Topic: Solution for Bank Account frozen by Cyber Police due to P2P Trading (India) - page 5. (Read 1871 times)

Scammers are using fake kyc documents to register bank accounts. Nowadays account opening can be done online. Due to rampant negligence in new banks where no physical verification is done scammers are able to take advantage.

The problem is if you don't have proof and you get some illegal funds in your account unknowingly not only will you be charged under various sections of IPC but they can also charge you under PMLA (Prevention of Money Laundering Act) provided you have used the illegal funds to purchase assets or convert it into some other form.

P2P Trading with the wrong person can land you in a hell of a lot of trouble.

How can you exactly stay safe when you are crypto trading if it's your government that is against it and freezes your account, that's just impossible to do. Also, why do they want a KYC when the crypto profits from trading goes into the bank account of the user, it's not like their using an alias to that bank account.

Not only in India, the problem exists in most of the countries and traders are losing their money after months and years later s they don't even know where to start and which trade went wrong.

I made some strong points about avoiding such scammers a long way back but the same points can be helpful even now.

I began to agree with you. A lot of peer-to-peer transactions have become a source of suspicion and can be considered dangerous.
The problem is that although cryptocurrencies can be tracked, many countries do not have enough resources to track these transactions, and because they are multiple countries, it will become impossible to track them.
So it is a suitable place for all scammers.

Extremely useful and correct at the same time. But a major question that I have is that have you or any of your acquaintance have encountered any such incident? Or are you just giving a normal SOP that the banks and vigilance follow whenever such a thing happens? Because honestly speaking I have never heard of anyone stuck so bad that his account froze due to these doubts.
 
Also if anyone gets stuck in this situation I think it really won't be easy to get out of it especially if you have done it through telegram or even the forum.

Staying safe and staying not implicated in Cryptocurrency trading is difficult but it is at least ensured on binance centralised exchange as every peer to peer users are expected to pass their Know Your Customer (KYC) before being allowed to trade. In case of issue of transactions involving a suspected account, I believe one's lawyer can request the investigating officer to contact the exchange to examine that one is not an accomplice in a fraud case but just a p2p cryptocurrency trader.

Any transaction done online leaves a trail. If the coins were sourced illegally then it can still create problems in direct trades as bitcoin is not exactly anonymous. In direct trades, you are usually blindsided to the personal identity of the buyer and the source of funds. It's next to impossible to prove that the coins arrived in your wallet during a direct trade done with cash. It's still better to stick with online platforms as you have enough proof.

People residing in India can take note of the following terms:

Cognizable Offence: It allows a police officer to arrest without a warrant. Please do not worry if you have done nothing wrong. If you fear harassment you can apply for anticipatory or pre-arrest bail.

Non-Bailable Offence: It means that the right to grant bail lies with the court and you need to get the court's permission for availing bail.

Compoundable Offence: It means with the permission of the court/authorities you can settle with the complainant and get your issue resolved. In the case of non-compoundable offences if the chances of conviction are less then the courts may allow settlement and quash the FIR.

Nice and resourceful article! Many people in India have already got their bank account frozen after p2p trading. Because there is no way to know from where the bitcoin buyer is arranging the money for you. So it is always best to avoid unknown traders emerged from nowhere.

I always prefer localbitcoins platform because I can see the rating of a trader from there. Also I can see that how frequently that person trades. An usually active trader will have nice ratings. The best part of localbitcoins is that, you can't post rating for any random people, rather only to the people you have closed a trade contract. So just keep your eye and ears open and you should be fine.

Good article, but proving your involvement in criminal activity just to transfer money from someone's account to your account is not a legal argument.
The problem of you buying and selling to the same person is considered money laundering and may lead to many legal problems, so it is better to buy and sell using cash, gift cards, or anything that does not include bank transfers.

Freezing your account, and if it does not mean losing money, it may waste a lot of time and money on legal procedures.
Peer-to-peer trading is beneficial in reducing fees but it must be approached with awareness and more seriousness.

in my country it self fintech or p2p lending getting crazy so many of them pop up and make easy to take the loan from singe ID card and yes the ID card from custumer kyc can be sell by the company to other provide who need the data

thats why for now i kinda scared to do some kyc if leaks happen we are done

This is quite a useful post and helps people understand the risk in P2P trading. I was always under the impression that P2P trading with these big exchanges are safe. However, I always avoided this route. Now, I'm happy that I never did that.

But yes, explaining people the risk about P2P trading is essential.

The rise of fintech companies has opened the gateway for fraudsters. In a race to open customer account PayTM and other companies are doing online KYC which fraudsters are using to open bank accounts with fake documents.

In case you can't resolve using the above-mentioned methods you might need to contact the local courts to obtain a defreeze notice. FIR copy's are nowadays available on online search portals. You can use them to get more information. Make sure to keep all the relevant proofs and do not do any direct trades.

This post is for those people who are innocent and have their bank account frozen due to a debit freeze order from Cyber Police.

Before we begin, I just wanted to mention that in case you're not fond of reading lengthy articles, you can get a quick overview here:
https://i.imgur.com/5J3DI8p.png

P2P trading is quite popular in India, and many people use it for daily trading. Platforms like Localbitcoins, WazirX, Binance, Paxful, Kucoin, etc., have a lot of liquidity in this space.

Unfortunately, people don't realize the risk of trading in P2P since there is an extremely high possibility of unknowingly getting money from a fraudster's account.

After the onset of the pandemic, the number of cyber frauds has skyrocketed. Cyber Criminals are always looking for ways to launder their money, and P2P Crypto Trading is easy for them to cash out instantly without any trace.


How Does A P2P Fraud Occur, And How Does It Affect Me?
During a fraud, the scammer lures the victim to send funds using a lottery scam, romance scam, etc.

In return, the scammer uses it to buy crypto from an unsuspecting seller (You) through P2P.

There can also be other scenarios where the scammer launches a P2P trade with you and then asks the victim to send funds directly to you.

Once the victim realizes the fraud, they complain to the local Police. The Police immediately get into action and try to locate the money and freeze it. Once they find the amount in a bank account, they send a freeze notice to your Bank's Nodal Officer under Section-102 CrPC to prevent the funds from getting withdrawn. The Police also have the power to get your KYC and transaction details using Section-91 CrPC.

Once the investigation begins, they start scanning all your transactions. They might also freeze accounts of your beneficiaries depending on their suspicion.


Should I Be Worried?
It's natural for you to panic when you realize that the Cyber Police have frozen your bank account.

Your mind starts racing, and you begin thinking about the worst outcomes, like landing in jail for a crime you didn't commit.

It's common for most people to end up with panic and anxiety because they don't know what to do.

I would request you not to worry and instead educate yourself about the law using my post.


What Should I Do After I Discover The Freeze?
Understand Why The Freeze Occurred: To understand why your bank account was frozen, you need to obtain a copy of the freeze notice sent to the bank by the Authorities (Cyber Police).

The banks are usually reluctant to share this copy, but if you're persistent, you can quickly get a hold of it. Remember, you have a legal right to prepare your defense; the freeze notice copy is integral to it.

In case they are reluctant to pass the freeze notice copy, then you can launch a complaint against the bank for free at:
RBI Ombudsman (https://cms.rbi.org.in/cms/indexpage.html#eng)
Public Grievance Portal (https://pgportal.gov.in/)
National Consumer Helpline (https://consumerhelpline.gov.in/)

Once you get the copy of the freeze notice, please read it thoroughly, as it may have details about the nature of the crime. This will help you understand how to prepare for your case.

Check The Section Of Freeze Notice: The section of the freeze notice is super important to understand if your bank account freeze is invalid or illegal. You can find details about the section at the top of the notice.

These freeze notices are usually sent under two sections, i.e., Section-91 and Section-102 CrPC.

If the freeze notice is under Section-91 CrPC, the Police have used the wrong section of CrPC and illegally frozen your account as they do not have the right to do so.

Section-91 only empowers the Police to get KYC and other details from the bank. However, it doesn't empower the Police to freeze your account.

You can read more about Section-91 here:
https://indiankanoon.org/doc/788840/

On the other hand, if the freeze notice is under Section-102 CrPC, it's legal and valid. The only thing to check in this case is whether the Investigating Officer has informed the local Magistrate. This is a mandatory requirement of Section-102 CrPC. You can use a copy application to get details from your local Court.

Reread the freeze notice thoroughly, especially if it's under Section-91 CrPC, and try to locate specific instructions for freezing your account. Sometimes freeze notices are sent only to get details of your KYC and transactions. However, they may not include an instruction to freeze your account.

Determine The Amount Of Fraud: The freeze notice might include details about the amount involved in the fraud. If the amount is small, then with the help of a lawyer, you can negotiate a settlement with the victim and save yourself time and court fees.

Gather Evidence: Once you've finished the steps above, it's time to gather evidence.

The following will help you prove your innocence:
P2P Trade logs and details from the exchange.
IP Address Logs at the exchange.
Location records of your phone.

P2P Trade logs will prove that you conducted trade on an intermediary platform (Binance, WazirX, LocalBitcoins) and had little to no information regarding the buyer's background.

IP Address logs from the exchange will prove your online presence at the intermediary platform (Binance, WazirX, LocalBitcoins) while receiving funds from the scammer.

The location records of your phone will further add to the fact that you were present in front of the computer while receiving funds from the scammer.

All the above details will prove the final fact that you conducted trade with an unknown buyer at an intermediary platform (Binance, WazirX, LocalBitcoins), due to which you ended up receiving stolen money involuntarily.

Contact A Local Lawyer: Check which state/city the freeze notice came from and then hire a lawyer belonging to that state/city. Avoid googling for lawyers, as most of them are inexperienced and will misguide you. The best option is to go with referrals from trusted sources.

How to choose a good lawyer:
1. Select lawyers between the ages of 35-45 as experience matters. Experienced lawyers usually have a vast network and more knowledge.
2. Avoid big law firms, as rookie /junior lawyers will probably take up your case. Prominent lawyers are primarily interested in high-profile cases.
3. Do not disclose the overall balance in the account to your Lawyer. They will use that info to decide your fees. Make sure to ask for their fees before proceeding.


What Should I Avoid Doing After The Freeze?
There are certain acts you should avoid doing as they are not going to produce any results.

Posting On Social Media: I have seen many people discussing their problems on social media and then tagging the Exchange, Cyber Police, Ministry Of Home Affairs, Prime Minister, Finance Minister, etc.

Such moves will only draw unnecessary attention to your case. Most people on social media are inexperienced in law, and they will start blaming the system for your misery. In the end, you will develop a victim mindset and avoid taking responsibility for solving your case.

Contacting The Victim/Bribing The Police: People also try to get in touch with the victim or settle the case under the table with the Police. If you opt for such moves, it will only increase your worries.

If you contact the victim, the Police will get an opportunity to establish a link between you and the victim. They may try to make you a scapegoat in the case.

On the other hand, if you bribe the Police, it's against the law and will land you in even bigger trouble. It can also lead to a case of abetting corruption being filed against you, further tarnishing your image in front of the Court.

Approaching The Consumer Court: In the hopes of getting a quick solution, many people lodge a complaint in the Consumer Court against the bank for deficiency of service or unfair trade practices.

Unfortunately, Consumer Courts do not have jurisdiction over criminal matters, so there is no point in making such a move.

It's also important to note that the banks have complied with the instruction of the Police, so they cannot be held liable for deficiency of service or unfair trade practices.

Such moves will only cost you money and time.

So avoid making uninformed decisions.


The Victim Has Filed A FIR Against Me. What Should I Do?
In a case where the scammer asks the victim to send funds to your account during a P2P trade, then the Police might register a FIR against you.

FIRs are registered under Section-156 CrPC. You have to right to get a copy of it. Most copies are available online on the Citizens portal these days. You can google it or seek the help of your Lawyer to get a copy.

You can read more about Section-156 CrPC here:
https://indiankanoon.org/doc/1291024/

Sometimes the Police will mention the FIR number on the freeze notice. You can refer to it and download the copy online.

Once you download the copy, read it thoroughly to determine the charges against you. Most of these charges are under Section-406 and Section-420 IPC. To prove these charges, the Police need to prove that you had an intention to deceive the victim right from the start of the transaction. In your case, it will be extremely difficult to do so since you did a P2P trade and you did not even know that you were getting involved in a fraud. So you were blindsided, and your action was involuntary. Remember, you cannot be convicted if the Police can't prove criminal intent.

The first thing to do is apply for anticipatory or pre-arrest bail under Section-438 CrPC. Anticipatory bail prevents the Police from arresting you. If you can't get it from lower courts, approach the High Court for the same. Once you get anticipatory bail, make sure to cooperate with the Police fully. Explain your side of the story with the help of your Lawyer.

You can read more about Section-438 CrPC here:
https://indiankanoon.org/doc/1783708/

Suppose the allegations in FIR are baseless and false. In that case, you can also lodge a petition to quash the FIR under Section-482 CrPC. Finally, note that the Courts will only grant such a petition based on merit.

You can read more about Section-482 CrPC here:
https://indiankanoon.org/doc/1679850/

If the FIR gets quashed, the case will get closed. However, you will have to face a trial if you can't get it quashed. Use the pieces of evidence that you have to prove your innocence.

In the meantime, you can use Section 451/457 to lodge a defreeze petition. The defreeze will allow you to access your funds which you can use to fight your case. Please note that you may be required to provide sureties as a deposit to the Court. You will get your deposit back when the case concludes.


Can The Police Arrest Me?
Nowadays, arrests are rare, and unless you've actually done something wrong, the Police won't arrest you. Instead, they may call you for your statement.

In Arnesh Kumar vs. State Of Bihar & Anr on 2 July 2014, the Hon'ble Supreme Court passed special instructions for arrest. It directed all Police officers to avoid automatic arrests for offences that are punishable with imprisonment for a term up to 7yrs (or less).

In most cases of bank freeze due to P2P trading, the FIR is usually registered under Section-406 and Section-420 IPC, both of which are applicable under Section 41A CrPC.

The Hon'ble Supreme Court laid down guidelines for arrest in Section-41A CrPC, which requires the Police to send you a notice for appearance. If you continue to comply with the notice and appear when you're summoned, you shall not be arrested.

You can read more about Section-41A CrPC here:
https://www.indiacode.nic.in/show-data?actid=AC_CEN_5_23_000010_197402_1517807320555&orderno=43

Now this section doesn't necessarily mean that the Police are powerless to arrest you. For example, if they have a reasonable complaint, credible information, or reasonable suspicion against you. In that case, they can still arrest you under the provisions of Section-41 CrPC.

But since this thread is for people who have not participated in a crime, I would say you don't need to worry much about an arrest. In most cases, the FIR might not even include your name. So it will be mandatory for the Police to send you a pre-arrest notice under Section-41A CrPC. If they make an arrest, they will need to record solid reasons for their action, which does not exist in your case. If the Police fail to follow the provisions of Section-41A CrPC you can prosecute them for Contempt of Court.

Suppose you want to be extra cautious and avoid harassment by the Police. In that case, you can file for anticipatory bail in Court under Section-438 CrPC. Inform the Police about your application and ensure them of full cooperation after you receive a copy of your anticipatory bail from the Court.

In most cases, the freeze notice comes from outside your state. You might not even be informed or summoned.

It's important to note that according to Section-160(1) CrPC, the Police cannot summon a person outside their territorial limits. So, if the Police from another state demand your attendance, refer to your Lawyer for the best course of action.

You can read more about Section-160(1) CrPC here:
https://indiankanoon.org/doc/210253/

Here are some favorable judgments passed by our Hon'ble Courts against random arrests:

In Mohd. Zubair vs. STATE OF NCT OF DELHI & ORS., Writ Petition(s)(Criminal) No(s).279/2022

The Hon'ble Supreme Court bench led by Justice DY Chandrachud stated:

"Because it results in one of the gravest possible consequences emanating from criminal law: the loss of personal liberty. Individuals must not be punished solely on the basis of allegations, and without a fair trial. When the power to arrest is exercised without application of mind and without due regard to the law, it amounts to an abuse of power. The criminal law and its processes ought not to be instrumentalized as a tool of harassment. Section 41 of the CrPC as well as the safeguards in criminal law exist in recognition of the reality that any criminal proceeding almost inevitably involves the might of the state, with unlimited resources at its disposal, against a lone individual".


In SATENDER KUMAR ANTIL v.s CENTRAL BUREAU OF INVESTIGATION & ANR.

The Hon'ble Supreme Court stated:

The courts will have to satisfy themselves on the compliance of Section 41 and 41A of the Code. Any non-compliance would entitle the accused for grant of bail.

We also expect the courts to come down heavily on the officers effecting arrest without due compliance of Section 41 and Section 41A. We express our hope that the Investigating Agencies would keep in mind the law laid down in Arnesh Kumar (Supra), the discretion to be exercised on the touchstone of presumption of innocence, and the safeguards provided under Section 41, since an arrest is not mandatory. If discretion is exercised to effect such an arrest, there shall be procedural compliance. Our view is also reflected by the interpretation of the specific provision under Section 60A of the Code which warrants the officer concerned to make the arrest strictly in accordance with the Code.


In POORAN SINGH vs. STATE OF DELHI, BAIL APPLN. 2029/2018

The Hon'ble HC stated:
It is trite law that the Police Officer before arresting the accused who is accused of offence which is punishable with imprisonment for a period of seven years has to be satisfied that such arrest is necessary to prevent a person from committing any further offence; or for proper investigation of the case; or to prevent the accused from causing the evidence of the offence to disappear; or tampering with such evidence in any manner; or to prevent such person from making any inducement, threat or promise to a witness so as to dissuade him by disclosing such facts to the Courts or the Police Officer; or unless such accused person is arrested, his presence in the Court whenever required cannot be ensured.


In Muhammed Rafi v. Satheesh Kumar M.V, CON.CASE(C) NO. 808 OF 2022, CRIME NO.254/2022 OF Vadakkanchery Police Station, Thrissur

The Hon'ble Kerala HC remarked:

Before we part, we deem it proper to remind that the power to arrest an individual vested in the State and exercised through its police officers at various stages of the criminal justice process, cannot be used as a punitive tool or as a measure of harassment unmindful of the duty to take into account the safeguards provided under Section 41 of the Cr.P.C. before the arrest of a citizen.


In RAKESH KUMAR v. VIJAYANTA ARYA (DCP) AND ORS

The Hon'ble Delhi HC sentenced the police officer to one-day imprisonment along with a fine of 2000INR and 15000INR (given to the victim) for violating the guidelines of Section-41(A).


In JAGDISH SHRIVASTAV vs. THE STATE OF MAHARASHTRA & ANR. (Crl.) No(s). 1758/2022

The Hon'ble Supreme Court has stated the following:
We deprecate such practice of the Police Officer in overstepping after the matter being instituted in this Court and taking the petitioners into custody without compliance of Section-41(A) Cr.P.C. and keeping in view the judgment of this Court in Arnesh Kumar vs. State of Bihar & Anr. (2014) 8 SCC 273.


In Sudhir Mehrotra vs. Investigating Officer & ANR., CONTEMPT APPLICATION (CRIMINAL) No. - 5 of 2022

The Hon'ble Allahabad High Court sentenced the Police officer to 14 days imprisonment for breaching Arnesh Kumar's guidelines on arrest.


Here is a good news article regarding arrest:
https://indianexpress.com/article/india/personal-liberty-important-aspect-of-constitutional-mandate-arrest-should-not-be-routinely-made-sc-7462666/


What Should I Do If I Have Visit The Police Station?
You may receive a notice from the Police Station under Section-41(A) demanding your appearance if you reside in their local jurisdiction.

In case they haven't sent you a notice under Section-41(A), then ask them to send you one.

Before visiting, ask them if they have installed functional CCTV cameras as per the directive of the Hon'ble Supreme Court. Keep this conversation on WhatsApp so that you have evidence if needed.

In Paramvir Singh Saini vs. Baljit Singh & Others Special Leave Petition (Criminal) No. 3543 of 2020

The Hon'ble Supreme Court directed all Police Stations to be equipped with CCTV Cameras. It also instructed that these cameras must be equipped with night vision and consist of audio and video footage.

CCTV cameras ensure the Police cannot harass you in any way.

Suppose the Police Station doesn't have a proper CCTV setup. In that case, you can lodge a contempt of court petition with your Lawyer's help. But make sure to cooperate with Police before you do so.

Also, if you have acquired an anticipatory bail, send the copy to the Police Station before making an appearance.

While recording your statement with the Police, make sure to read it at least three times to understand if it was noted correctly. In case of errors, you can refuse to sign the statement. Never sign any statement without reading it thoroughly.


What Are My Rights At The Police Station?
The Constitution of India has given you three important rights:

1. Right to remain silent: Article 20(3) of the Constitution and Section-161(2) of the CrPC allows you to protect yourself against self-incrimination. Even during police interrogation, you are entitled to remain silent. The Police cannot physically or mentally coerce you to give a confession.

For your information, Article 20(3) of the Indian Constitution states that "No person accused of an offence shall be compelled to be a witness against himself."

You can read more about Section-161(2) here:
https://indiankanoon.org/doc/1110422/


2. Right to consult a Lawyer: You can always ask your Lawyer to accompany you when you visit the Police Station.

3. Protection against torture: No Police Officer can torture you to get a confession. Also, a disclosure statement made in police custody, unless it leads to actual recovery, etc., will not be considered admissible evidence in Court.


How Can I Get My Account Defreezed?
Alright, now that we've reached the end of this article, let's discuss the remedy.

Following are the different scenarios that can happen and how you can solve them:

Bank Does An Illegal Freeze: Most banks don't even read the notice properly and proceed to freeze your account. Sometimes the banks will receive a notice under Section-91 CrPC, which does not have an instruction to freeze, yet they freeze your account. Such freeze is illegal, and you complain against your bank at:

RBI Ombudsman (https://cms.rbi.org.in/cms/indexpage.html#eng)
Public Grievance Portal (https://pgportal.gov.in/)  
National Consumer Helpline (https://consumerhelpline.gov.in/).

The above government portals can help you get your account defreezed without any cost.

Freeze Notice Is Under Section-91 CrPC: As mentioned above, the Police do not have the power to freeze your bank account under Section-91 CrPC.

The same has been iterated by the Hon'ble Uttarakhand HC in paragraphs 10 and 11 here:
https://app.box.com/s/f119n0cbsf7vorgnx1hv3wn61eauqpqm

You can show the above judgment to your Lawyer for reference purposes.

You can launch a defreeze petition under Section-451/457 CrPC in lower courts and challenge the illegal freeze on technical grounds. If you're willing to provide sureties to Court as a deposit, then the Court might consider defreezing your account.


Freeze Notice Is Under Section-102 CrPC: When the freeze notice is under Section-102 CrPC, it's usually a valid freeze. However, in some instances, the Investigating Officer does not comply with the provisions of this section.

To understand the compliances mentioned above, let's first take a look at Section-102 CrPC.

You can read about it here:
https://indiankanoon.org/doc/648213/

The word "forthwith" is mentioned in Section-102(3) CrPC, which means that the Investigating Officer has to report the seizure of your Bank Account to the local Magistrate as soon as possible. However, they usually ignore this requirement and may report it late. If they are unable to justify the delay, you can challenge the freeze in Court (under Section-451/457 CrPC) for non-compliance.

In the judgment reported in “1994 Supp (2) SCC 372 (Arjun Marik and others versus State of Bihar)”, wherein, the Honble Supreme Court dealt with a word forthwith occurring in Section 157 Cr.P.C., and held that forthwith means without any undue delay and immediately.

You can cite this judgment to defend your case if the Investigating Officer delays reporting the seizure.

To determine whether the seizure was reported or not, you can send a copy application to your local Court and confirm the same.

For a freeze to be valid under Section-102 CrPC, the property (Your Funds) must be either:
Alleged or suspected to have been stolen; or
Have a nexus between the property and the commission of the crime.

So the Investigating Officer needs to prove that you are in possession of the stolen property and you played a role by participating in the crime.

If you have received money directly from the victim or the scammer, it proves that you have stolen property.

But the Investigating Officer cannot establish the nexus as you can always claim that you received the funds unknowingly on a P2P platform while performing a random trade. This will again help you challenge the freeze in Court (under Section-451/457 CrPC) for non-compliance with provisions. Please note that the Court may ask for sureties before issuing a defreeze order.

An alternate remedy to approaching the courts would be to provide sureties in the form of a bond to the Police under Section-102(3) CrPC. Depending upon their satisfaction, they may allow your bank account to be defreezed.

Now I shall provide some useful judgments which will help your Lawyer challenge the freeze in Court:

The High Court of Telengana in Hajji Mohammed Sattar vs. State of Telangana ACB where it considered the fact that not only is the Petitioner a third party to the crime but also the statement of the bank account was already secured by the authorities. Therefore, given that the statement of bank account was already secured, the Court held that the offence (if any) could be proved from the entries made in the bank account. Since no other incriminating evidence was found by the investigating authority even after freezing the account, the Court found no reason to keep the accounts frozen.

In B. Kavitha vs. The Inspector of Police, the High Court of Madras while directing the de-freezing of an account pointed that the investigating authorities had not only failed to comply with the mandate of Section 102 but had also frozen the bank accounts without even registering an FIR, showing the hastiness of the officers' actions. The Court also considered that the said bank accounts were being used to repay the Petitioner's loan amounts. As such, the Court found the actions of the investigating authority as violative of the Petitioner's fundamental right under Article 21 of the Constitution.

Madhu vs. Sub Inspector of Police, the Court stated that a Petitioner can approach the High Court itself if the freezing is per se contrary to the provisions of law and could be assailed as illegal without reference to factual disputes involved in the matter.

Judgment of the Madras High Court titled as T. Subbulakshmi & Anr. v. The Commissioner of Police & Ors., 2013 SCC OnLine Mad 2629, which reiterates that the seizure has to be reported forthwith to a magistrate which is a necessary requirement and if the requirement is not fulfilled, then the seizure cannot be legally sustained.

In the case of Uma Maheswari & Anr. v. State rep. by Inspector of Police, 2013 SCC OnLine Mad 3829, the Court held that reporting of the freezing of the bank accounts is mandatory. Failure to do so will vitiate the freezing of the bank account. It shall be reported forthwith to the jurisdiction magistrate. The phrase shall employed in Section 102(3) Cr.P.C is held to be mandatory in nature and violation of it goes to the root of the matter.

Muktaben M. Mashru v. State Of Nct Of Delhi & Anr 29-11-2019 (Delhi HC)
Court is of the considered view that the order of IO of debitfreezing of bank accounts of accused / applicant Muktaben is in clear violation of mandatory requirement of law and therefore. The accounts of Muktaben seized/debit-freezed on the request of IO are directed to be de-freezed.

Para 38: It is an admitted fact that the IO had not informed the concerned Magistrate forthwith regarding the prohibitory order and also did not give any notice to the petitioner and the co-account holder, Piyush Bhai Thakkar, allowing her/him to operate the bank account, subject to her/his executing a bond undertaking to produce the amounts in court, as and when required or to tell her/him, subject to such orders as the Court may make regarding the disposal of the same.

The High Court of Bombay in Gulam Sarvar vs. State of Maharashtra and Ors.[5] in this context held that the:
Making of an allegation simplicitor; for the purposes of Section 102 of Cr.P.C., is not sufficient and it must be shown that the allegation is founded on such a material as to at least create a reasonable suspension about the amount in the account having some connection or possibility of having some connection with the commission of crime.

In R.Chandrasekar vs Inspector of Police, Salem [2002 (5) CTC 598], it was held that seizure of bank account by the investigating officer must be reported to the Magistrate as it is a mandatory requirement of law.

In Karthika Agencies Export House v.s The Commissioner of Police & Others, WP.No.17953 of 2021 and WMP.No.10605 of 2021, Hon'ble Justice GK Ilanthiraiyan (Madras HC) stated that:

The Hon'ble Supreme Court of India and this Court repeatedly held that the provision under Section 102(3) of Cr.P.C. requires that the police officer shall forthwith report the seizure to the Magistrate having jurisdiction. In the case on hand, the account was frozen on 18.02.2021 and the same was informed to the Magistrate concerned only on 17.09.2021. Therefore, the information of the seizure reported to the Magistrate only on 17.09.2021. Thus, the condition contemplated under Section 102(3) of Cr.P.C. to forthwith report the seizure before the Magistrate has not been complied with as well as it is not known whether superior officer has been informed in compliance with Section 102(2) of Cr.P.C.

In Narayan Yadav v. State of Karnataka, WRIT PETITION NO.226989/2020 (GM-RES), Hon’ble Mr. Justice Mohammad Nawaz  stated:

It is the contention that the freezing of the bank account of the petitioner was not reported forthwith to the Jurisdictional Magistrate, which is mandatory. It is not in dispute that all the four bank accounts of the petitioner have been freezed by virtue of the notice issued by the Investigating officer. Certainly such freezing of account would adversely affect his right to life under Article 21 of the Constitution of India.

The Amount Involved In The Fraud Is Very Small: Sometimes, the amount of fraud is mentioned on the notice. If you can't determine the amount, you can approach your Lawyer to figure it out from the Investigating Officer.

Suppose this amount is relatively small as compared to the funds available in your frozen account, then you can opt for a settlement with the victim.

You must be wondering why I mentioned this method when I was against it in the above paragraphs. The answer is it can save you time and money.

Whenever you are making a settlement with the victim, never contact them directly. Ask your Lawyer to do all the talking. With the help of your Lawyer, make a written agreement with the victim. Once the victim is ready to settle and cancel their complaint/FIR inform your Investigating Officer via email. Never agree for verbal settlements or send settlement money via cash. Use digital payments for the sake of proof.

After you send the money to the victim, ask them to inform the Investigating Officer immediately to cancel the complaint/FIR. Once it's done, you can request the Investigating Officer to send a defreeze notice to your bank.

All Your Bank Accounts Have Been Frozen: In this scenario, you lose complete access to your funds. Such a freeze affects your right to life, guaranteed under the Indian Constitution.

If all your accounts have been frozen, the first thing you need to do is to borrow some money from your friends and relatives. Use this money to hire a lawyer and file a defreeze petition in the High Court on the basis of violation of the right to livelihood under Article 21 of the Constitution. If you have proof that the freeze is unjustified, then you can also file a petition on the basis of violation of Article 14 of the Constitution as well.

For your reference:
Article 21 of the Indian Constitution states that "No person shall be deprived of his life or personal liberty except according to procedure established by law."
Article 14 of the Indian Constitution states that "The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India Prohibition of discrimination on grounds of religion, race, caste, sex or place of birth."

The following judgments will help:

In the case of Mr.Prakash Padukone and others vs. State of Karnataka [W.P.No.13516-13518/2018 (GM-POLICE) - 4.04.2018], the Hon'ble High Court stated the following:

This court is of the firm opinion that unless and until there is a strong suspicion against the petitioners, the Police would not be justified in freezing the account belonging to the petitioners. For, such freezing of account adversely affects the right to life under Article 21 of the Constitution of India.


A single-judge bench of Justice Mohammed Nawaz while allowing the petition filed by one Narayan Yadav [WRIT PETITION NO.226989/2020 (GM-RES)] in the Karanataka HC said:

It is not in dispute that all the four bank accounts of the petitioner have been frozen by virtue of the notice issued by the Investigating officer. Certainly such freezing of accounts would adversely affect his right to life under Article 21 of the Constitution of India.


Can I Get Compensation For An Illegal Freeze?
Once you prove that the freeze was illegal, you can ask the Court for a compensation from the Police. It's possible to get compensated, but it won't be easy as it will depend on your case's facts and the Court's discretion.

Here is a rare judgment you can refer to:
Swaran Sabharwal vs. Commissioner of Police
https://www.casemine.com/judgement/in/560909cce4b0149711170ac3


How Can I Protect Myself From P2P Fraudsters?
Despite having the means, most P2P platforms (like Binance and WazirX)  do not conduct any physical or video verification. This makes their platform a fertile ground for cyber-criminals.

So if you want to stay safe while trading cryptocurrencies, do it directly on the platform instead of dealing with unknown strangers.

I would like to conclude by saying that if you've done nothing wrong, you have no reason to worry. The law protects the innocent. Court cases might take time, but there is light at the end of the tunnel. So you just have to be patient.


If you have any queries, feel free to send me a private message, and I will do my best to help you.