a lien on a particular amount and freezing an entire bank account. A lien over ₹2,253 would preserve the amount identified by the investigating agency while leaving the businessman free to access the balance of his funds. A blanket debit freeze, on the other hand, would prevent him from withdrawing or otherwise using money that was not shown to be connected with the investigation.

The petitioner further emphasised that he was operating a small proprietorship business and that the continued freezing of his account could have consequences extending beyond the disputed transaction. A bank account used in the ordinary course of business is ordinarily the mechanism through which a proprietor receives payments, pays suppliers, meets expenses and conducts routine commercial activity. Preventing access to the entire account could therefore substantially interfere with the conduct of business even where the investigating agency had identified only a small sum as potentially disputed.

Another important aspect of the petitioner’s case was the absence of effective communication from the Tamil Nadu Cyber Crime authorities. He stated that he had repeatedly attempted to ascertain the circumstances in which the account had become subject to the restriction and had sought information concerning the case. Despite these efforts, the investigating authority had not responded in a manner that enabled him to understand why the freeze had been extended to his entire account.

The petitioner also placed reliance on the fact that Axis Bank itself had not acted independently in freezing the account. The bank’s position was that it was bound by the police direction and could not remove the restriction unless the authority that had initiated the process issued an appropriate revocation or unfreezing communication. This, according to the petitioner, left him in a position where he was unable to operate his account while the investigating authority did not provide any meaningful response to his requests.

Significantly, however, the petitioner did not seek to obstruct the investigation or insist that the disputed amount be released. He fairly submitted before the High Court that the lien over ₹2,253 could continue. His grievance was specifically against the freezing of the balance of the account. This concession demonstrated that his challenge was directed at the extent of the restriction rather than at the investigating agency’s power to preserve the amount which it considered relevant to the case.

The respondents adopted varying positions before the High Court. The State of West Bengal, Axis Bank and the Reserve Bank of India essentially left the matter to the discretion of the Court. Axis Bank, in particular, explained that it had merely acted in compliance with the instructions issued by the Tamil Nadu police authorities. The bank did not suggest that it had independently determined that the entire account ought to be frozen. Its position was, in substance, that it was implementing the restriction communicated to it by the investigating authority and would require appropriate instructions from the competent authority before removing the freeze.

The position of the Tamil Nadu police authorities was, however, materially different in the proceedings because the Inspector of Police who had issued the relevant notice did not appear before the High Court. The Court noted that the concerned police officer had been served with the writ petition and had also been informed of the proceedings through Speed Post and email. Despite this, there was no appearance on behalf of the officer to explain the necessity for continuing the debit freeze over the entire account.

The absence of the investigating officer assumed significance because the central issue before the Court was not whether the police could investigate the transaction or secure suspected proceeds. Rather, it was whether the particular action taken against the petitioner’s bank account was supported by the police direction and whether freezing the whole account was necessary in light of the amount actually sought to be secured.

The respondents did not place before the Court any specific justification demonstrating why access to the balance of the account was required to be prevented. There was no material, as reflected in the order, establishing that the entire amount lying in the account represented proceeds of the transaction under investigation or that allowing the petitioner to operate the remaining funds would frustrate the investigation.

The Court therefore had to consider the matter primarily on the basis of the police notice itself, the limited amount mentioned therein, the subsequent debit freeze, and the absence of any explanation from the officer who had initiated the restriction.

Court’s Judgment:

Justice Rishad Medora closely examined the scope of the police notice and found a clear disconnect between what the investigating authority had specifically sought to secure and the manner in which the petitioner’s bank account had ultimately been restricted.

The High Court noted that the notice issued by the Inspector of Police concerned a particular transaction and directed the bank to “Lien Mark” a specific amount of ₹2,253. The Court found that the notice, on its face, did not provide a rational basis for preventing the petitioner from operating the entire account.

This distinction between a lien and a blanket debit freeze was fundamental to the Court’s reasoning. A lien over a particular amount operates to preserve that amount against withdrawal or transfer, thereby protecting the interest of the investigation. A complete debit freeze, by contrast, places a restriction upon the account as a whole. Such a restriction necessarily affects amounts which may have no connection whatsoever with the transaction being investigated.

The Court observed that the disputed amount was only ₹2,253 and questioned why the investigative objective could not be achieved simply by securing that amount. If the purpose of the police direction was to prevent the disputed sum from being withdrawn or transferred, the same purpose could ordinarily be served by retaining a lien over that specific amount.

The Court therefore found no convincing justification for extending the restriction beyond the sum specifically identified by the investigating authority. It observed that there “does not appear to be any rationale” behind the direction resulting in the entire account being frozen. The Court further stated that, having directed the bank to “Lien Mark” a specific amount in respect of a particular transaction, it was unable to understand the necessity for directing the debit-freezing of the entire account.

The Court described such a direction as appearing to be “without any justification whatsoever.” The observation is significant because it underscores that investigative authority over financial accounts is not unlimited merely because a transaction is under investigation. The restriction imposed must bear a rational relationship with the object sought to be achieved.

The High Court’s approach effectively applied a principle of proportionality to the financial restraint. The Court did not interfere with the investigation itself and did not prevent the Tamil Nadu Cyber Crime authorities from continuing to investigate the disputed transaction. Nor did it direct that the ₹2,253 identified in the police notice be released to the petitioner. Instead, it preserved the investigating agency’s interest in the disputed amount while removing the restriction imposed on the rest of the account.

In this respect, the order strikes a balance between two competing interests. On one side is the legitimate interest of the State in investigating cybercrime and ensuring that suspected proceeds are not withdrawn, transferred or otherwise dissipated. On the other is the individual’s right to access and use funds which have not been shown to be connected with the alleged wrongdoing.

The Court’s direction was accordingly carefully tailored. Axis Bank was directed to immediately de-freeze the petitioner’s entire bank account. At the same time, the bank was required to continue marking ₹2,253 as a lien. The petitioner would not be entitled to withdraw that amount, subject to any further directions that might subsequently be issued by the Tamil Nadu Cyber Crime police authorities.

Thus, the Court did not grant the petitioner an unconditional release of all funds. Instead, it preserved precisely that portion of the account which had been identified by the investigating agency as disputed. The balance of the account, however, was restored to the petitioner’s use.

The Court’s order also reflects the practical importance of requiring investigating authorities to clearly communicate the precise nature and extent of a financial restriction. A police request to secure a particular amount cannot automatically be treated as an authority to immobilise an entire bank account, particularly when the consequences of such a restriction may affect the account holder’s business and ordinary financial dealings.

The absence of the concerned Tamil Nadu police officer also left the Court without any explanation as to why a blanket freeze was considered necessary. The officer had been duly served and informed of the proceedings, but did not appear. Consequently, there was no material before the Court to establish that freezing the entire account was required either for preservation of evidence or for safeguarding the investigation.

The Court’s reasoning is also important in the context of the statutory power under Section 106 of the BNSS. The provision enables police authorities to seize certain property in appropriate circumstances during investigation. However, the existence of an investigative power does not mean that every restriction imposed pursuant to that power is automatically valid irrespective of its extent. The exercise of statutory authority must remain connected to the purpose for which the power exists and cannot be expanded without justification.

In the present case, the police authorities had identified the disputed amount with sufficient precision. The notice referred to a particular transaction and expressly quantified the amount to be lien-marked. Once that amount could be secured separately, the necessity of paralysing the entire account became difficult to sustain.

The Court therefore adopted a restrained approach: it neither substituted itself for the investigating agency in determining the merits of the cybercrime allegations nor examined the underlying transaction in detail. Instead, it addressed the immediate grievance arising from the disproportionate nature of the account restriction.

The judgment also illustrates the distinction between investigating a suspected financial transaction and treating an entire bank account as though every amount deposited therein is tainted. Unless there is material connecting the whole account with the alleged offence, an indiscriminate freeze can impose consequences far beyond the investigative requirement. For a person running a business through that account, such a freeze may effectively disrupt the entire commercial operation.

The High Court’s intervention was therefore directed toward ensuring that the restraint remained confined to the identified disputed amount. The order does not prevent the Tamil Nadu police from taking any further lawful steps in accordance with the investigation. If the investigating agency subsequently considers that additional restraint is necessary and can demonstrate a lawful basis for doing so, it would remain open to it to proceed in accordance with law. What the Court rejected was the continuation of an unexplained blanket debit freeze when the existing notice itself identified only ₹2,253 for protection.

The Court consequently directed Axis Bank to immediately de-freeze the petitioner’s account, while continuing the lien over ₹2,253. The petitioner and the bank were also directed to immediately furnish a copy of the judgment to the concerned Tamil Nadu police officer through email as well as Speed Post, thereby ensuring that the investigating authority was formally informed of the Court’s directions.

The writ petition, Sohel Molla v. State of West Bengal and Others, was accordingly disposed of without any order as to costs.

The decision serves as an important reminder that financial restrictions imposed during criminal or cybercrime investigations must have a clear and rational connection with the object of the investigation. The power to preserve suspected proceeds cannot, without adequate justification, become a power to immobilise an individual’s entire bank account. Where the investigating authority identifies a specific disputed amount, securing that amount through a lien may be sufficient to protect the investigation while avoiding unnecessary interference with the account holder’s remaining legitimate funds.

The ruling thus reinforces a basic principle of fairness in the exercise of investigative powers: the extent of the restriction must correspond to the extent of the investigative necessity. A disputed sum of ₹2,253 could justify securing ₹2,253; it could not, in the absence of a further explanation, justify shutting down access to an entire bank account.