In a significant ruling with far-reaching implications for cybercrime investigations and banking practices, the Madhya Pradesh High Court has held that law enforcement agencies should not freeze an entire bank account over a minor disputed transaction when less restrictive measures are available. The court directed that, wherever possible, only the amount linked to the alleged cyber fraud should be blocked rather than imposing restrictions on the entire account.

The judgment came while hearing a petition filed by Archana Shivhare, a Bhopal-based businesswoman, whose current account containing more than ₹2.51 crore was frozen following a suspected cyber transaction of just ₹980.

Justice Himanshu Joshi, presiding over the single bench, observed that freezing an entire bank account should remain an exceptional measure and must not become the standard response in cybercrime investigations.

Dispute Over ₹980 Transaction

According to the petition, Shivhare operates seven composite liquor outlets in Narsinghpur district, with all business transactions routed through a single current account.

In April 2026, the State Bank of India branch in Itarsi froze the account without prior notice. The action was reportedly taken following a cybercrime complaint registered under Section 106 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023.

During the hearing, counsel for the petitioner argued that the alleged suspicious transaction involved only ₹980, while the account held more than ₹2,51,72,192.57. The petitioner requested that only the disputed amount be blocked if required for investigation, allowing access to the remaining legitimate funds.

Court Calls for Proportionate Action

Accepting the argument, the High Court observed that investigating agencies must distinguish between the amount allegedly connected to an offence and the lawful funds lying in the account.

The bench said that freezing an entire account despite the disputed amount being minimal was not a proportionate response. Instead, agencies should impose a lien or debit freeze only on the amount necessary for investigation wherever feasible.

The court clarified that complete freezing of an account should be reserved for extraordinary circumstances supported by written reasons.

Banks Also Have Responsibility

The High Court also underlined the role of banks in protecting customers' rights during such proceedings.

It observed that banks cannot simply act as passive executors of police instructions and direct customers to approach investigating agencies or courts. Instead, banks must immediately inform account holders about the reason for freezing, the details of the investigating authority and the available grievance redressal mechanism.

The court described banks as the first point of contact for customers affected by such actions and said they must actively facilitate the resolution process.

Statewide Guidelines Issued

To ensure uniform implementation across Madhya Pradesh, the High Court issued a detailed set of directions for banks, police authorities and investigating agencies.

Under the guidelines:

• Only the disputed amount should be frozen through a lien or debit restriction wherever possible.

• Entire bank accounts should be frozen only in exceptional cases supported by written reasons.

• Investigating officers must promptly inform the jurisdictional magistrate after ordering a bank account freeze.

• Banks must notify account holders about the freezing action, the reasons behind it and the grievance redressal process.

• Complaints received by banks must be uploaded to the designated portal within seven days.

• Investigating officers must pass a reasoned order within 15 days of receiving a complaint.

• If the complaint is accepted, banks must de-freeze the account within 48 hours.

• Where no valid order exists to continue the freeze beyond 90 days, restrictions may be lifted following the prescribed procedure.

• If investigators seek to continue freezing the entire account, they must issue a detailed and reasoned written order.

Court Directs Fresh Decision

The High Court directed the investigating officer to reconsider Shivhare's application in accordance with the Standard Operating Procedure issued on April 10, 2026, along with the principles laid down in the judgment.

The court observed that if securing ₹980 is sufficient for the investigation, the remaining balance should be released immediately. However, if authorities believe freezing the entire account is necessary, they must provide detailed reasons supported by law.

The High Court further instructed the Madhya Pradesh government to circulate the judgment among all banks, police stations, cybercrime units and investigating agencies to ensure a uniform and legally compliant procedure for freezing bank accounts in cybercrime cases across the state.