Nowsath vs. The Regional Director
Original PDF →Facts
The petitioner, Nowsath, a proprietor of AAA-CCTV Electronic Security System, filed a writ petition seeking to defreeze his savings bank account held with ICICI Bank (respondent 2). The account was frozen by the bank at the instance of the Cyber Crime Division (respondent 3) following a complaint lodged by S. Ammu. The complainant alleged she was cheated of Rs. 75,000/- by individuals promising benefits from QNET Company. The petitioner's account was frozen because a customer, Arun Rathakrishnan, who had purchased a CCTV for Rs. 75,000/- from the petitioner and for whom the petitioner had raised a GST invoice, was allegedly involved in the fraudulent scheme. The petitioner stated he was agreeable to hold Rs. 75,000/- as security for the investigation.
Held
The Court held that freezing an entire bank account under the guise of investigation, without quantifying the amount and period, is a violation of fundamental rights to trade, business, and livelihood. The Court referred to its previous order in W.P.No.25631 of 2024 and the principles laid down in Supreme Court judgments, including M.T.Enrica Lexie, Teesta Atul Setalvad, and Shento Varghese. The Court noted that while the Cyber Crime Bureau indicated suspected money of Rs. 2,48,835/-, the bank had frozen the entire account. Therefore, the Court directed the second respondent bank (ICICI Bank) to defreeze the petitioner's account after retaining a sum of Rs. 75,000/- to secure the interest of the complaint in FIR in Crime No.88 of 2023. The petitioner was permitted to operate the remaining balance in his account. The Court also stated it was open for the petitioner to work out his remedy before the concerned court in Karnataka for the release of the balance amount.
Key Issues
1. Whether the freezing of the petitioner's entire bank account is justified when the suspected tainted money is only Rs. 75,000/-, thereby violating the petitioner's fundamental rights to trade, business, and livelihood? (This issue turns on the principles of natural justice and the proportionality of freezing orders in the context of ongoing investigations). Petitioner's arguments: The petitioner argued that a blanket order freezing the entire account without quantifying the amount and period is a violation of fundamental rights. He relied on a previous High Court decision in W.P.No.25631 of 2024 (Mohammed Saifullah Vs Reserve Bank of India and others) which cited a circular from the Commissioner of Police, Greater Chennai Police, and another decision in WP No.13509 of 2024, which directed the account holder to execute a bond. Revenue/State's arguments: The judgment does not record specific arguments from the revenue or state respondents regarding the justification of the blanket freeze. The freezing was initiated based on instructions from the Cyber Crime Bureau.
AI-generated summary — verify with the full judgment below
Before: Dr.Natesan Road,
This writ petition has been filed for a Mandamus to direct the second respondent bank to defreeze the petitioner's savings bank account No. 613201517513 and release the entire savings amount including the amount of Rs.75,000/- by the second respondent by considering the petitioner's representation dated 29.01.2025. 2. The petitioner appears to be a proprietor of proprietix concern, namely AAA-CCTV Electronic Security System having branches at Trichy and Karaikudi. It is the case of the petitioner that a customer named, Arun Rathakrishnan had purchased a CCTV from Trichy Unit of the petitioner for a 2/8 https://www.mhc.tn.gov.in/judis sum of Rs.75,000/-. The petitioner also raised a GST invoice after charging necessary Goods and Services Tax for the supply of the CCTV to the said Arun Rathakrishnan, who claimed himself to be the proprietor of Arun Smart Store, Tennur, Trichy – 17. 3. It appears that a complaint had been lodged by one S.Ammu from K.G.F., stating that she is an unemployed person and she had received a phone call on 12.10.2021, from a person who promised to the said complainant to provide her with certain benefits provided she invests amounts with QNET Company and believing the same she transferred the amounts to the said QNET Company on the instructions of the following persons:- 1.Gantanlaka (Mobile No.9620066923) 2.Santhosh Achari (Mobile No.8073461438) 3.Arjun Radhkrishna (Mobile No.9894150686) 4.Ayay, said to be IDFC Bank Manager (Mobile No.7008899814)
However, she was cheated and therefore, she had approached the KGF Central Crime Police Station, Karnataka, which registered an FIR in Crime No.88 of 2023 for offence under Section 420 of the IPC read with the 3/8 https://www.mhc.tn.gov.in/judis Information Technology Act, 2000. Based on the instructions received from the counter part of the third respondent, the petitioner's account was frozen as the said Arun Rathakrishnan, the proprietor of Arun Smart Store, Tennur, Trichy -17, had purchased the CCTV and other goods from the petitioner. The amount transferred by the Said S.Ammu, the complainant appears to be Rs.75,000/- However, the petitioner account with the second respondent has been frozen at the instance of the third respondent pursuant to the instructions received from the counter part.
The learned counsel for the petitioner submits that the petitioner is agreeable to hold a sum of Rs.75,000/- as security for the crime under 4/8 https://www.mhc.tn.gov.in/judis
This Court has taken note of the situation and ordered as under in W.P.No.25631 of 2024:
Unfortunately, in most of the cases the guidelines issued in this Circular not observed. Later when an identical issue came up for consideration before this Court in WP No.13509 of 2024 considering the dictum laid down by the Hon’ble Supreme Court in M.T.Enrica Lexie and another –vs- Doramma and others reported in MANU/SC/0409/2012, Teesta Atul Setalvad and others –vs- The State of Gujarat and others, reported in (2018) 2 SCC 372 and Shento Varghese –vs- Julfikar Husen and others, reported in 2024 SCC Online SC 895, directed the petitioner/account holder to execute a bond undertaking to deposit the amount in case the money found in his account is a tainted money and liable to be forfeited.
As far as the present case in hand, though the intimation from the Cyber Crime Bureau, Telangana, indicates that suspected money in the account of the petitioner is only a tune of Rs. 2,48,835/-, due to the blanket order to freeze the account, the fifth respondent Bank has freezed the account in its entirety. Therefore, the petitioner herein is unable to operate his account and deal with the money lying in his account.
Under the guise of investigation, order freezing the entire account without quantifying the amount and period cannot be passed. Such order will be construed as violation of the fundamental rights of trade and business as well as violation of livelihood. Therefore, it is appropriate to direct the fifth respondent to de-freeze the account and kept a lien over a sum of Rs. 2,50,000/-. The petitioner herein is permitted to operate his account, subject to the condition that he shall ensure, the account shall always have a minimum of Rs. 2,50,000/-.
With the above directions, this Writ Petition is disposed of. There shall be no order as to costs. 5/8 https://www.mhc.tn.gov.in/judis
Since the petitioner's account has been frozen on account of transactions with the said Arun Rathakrishnan on 22.11.2021, 23.11.2021 and 24.11.2021, there shall be a direction to the second respondent Bank to de-freeze the petitioner's account after retaining a sum of Rs.75,000/- to secure the interest of the complaint in FIR in Crime No.88 of 2023, dated 09.10.2023. It is open to the petitioner to work out the remedy before the Concerned Court in Karnataka for release of the balance amount.
The writ petition stands disposed of. There shall be no order as to costs.
2025 NCC : Yes / No Index : Yes / No Internet : Yes / No sn To 1.The Regional Director, Reserve Bank of India, Fort, Glacis, No. 16, Rajaji Road, Fort St. George, Chennai - 600001. 6/8 https://www.mhc.tn.gov.in/judis
The Branch Manager, ICICI Bank, Trichy Main Branch, No. 58, West Bouleward Road, Sivapoorna Complex, Trichy. 3.The Superintendent of Police, Cyber Crime Division -I, Cyber Crime Wing-Iii, Dr.Natesan Road, Police Training College Campus, 3rd Floor, Ashok Nagar, Chennai. 7/8 https://www.mhc.tn.gov.in/judis C.SARAVANAN, J.
sn
W.P(MD).No.17966 of 2025
2025 8/8 https://www.mhc.tn.gov.in/judis
Reproduced from the public record of the Madras High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.