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What the courts have said

Judgments you can cite when the whole account is blocked over a small disputed amount.

High Courts have been dealing with these freezes in bulk, and the direction of the rulings is consistent: the restriction must be proportionate to the disputed amount.

Rajasthan High Court, 20 August 2026

Deciding 105 writ petitions together in Shree Balaji Enterprises v. Reserve Bank of India, the court laid down a detailed framework. Where the disputed amount is identifiable and there is no material justifying a wider freeze, the account is to be permitted to operate subject only to a lien or hold for the disputed amount. The court observed that if the alleged fraud is ₹500 and the account holds ₹5 lakh, the purpose of investigation is ordinarily served by preserving ₹500, not by depriving the holder of the rest. It also held that an expression such as “suspicious transaction”, “mule account” or “Layer-1 account” cannot by itself be adequate reason to immobilise an entire account indefinitely.

Kerala High Court

In Dr. Sajeer v. Reserve Bank of India, listed in the SOP's own annexure of legal provisions, the court held that freezes must be proportionate and confined to the specific amounts indicated in police requisitions rather than immobilising entire accounts, and required timely communication from the police to the bank on whether a partial freeze needs to continue.

Madras High Court

In Mohammed Saifullah v. Reserve Bank of India, also in the SOP's annexure, the court directed a bank to reactivate an account where roughly ₹9.7 lakh had been blocked for over a year against a disputed sum of about ₹2.5 lakh, holding that freezing an entire account without specific justification on amount or duration affects the rights to livelihood and business. It allowed a hold of about ₹2.5 lakh to remain.

Madhya Pradesh High Court, 2026

The court directed a bank to unfreeze an account and keep only the disputed amount in a separate fixed deposit, to be released only after the Judicial Magistrate decides, in a case where the investigating agencies had not informed the Magistrate of the seizure.

How to use these

Cite them in a representation as the reason for a specific request — confine the restriction to the disputed amount — not as an accusation that the bank or the police acted illegally. A bank officer can act on a proportionality request. They cannot rule on legality; only a court can. Note also that these judgments bind within their own states and are persuasive elsewhere.

One caution: the Supreme Court held in Shento Varghese v. Julfikar Husen (2024) that delay in reporting a seizure to the Magistrate does not by itself void the seizure, so do not build a case on that point alone.