Introduction
Court: High Court of Judicature for Rajasthan at Jodhpur
Bench: Hon’ble Mr. Justice Kuldeep Mathur
Matter: S.B. Civil Writ Petition No. 1885 of 2026
Petitioner: Dilip Singh Chouhan (S/o Nepal Singh Chouhan), resident of Dungarpur, Rajasthan
Respondents: Multiple investigating police stations (including Thane, Kolhapur, Gurugram, Surat, and Ghaziabad) and AU Small Finance Bank (Nodal Officer, Sagwara Branch)
Order Date: 18 February 2026
Case Background
Relief Sought:
The petitioner sought issuance of appropriate directions under Article 226 of the Constitution of India for defreezing his AU Small Finance Bank account No. 2121224136147072 (IFSC: AUBL0002241), removal of lien/hold entries imposed on the account, quashing of any freezing communications allegedly issued without notice, direction for completion of the investigation within a time-bound period, and permission to operate the account partially for essential expenses pending investigation.
Context:
Multiple FIRs and complaints registered across different jurisdictions alleged that certain amounts had been transferred into the petitioner’s bank account in connection with suspected offences. Acting upon communications received from investigating agencies, the respondent-bank froze the petitioner’s account. The petitioner denied any involvement in wrongdoing and submitted that continued blanket freezing of the account deprived him of access to legitimate funds required for family sustenance, payment of educational fees, medical contingencies, and professional commitments.
Issues Before the Court
- Whether the entire bank account may be frozen where only specific sums are alleged to be tainted.
- Whether the petitioner should be permitted to operate the account for legitimate transactions while the disputed amount remains under lien.
- What procedure should be followed where the investigating officer has not specified the exact amount to be earmarked for lien.
Parties’ Submissions
Petitioner:
Learned counsel Mr. Mahip Singh, appearing for Mr. Adarsh Singhal, submitted that the freezing of the petitioner’s account had been imposed without prior notice or opportunity of hearing and had caused significant hardship. It was requested that the Court direct the bank to permit operation of the account beyond the disputed amount and ensure that any investigation is completed within a reasonable time frame.
Respondents:
Multiple investigating agencies and the respondent-bank were impleaded in the proceedings. The order does not record detailed contested pleadings; however, the Court proceeded to frame directions to the bank and investigating officers to ensure proportionality and procedural clarity in the freezing process.
Court’s Observations and Reasoning
The Court emphasized the principle of proportionality, observing that freezing the entire bank account when only a portion of the funds is alleged to be connected with suspicious transactions results in unnecessary hardship to the account holder. Accordingly, it was held appropriate that only the disputed amount be kept under freeze while the petitioner is permitted to operate the account with respect to the remaining balance.
The Court also addressed situations where the investigating agency has not communicated the exact amount to be earmarked for lien. In such circumstances, the bank is required to initiate communication with the concerned Investigating Officer seeking specification of the disputed amount, and the Investigating Officer is obligated to respond within a stipulated period, thereby ensuring that only the relevant amount remains frozen.
Operative Order
Primary Direction:
Respondent No.6, AU Small Finance Bank, is directed to retain freeze only over the disputed amount (i.e., the amount alleged to have been illegally transferred into the petitioner’s account) and to permit the petitioner to operate the account with respect to the remaining balance.
Communication Protocol:
- If the bank has not received information regarding the exact disputed amount from the Investigating Officer or police authorities, the bank shall send a communication to the concerned Investigating Officer or police authorities, endorsing a copy of the Court’s order, requesting specification of the amount to be earmarked under lien.
- Upon receipt of such communication, the concerned Investigating Officer shall inform the bank of the amount to be kept under lien within seven days of receiving the communication.
- In the event that no response is received within the stipulated period, the bank shall proceed in accordance with the Court’s directions and permit operation of the account beyond the disputed amount, while retaining authority to freeze the identified amount once it is subsequently specified.
Disposition:
The writ petition was disposed of in the above terms, and all pending applications, including stay petitions, were also disposed of accordingly.
Key Takeaways and Practical Implications
Proportionate Freezing Requirement:
The order reiterates that freezing actions must be proportionate and limited to the specific disputed amount rather than imposing blanket freezes over entire bank accounts.
Mandatory Bank–Police Coordination:
Banks are required to communicate with investigating authorities to ascertain the exact lien amount, and investigating officers are obligated to respond within the specified timeframe to avoid unnecessary hardship to account holders.
Operational Clarity for Financial Institutions:
Where investigating agencies fail to specify the disputed amount, banks must implement the Court’s directions and permit operation of the remaining balance instead of maintaining indefinite total freezes.
Procedural Nature of Relief:
The relief granted restores access to legitimate funds but does not determine the merits of the allegations or affect the course of the ongoing investigation.
Suggested Next Steps
For the Petitioner:
Resume lawful transactions using the unfrozen balance, maintain records of transactions and communications, and cooperate fully with investigating authorities.
For the Bank:
If the lien amount has not yet been specified, send the prescribed communication to the Investigating Officer, earmark the amount once communicated, restore account operations for the remaining balance, and maintain documentation evidencing compliance.
For Investigating Officers / Police:
Respond to the bank’s communication within seven days specifying the exact amount to be retained under lien and provide supporting particulars to justify the lien in accordance with law.