Shraddish Seva Foundation vs. State Of Rajasthan

Facts

Multiple petitioners filed writ petitions challenging the freezing of their bank accounts, allegedly due to cybercrime complaints. The petitioners include individuals and businesses such as Rajan Devi, M/s Aditya Enterprise, M/s Angel Corporation, Ankit Kumar Saini, Ram Avtar Yadav, Vinod Kumar Jangir, Smt. Pratibha Gupta, Siyaram Enterprises, Naveen Kumar Sharma, Zpay Solutions Private Limited, Ratan Singh Rathore, and Umesh Agarwal. The respondents include various State of Rajasthan departments (Home Affairs), police authorities (Cyber Crime units), and banks (State Bank of India, UCO Bank, HDFC Bank, South Indian Bank Ltd., AU Small Finance Bank, IDFC First Bank Ltd., ICICI Bank Limited, Bank of Baroda). The core issue is the freezing of bank accounts without prior notice, impacting the account holders.

Held

The Court held that while the freezing of bank accounts in cybercrime investigations can cause prejudice, immediate preventive action by investigating agencies cannot be termed arbitrary solely on the ground of lack of prior notice. This is due to the nature of cyber offenses where proceeds can be quickly transferred. However, such power must be exercised with circumspection, proportionality to the alleged fraud, and should not continue indefinitely without review. The Court noted the existence of an efficacious grievance redressal mechanism under the Standard Operating Procedure (SOP) dated 02.01.2026, which provides a structured, time-bound process involving a District Grievance Officer and a State Grievance Officer, and recourse to the jurisdictional court. The Court also referred to the judgment in Madna Ram Vs. RBI & Anr. (dated 12.08.2026) and its directions. Consequently, the Court found that writ petitions seeking de-freezing of accounts without first availing the remedies under the SOP are ordinarily premature. The authorities are required to ensure proportionality and adhere to the safeguards and timelines prescribed in the SOP and the Madna Ram judgment. The Court permitted parties or their advocates to contest cases before the respondents.

Key Issues

1. Whether the freezing of bank accounts by investigating agencies in connection with cybercrime complaints, without prior notice to the account holder, is arbitrary and illegal, violating principles of natural justice? 2. Whether the existing grievance redressal mechanism, as outlined in the Standard Operating Procedure (SOP) dated 02.01.2026 issued under the National Cyber Crime Reporting Portal and Citizen Financial Cyber Fraud Reporting and Management System, is an efficacious remedy for account holders whose accounts have been frozen? Petitioner's arguments: The petitioners contended that the freezing of their bank accounts without affording them an opportunity to be heard is arbitrary and causes significant prejudice. They argued that such action, especially in the absence of a clear and accessible redressal mechanism, is unsustainable. Revenue/State's arguments: The respondents, including the State and police authorities, argued that in the context of cybercrimes, where funds can be rapidly transferred, immediate preventive action is necessary. They also pointed to the existence of a structured grievance redressal mechanism under the SOP, suggesting that writ petitions filed without exhausting this remedy are premature.