The Allahabad High Court has held that legal fees paid to an advocate for professional services cannot automatically be treated as proceeds of crime merely because the client is under investigation or accused of wrongdoing.
The bench of Justice J.J. Munir and Justice Arun Kumar has expressed serious concern over the freezing of a practicing advocate’s bank account by the Cyber Cell of the Uttar Pradesh Police on allegations linked to suspicious transactions, observing that indiscriminate freezing of lawyers’ accounts could adversely affect the administration of justice and the functioning of courts.
The Bench noted that the issue was already settled by earlier Division Bench judgments of the High Court, including Khalsa Medical Store v. Reserve Bank of India and Marufa Begum v. Union of India. According to these decisions, authorities investigating cyber fraud cannot freeze an entire bank account merely because a suspicious transaction has been reported. At most, only the amount representing the alleged proceeds of crime or suspicious transaction can be subjected to restraint.
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The Court observed that freezing the whole account without distinguishing the disputed amount from legitimate funds runs contrary to established legal principles.
The Bench made noteworthy observations regarding the professional role of advocates and the implications of freezing their bank accounts. It emphasized that lawyers may receive professional fees from a wide range of clients, including individuals accused of serious offences.
The Court stated that an advocate’s remuneration, earned for rendering legal services, constitutes lawful income. Treating such payments as criminal proceeds without proper examination could undermine the legal profession and interfere with the right of accused persons to obtain legal representation.
In a strong observation, the Bench remarked that if advocates’ accounts are routinely frozen on allegations of cyber fraud, it could become difficult for lawyers to discharge their professional duties under the Advocates Act. Such actions, the Court warned, may ultimately hamper the functioning of courts and the administration of justice itself.
Recognizing the broader implications of the issue, the High Court directed the Additional Chief Secretary (Home), Uttar Pradesh, Lucknow, to personally file an affidavit within two weeks. The affidavit must explain the policy and safeguards governing the freezing of advocates’ bank accounts by police authorities and indicate how such actions can be regulated to ensure that the justice delivery system is not adversely affected.
At the same time, the Court clarified that a different situation would arise where an advocate himself is involved in criminal activity and funds credited to his account are alleged proceeds of his own crime.
The Court recorded that the transactions under scrutiny involved relatively modest amounts, including a credit of ₹20,000 received on March 18, 2026, and credits of ₹3,700 each received on April 23, 2026. The total balance available in the petitioner’s account stood at ₹1,03,071.
These facts were taken note of while considering the legality and proportionality of the action taken by the Cyber Cell.
The High Court issued notice in the matter and directed the respondents to file their counter affidavits within two weeks. It also ordered that the Registrar (Compliance) communicate the order to the Additional Chief Secretary (Home), the Cyber Cell of Uttar Pradesh Police, and the concerned bank branch through the respective Chief Judicial Magistrates.
The matter has been directed to be listed again on July 17, 2026, when the Court is expected to examine the State Government’s response on the larger issue of freezing advocates’ bank accounts during cybercrime investigations.
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