Who this is for
Account holders often discover a freeze only when a payment fails. In cyber fraud investigations, money is traced through several accounts, and an account that received part of it — even for genuine goods or services — can be frozen on a request from a police station anywhere in India. Traders, shopkeepers and professionals who receive UPI payments are frequently affected.
The firm advises account holders on finding out why the account was frozen, limiting the restriction to the disputed amount, and obtaining release through the investigating agency, the Magistrate or the High Court.
The law as it stands
- Section 106, BNSS 2023 (formerly Section 102 CrPC) allows the police to seize property connected with an offence, and the seizure must be reported to the Magistrate.
- Section 107, BNSS 2023 requires an order of the Magistrate to attach property believed to be proceeds of crime.
- Several High Courts have held that a restraint should ordinarily be a lien on the disputed amount, not a blanket debit freeze of the whole account, and that it must rest on recorded material linking the account to the offence.
- A freeze cannot continue indefinitely merely because an investigation is pending; it should be reviewed and lifted when the account holder’s connection to the offence is not shown.
- Article 226 of the Constitution allows the High Court to intervene where a freeze is without authority, disproportionate or left unexplained.
Steps to unfreeze an account
- Get the details from the bank in writing: which agency asked for the freeze, the complaint or case number, and the amount under restriction.
- Identify the disputed transaction in your statement and gather proof of why you received it (invoice, GST record, delivery proof, chat with the payer).
- Written representation to the investigating officer explaining the transaction and asking for the restriction to be limited to the disputed amount or lifted.
- Application before the Magistrate for release or modification of the freeze, where the agency does not respond.
- Writ petition before the High Court where the freeze is arbitrary, indefinite or covers far more than the disputed amount.
Documents to keep ready
- The bank’s letter, email or SMS about the freeze
- Account statement for at least three months around the disputed credit
- Invoices, GST returns, delivery or service records for the transaction
- Communication with the person who made the payment
- KYC documents and, for businesses, registration and GST certificates
- Any notice received from the police
Frequently asked questions
Why was my account frozen when I did nothing wrong?
Money from a fraud may have reached your account, often after passing through other accounts, for example as payment for goods you sold. The police trace the money trail and ask banks to restrict accounts that received it. Showing that you received the money in a genuine transaction is the starting point for release.
Can the bank freeze my entire account for a small disputed amount?
Courts have repeatedly said the restriction should ordinarily be limited to the disputed amount through a lien, with the rest of the account left operational. Where the whole account is blocked, a representation and, if needed, a court application can be made.
Do I have to travel to the state where the complaint was filed?
Not always. Representations can usually be sent in writing and by email. Depending on the facts, a writ petition may be filed before the High Court within whose territory the account is held.
How long can a freeze last?
The law sets no fixed period, but a freeze cannot be kept in place indefinitely without review. A long, unexplained freeze is itself a ground for approaching the court.
Will the freeze affect my credit record?
A police-requested restriction is not a loan default. Keep records of the freeze and its release in case a lender or business partner asks about it.