{"id":3611,"date":"2026-02-16T12:02:14","date_gmt":"2026-02-16T06:32:14","guid":{"rendered":"https:\/\/xpertslegal.com\/blog\/?p=3611"},"modified":"2026-02-16T12:02:14","modified_gmt":"2026-02-16T06:32:14","slug":"delhi-hc-indiscriminate-bank-freezing-hits-right-to-livelihood","status":"publish","type":"post","link":"https:\/\/xpertslegal.com\/blog\/delhi-hc-indiscriminate-bank-freezing-hits-right-to-livelihood\/","title":{"rendered":"Delhi HC: Indiscriminate Bank Freezing Hits Right to Livelihood"},"content":{"rendered":"

Malabar Gold and Diamond Ltd. & Ors. v. Union of India & Ors.<\/strong><\/h1>\n

W.P.(C) 4198\/2025<\/p>\n

PURUSHAINDRA KUMAR KAURAV, J<\/p>\n

 <\/p>\n

Overview<\/strong><\/h3>\n

The Delhi High Court examined the legality of freezing the bank accounts of a business entity solely on the basis that the proceeds of an alleged cyber fraud committed by a third party had entered into the accounts. The Court held that banks must comply with statutory requirements in applying debit-freezing and account-freezing techniques since these are arbitrary and unconstitutional and lack proper evidence of guilt. The case is important because it safeguards innocent businesses from being completely financially ruined by the overzealousness of law enforcement agencies.<\/p>\n

Facts<\/strong><\/h3>\n

Malabar Gold and Diamond Limited and its group companies carry out their authorized business operations to buy and sell gold and precious gems. The period from August 2024 to March 2025 saw the business operations of the parties involved in transactions that led to around \u20b914.20 crores of transactions between them and Dallas E-com Infotech Pvt. Ltd. after they completed all the necessary KYC and banking formalities.<\/p>\n

Third parties later filed complaints of cyber fraud against the customer. Police authorities contacted the banks to freeze the accounts of the petitioners without any FIR or complaint or results of the investigation. The business operations were severely affected as police authorities froze around \u20b980 lakh that existed in different bank accounts required for paying salaries and conducting normal business operations.<\/p>\n

The authorities did not produce any evidence that would show the petitioners committed the crimes as ordered by the court.<\/p>\n

Legal Issues<\/strong><\/h3>\n
    \n
  1. Whether police authorities can freeze or debit-freeze bank accounts under Section 106 BNSS without following the attachment procedure under Section 107 BNSS.<\/li>\n
  2. Whether bank accounts of a non-accused, non-suspect entity can be frozen solely because disputed funds passed through them.<\/li>\n
  3. Whether such freezing violates Articles 19(1)(g) and 21 of the Constitution, which protect the right to trade and livelihood.<\/li>\n
  4. Whether freezing must be proportionate, reasoned, and supported by material indicating complicity.<\/li>\n<\/ol>\n

    Decision<\/strong><\/h3>\n

    The Court held that Section 106 BNSS allows the police to seize evidence but does not empower them to freeze or attach bank accounts. The act states that all processes for obtaining alleged crime proceeds must comply with the requirements set out in Section 107 BNSS, which states that a competent Magistrate must give prior approval and issue orders after completing the necessary procedures.<\/p>\n

    The Court held that the process of freezing entire accounts without reason amounts to arbitrary behavior because account holders are not charged or suspected of anything. The Court directed that Defreezing all bank accounts of the petitioners must happen immediately. The investigation agencies have the power to investigate BNSS laws if they have trustworthy evidence of involvement. The future freezing of assets must be justified from a legal perspective, which must show the right amount of control and give specific reasons.<\/p>\n

    The ruling stated that businesses should not be penalized for crimes committed by third parties because it affects their business while cybercrime investigations must safeguard basic rights.<\/p>\n\n","protected":false},"excerpt":{"rendered":"

    Malabar Gold and Diamond Ltd. & Ors. v. Union of India & Ors. W.P.(C) 4198\/2025 PURUSHAINDRA KUMAR KAURAV, J   Overview The Delhi High Court examined the legality of freezing the bank accounts of a business entity solely on the basis that the proceeds of an alleged cyber fraud committed by a third party had […]<\/p>\n","protected":false},"author":1,"featured_media":3613,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-3611","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-judgement"],"_links":{"self":[{"href":"https:\/\/xpertslegal.com\/blog\/wp-json\/wp\/v2\/posts\/3611","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/xpertslegal.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/xpertslegal.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/xpertslegal.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/xpertslegal.com\/blog\/wp-json\/wp\/v2\/comments?post=3611"}],"version-history":[{"count":2,"href":"https:\/\/xpertslegal.com\/blog\/wp-json\/wp\/v2\/posts\/3611\/revisions"}],"predecessor-version":[{"id":3615,"href":"https:\/\/xpertslegal.com\/blog\/wp-json\/wp\/v2\/posts\/3611\/revisions\/3615"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/xpertslegal.com\/blog\/wp-json\/wp\/v2\/media\/3613"}],"wp:attachment":[{"href":"https:\/\/xpertslegal.com\/blog\/wp-json\/wp\/v2\/media?parent=3611"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/xpertslegal.com\/blog\/wp-json\/wp\/v2\/categories?post=3611"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/xpertslegal.com\/blog\/wp-json\/wp\/v2\/tags?post=3611"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}