Case Summary: Pawan Kumar Rai vs. Union of India & Anr., W.P.(C) 15066/2024, Decided on 17th December 2024

Court: High Court of Delhi
Coram: Hon’ble Mr. Justice Manoj Jain

Facts:

• The petitioner, Pawan Kumar Rai, is a small-time street vendor selling chhole-bhature in Ashok Vihar, Delhi.
• He maintained a savings account at Union Bank of India.
• On 01.10.2024, he was shocked to find his bank account frozen without prior notice.
• It was later revealed that a mere sum of Rs. 105/- was credited from an unknown person, allegedly linked to a cyber fraud case.
• The freezing was based on a communication from Anantapur IV Town Police Station (Andhra Pradesh) regarding a cyber fraud complaint filed by a person named Mr. Lokesh.
• The petitioner denied any involvement or knowledge of such fraud and argued that the freezing was done without following principles of natural justice.

Petitioner’s Submissions:

• No prior notice or opportunity to be heard was given.
• The action violated the principles of natural justice and audi alteram partem.
• Petitioner’s entire livelihood was jeopardized as he depended on the frozen account to conduct daily transactions.
• He suggested the possibility that the Rs. 105/- might have been paid by a customer for food via UPI.
• Contended that only Rs. 105/- should be lien-marked, not the entire balance of Rs. 1,22,556/-.

Observations of the Court:

• The court found no indication that the petitioner was involved in any criminal conspiracy.
• The freezing of the entire account merely for Rs. 105/- was deemed excessive and unjustified.
• The freezing order was passed without informing the Magistrate under Section 102 CrPC (now Section 106 BNSS).
• The court acknowledged the petitioner’s right to livelihood under Article 21 of the Constitution, emphasizing that freezing the entire account was a gross encroachment on this fundamental right.
• The bank admitted receiving no further communication from the police after the initial freezing request.

Court’s Direction:

• Directed the bank to de-freeze the petitioner’s account except for Rs. 105/-, which may be lien-marked.
• Petitioner was permitted to operate his bank account freely, ensuring his business and livelihood are not hampered.
• The bank was directed to inform the concerned police station and provide a copy of the court order.

Significance:

This judgment is a crucial precedent affirming that:
• Entire bank accounts should not be frozen without proportionality and due process.
• Fundamental rights such as the right to livelihood cannot be compromised without compelling reasons.
• Law enforcement and banks must act within the bounds of procedural fairness while addressing cyber fraud