Rajasthan High Court stops blanket bank account freezes in cyber fraud cases

The Rajasthan High Court has ordered police and banks to refrain from freezing bank accounts entirely in cyber fraud cases, stating that a single suspect transaction does not justify disabling an entire account. Justice Anand Sharma emphasized the state's responsibility to protect victims of cyber fraud, prevent stolen funds from being moved or lost, and ensure that recoverable funds remain traceable.

The court ruled that when the only basis for account restraint is a single cyber complaint, the bank should only freeze the disputed amount and permit the remaining balance to operate. The court acknowledged the importance of effectively combating cyber fraud but also underscored the necessity of safeguarding the legitimate property rights of innocent account holders and maintaining citizens' trust in digital transactions and the banking system.

The court highlighted that no bank account should be subjected to indefinite blanket freezing solely based on unsubstantiated or vague information. They also criticized the practice of freezing accounts without an FIR or complaint on official platforms, and emphasized that investigation should not be allowed to continue indefinitely without periodic review by the investigating officer and supervisory officer.