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Introduction
Freezing bank accounts play a vital role in cybercrime investigations in India. It helps authorities secure money trails and block further financial damage while probing digital offenses. Indian laws offer legal backing to freeze accounts suspected to be linked with illegal online activities.
Legal Provisions Enabling Freezing of Bank Accounts
Under the Information Technology Act, 2000, Section 66 empowers authorities to freeze bank accounts associated with cybercrimes like hacking, phishing, and identity theft. This ensures that unlawful transactions are stopped while the investigation proceeds. The Prevention of Money Laundering Act, 2002, through Section 17(1)(iv), also allows freezing of bank accounts suspected of being used for laundering money. This applies even if a third party committed the cybercrime. Section 318(4) of the Bharatiya Nyaya Sanhita, 2023, permits account freezing in fraud and cheating cases. If someone dishonestly induces a transfer of money or securities, the linked accounts can be blocked.
Additionally, Section 106 of the Bharatiya Nagarik Suraksha Sanhita, 2023, authorizes police to seize any property, including bank accounts, connected to a suspected crime. This is the updated version of the former Section 102 of the Criminal Procedure Code (CrPC), giving police powers to act promptly in such situations.
Judicial Interpretation of Seizure Provisions
Indian courts have also shaped how these provisions are applied. In the Italian Marines Case (M.T. Enrica Lexie v. Doramma), the Supreme Court clarified that seized property includes any asset connected to a crime, including stolen goods or bank funds. In State of Maharashtra v. Tapas D. Neogy, the Supreme Court held that freezing of a bank account is valid only when two conditions are met: the presence of identifiable “property” and a reasonable suspicion linking that property to a crime.
Requirements for Freezing Bank Accounts
Authorities must clearly show a connection between the suspected crime and the specific bank account. The account must be precisely identified, and material evidence must support the move to freeze it. Allegations alone are not sufficient. Investigators must demonstrate credible grounds and back them with evidence to justify freezing an account.
Popular Bombay High Court Observations
In Gulam Sarvar v. State of Maharashtra, the Bombay High Court emphasized that a mere accusation cannot lead to account freezing. There must be reasonable suspicion supported by factual evidence linking the account to a crime. In Vinod Kumar Ramachandran Valluvar v. State of Maharashtra, the court ruled that Section 106 of the Bharatiya Nagarik Suraksha Sanhita cannot be used unless the discovery of the account itself raises suspicion of a criminal act. Tracing deposits alone does not prove involvement in a crime.
Conclusion
India’s legal system provides strong support for freezing bank accounts in cybercrime and financial fraud cases. However, these actions must meet strict legal criteria. Courts have repeatedly affirmed that reasonable suspicion, backed by evidence, is essential before any account is frozen. These legal safeguards prevent misuse of power and ensure that investigations are conducted fairly, with respect for individual rights and protection for victims.
