If you are stuck in such a situation, here is what to do.

A recent incident highlights a growing concern involving UPI transactions and the subsequent freezing of bank accounts. Mr. Alok was involved in a minor road accident in the city of Prayagpur a few days ago. The incident caused minor damage to his vehicle. To avoid involving the police and engaging in lengthy procedures, both parties decided to settle the matter amicably. They mutually agreed on a compensation amount of ₹15,000, which the other party, Mr. Rohan, transferred to Mr. Alok’s bank account via UPI.

However, the situation took an unexpected turn. A day later, Mr. Rohan approached the local police station and filed a complaint against Mr. Alok, disputing the transaction. Acting on this complaint, the police instructed Mr. Alok’s bank to put a hold on his account. Now, Mr. Alok is caught in a difficult position. His bank states that the issue is under the purview of the Cyber Cell, while the Cyber Cell directs him back to the local police station. The Station House Officer (SHO) at the concerned police station is unresponsive and insists that Mr. Alok must visit the station in person, which he is hesitant to do given the circumstances and the relatively small amount involved.

This scenario exposes a significant loophole where a party can misuse the system by filing a false complaint after a mutual settlement, causing immense harassment and financial blockage for the other individual.

Advice in such cases

If you find yourself in a similar situation, it is crucial to act strategically and not panic. The freezing of a bank account is a procedural step taken by the police during an investigation and does not imply guilt.

• Gather all evidence immediately. This includes screenshots of any chat conversations (like WhatsApp) where the settlement was discussed and agreed upon, the UPI transaction ID, and bank statements reflecting the transaction.
• Do not ignore the police. While it may seem intimidating, avoiding them can be misconstrued as an admission of guilt. It is better to face the situation with facts and evidence.
• Prepare a written representation detailing your side of the story, from the accident to the mutual settlement and the subsequent false complaint. Attach all the evidence you have gathered.
• Submit this representation to the SHO of the concerned police station and also send a copy to a senior officer, such as the Deputy Commissioner of Police (DCP) or Superintendent of Police (SP) of the area, to ensure the matter is on record at a higher level.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

Applicable Sections of Law

Understanding the legal provisions involved can provide clarity on the actions of the police and the bank.

• Section 91 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS): This is the primary section under which police often act. It empowers a court or an officer in charge of a police station to issue a written order to a person to produce any document or thing necessary for the purpose of any investigation. In such cases, the police issue a notice to the bank, which then freezes the account in question.
• Section 316 of the Bharatiya Nyaya Sanhita, 2023 (BNS): This section pertains to ‘Cheating’. The complainant might have falsely alleged that you cheated them into paying the money, which forms the basis of their police complaint.
• Section 324 of the Bharatiya Nyaya Sanhita, 2023 (BNS): In some cases, the complaint could be framed as ‘Extortion’, alleging that you forced the other party to pay the amount under threat.

If you are the complainant

If your account has been frozen based on a false complaint, you are the aggrieved party in this situation. Here is how you should proceed:

• Compile all your evidence meticulously. The stronger your evidence of a mutual agreement, the weaker the other party’s case becomes.
• Draft a clear, factual complaint or representation detailing the entire sequence of events. Explain how the other party is misusing the law after a mutual settlement.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.
• Formally approach your bank’s nodal officer. Provide them with a copy of your representation to the police and all supporting evidence, requesting them to unfreeze your account based on the facts.
• If the police do not take action, you can file an application before the jurisdictional Magistrate, seeking a direction to de-freeze your account.

If you are the victim

As the victim whose account has been wrongfully frozen, your immediate goal is to get the account operational and clear your name.

• Stay calm. The initial action by the police is often precautionary and based solely on the complaint received.
• Preserve all digital evidence. Do not delete any chats or messages related to the incident and the settlement. Take screenshots and back them up.
• Your communication with the police should be formal and documented. Prefer written communication over verbal calls where possible.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think. A lawyer is essential to navigate the police procedures and, if necessary, move the appropriate court for relief.

How the police behave in such cases

In cases of financial complaints, especially those involving digital transactions, police tend to act swiftly to freeze accounts to prevent the funds from being withdrawn. This is often a standard operating procedure. However, the follow-up investigation can be slow. You may encounter jurisdictional confusion, with different departments (local police, cyber cell) passing the responsibility. The police may also initially pressure you to “return the money” to close the complaint quickly, but you should not do so if the transaction was part of a legitimate settlement. Persistence and formal follow-ups, preferably through a lawyer, are key to getting them to investigate your side of the story.

FAQs people normally have

What evidence is required?

The most crucial part of your defense is solid evidence. You should collect:

• Screenshots of chat logs (WhatsApp, SMS, etc.) where the settlement amount was discussed and agreed upon.
• The UPI transaction receipt showing the Transaction ID, date, time, and amount.
• Your bank statement showing the credit of the amount.
• Any photographs or videos of the damages from the accident.
• Names and contact details of any person who witnessed the accident or the settlement discussion.

How long will the investigation take?

There is no fixed timeline for such investigations. The process to de-freeze an account can vary widely. If you are proactive, provide all evidence promptly, and follow up consistently, the matter might be resolved at the police station level within a few weeks. However, if the police are unresponsive or the other party continues to press false charges, you may need to approach the court. With legal intervention, an application to de-freeze the account can be decided by a court, typically within one to two months, depending on the court’s schedule.

Advocate Sudhir Rao, Supreme Court of India