Rajasthan High Court has raised serious concern over the rising trend of indiscriminate and unwarranted freezing of bank accounts by investigating agencies, noting that such actions cause major financial hardships for innocent individuals and businesses.
Justice Manoj Kumar Garg, presiding over the case Smt. Kailash Kanwar Rathore & Ors. v. State of Rajasthan, ruled that the freezing of bank accounts without following mandatory procedures under Section 102(3) of the CrPC is legally unsustainable. The Court noted that account holders, who are not even accused in the case, must not suffer indefinite deprivation of their financial rights.
"The unwarranted freezing of bank accounts by investigating authorities in a mechanical manner has emerged as a growing concern... Such actions, based merely on suspicions, severely impair operational functioning and plunge parties into financial distress."
The petitioners, wife and sons of the main accused Hukam Singh, were not named in any criminal offence related to FIR No. 147/2024 registered at Police Station Rajnagar. Despite this, their bank accounts were frozen during investigation into charges under Sections 420, 406, 381, and 120-B IPC. Their applications to de-freeze accounts were dismissed by the Chief Judicial Magistrate and later by the Sessions Judge, Rajsamand.
The petitioners argued that the action lacked legal basis and procedural compliance, especially under Section 102(3) of CrPC, which requires police officers to inform the Magistrate about any seizure, including bank account freezing.
“If there is any violation in following the procedures under Section 102 CrPC, the freezing of the bank account cannot be legally sustained,” the Court emphasized, relying on precedents like T. Subbulakshmi v. Commissioner of Police and Muktaben Mashru v. State of NCT Delhi.
In this case, the investigating officer admitted that no such report had been submitted to the Magistrate regarding the seizure of accounts.
“Total failure to report the seizure, as required under Subsection (3), negatively impacts the validity of the freezing action,” the Court observed.
Quoting established legal principles, the High Court noted that bank accounts are classified as “property” under Section 102, and the freezing action, being investigative, demands strict adherence to procedural safeguards.
Eventually, the Court allowed the criminal misc. petition, quashed the orders passed by the Magistrate and Sessions Court, and directed the concerned bank to de-freeze the petitioners’ accounts.
“In the interest of justice, the petitioners shall execute bonds before the Trial Court, undertaking to produce the requisite amount in Court whenever required.”
Title: Smt. Kailash Kanwar Rathore & Ors. v State of Rajasthan
Counsel for petitioners: Mr. Divik Mathur, Mr. Pravin Kumar Choudhary
Counsel for respondents: Mr. Deepak Choudhary, AAG, Mr. Kuldeep Kumpawat, AAAG, Mr. Laxman Ram Bishnoi