Facts of the Case

This is WP(Crl.) No. 732 of 2023 before the Kerala High Court, filed by Sekar Garments, a GST-registered garments trading firm, seeking to unfreeze its HDFC Bank account, which had been frozen in connection with FIR 30/2023 registered with the Cyber Crime Police Station, Ernakulam Rural. This is not a GST case — it concerns the legality of a blanket bank-account freeze during a cyber-fraud investigation. GST registration and GST invoices/returns of the petitioner firm appear among the annexures only to establish the genuineness of its business.

Issues Involved

  1. Whether freezing the petitioner's entire bank account was a proportionate and lawful response when the specific amount allegedly involved in the crime was only Rs.7,48,000/-.

Petitioner's Arguments

  • The freezing of the entire bank account, rather than only the disputed sum, was excessive and crippled the firm's day-to-day business operations, violating Article 14 of the Constitution.

Respondent's Arguments

  • The police, represented by the Public Prosecutor, defended the freeze as part of an ongoing cyber-crime investigation into the alleged fraud.

Court Order / Findings

  • The Court held that where only Rs.7,48,000/- was allegedly credited into the petitioner's account in connection with the crime, freezing the entire bank account was excessive and too onerous a procedure, falling foul of Article 14 of the Constitution.
  • The freeze was ordered to be confined to Rs.7,48,000/- alone, with the petitioner given liberty to operate the account in excess of that sum.
  • The petitioner was given the option to keep the Rs.7,48,000/- in a separate account under lien, freeing up the rest of the account for normal business use, with the investigating officer free to take further steps if additional amounts were later found to be involved.

Important Clarification

This is a bank-account-freeze/criminal-procedure ruling with no GST-law holding. The practical point of general interest is the principle that freezing an entire bank account, where only a specific, quantifiable sum is under investigation, can be challenged as disproportionate and unconstitutional — the freeze should ordinarily be confined to the disputed amount.

Sections Involved

  • Article 14, Constitution of India — protection against arbitrary/excessive executive action
  • Code of Criminal Procedure, 1973 — provisions relating to freezing of bank accounts during investigation

Decision – In Favour of

Partly in favour of the petitioner — the writ petition was allowed to the extent of limiting the account freeze to the disputed Rs.7,48,000/-, while leaving the investigation itself to proceed.

Case Details

Court: High Court of Kerala at Ernakulam
Case No.: WP(Crl.) No. 732 of 2023 (FIR 30/2023)
Coram: Justice Bechu Kurian Thomas
Date: 14 August 2023

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