Andhra Pradesh HC Orders Defreezing of Wine Shop Owner's Account Frozen Over Rs 1,000 UPI Payment by a Fraud Suspect

A Bihar cyber cell froze a Mangalagiri wine trader's SBI account over a Rs 1,000 UPI receipt from a cheating accused. The Andhra Pradesh High Court held the action illegal and ordered immediate defreezing.

The High Court of Andhra Pradesh at Amaravati has directed the State Bank of India, Mangalagiri Branch to defreeze the current account of Sri Sai Wines, a licensed retail liquor outlet in Guntur District, after finding that Bihar's Cyber Cell had caused the account to be frozen without prior notice, without disclosing reasons, and without following due process. Justice Ravi Cheemalapati, sitting singly, disposed of Writ Petition No. 969/2026 on 22 June 2026, ruling that the freezing of the account was unsustainable and contrary to law. The trigger for the freeze was a single UPI payment of Rs 1,000 received by the shop from an individual later named in a cheating case registered in Patna District, Bihar. An amount of Rs 8,26,633 was lying locked in the account at the time of the court's consideration.

The Dispute Before the High Court

The petitioner, Sri Palla Akhil Reddy, runs Sri Sai Wines at Door No. 15-9-152, Nuthakki Village, Mangalagiri Mandal, Guntur District, under a licence bearing No. G.SI.No.GTR/34/2024-26 dated 30 October 2024. For his business, he maintained a current account with SBI's Mangalagiri Branch (Account No. 43461149232).

On 19 August 2025, the account was abruptly frozen by SBI. The petitioner visited the branch to enquire, following which a letter dated 15 September 2025 was served on him. The letter revealed that the freeze had been effected at the direction of the Cyber Cell Officer, Patna District (the 4th respondent), through the Station House Officer, Bariarpur Police Station, Munger District, Bihar (the 5th respondent).

The petitioner issued a registered legal notice to the bank and to the Cyber Cell Officer. No action followed. He then approached the Andhra Pradesh High Court under Article 226 of the Constitution of India, seeking a writ of mandamus to declare the freezing action illegal as violating Articles 14, 19(1)(g), 21, and 300-A of the Constitution, and for a direction to defreeze the account. He also filed IA No. 1 of 2026 under Section 151 CPC for an interim direction to defreeze the account pending disposal of the writ petition.

The Root Cause: A Rs 1,000 UPI Sale

The facts as placed before the court showed that on 19 August 2025, a customer purchased liquor worth Rs 1,000 from Sri Sai Wines and made payment through UPI, recorded as transaction No. 461984251. The paying individual was subsequently named in a cheating case registered in Patna District, Bihar. Upon tracing that the UPI transaction originated from that individual's account, the Cyber Cell directed SBI to freeze the petitioner's account.

No notice was issued to the petitioner before the freeze. No speaking order was passed. The petitioner had no involvement in any criminal case. At the time the account was frozen, Rs 8,26,633 was lying in it, and the petitioner was rendered unable to operate his business.

Counsel for the petitioner, Sri Chetan Ponnuru, argued that a vendor receiving a UPI payment cannot verify the credentials or conduct of the buyer at the point of sale. PhonePe, Google Pay, and other UPI-based applications are the standard mode of payment even in petty retail transactions. Holding a vendor's account to ransom for receiving money in the ordinary course of trade — money paid by someone later found to be a fraudster — without any inquiry into the vendor's own involvement, is both disproportionate and legally impermissible.

Despite being served with notice, SBI (the 3rd respondent) and the Cyber Cell Officer (the 4th respondent) did not enter appearance before the court.

How the Court Reasoned

Justice Ravi Cheemalapati accepted the factual matrix in full. The court acknowledged that UPI-based payments — through PhonePe, Google Pay, and similar platforms — are now standard even in small retail businesses. A vendor in such a setting has no practical means of verifying a buyer's credentials before accepting a digital payment.

The court noted that the petitioner had no traceable involvement in the cheating case registered against the individual who paid him Rs 1,000. The sole basis for the freeze was that the Rs 1,000 had passed through the accused's account before reaching the petitioner's account — a transaction that was entirely ordinary on the petitioner's side.

The court held that without verifying the credentials of the petitioner and without noticing his involvement in any criminal case registered against the said individual, the authorities cannot freeze the petitioner's account. The action was taken without notice and without following due process, rendering it “unsustainable and contrary to law.”

The bench found that the petitioner had made out a case warranting interference. The freezing was declared illegal. Because the 5th respondent — the Station House Officer, Bariarpur Police Station — was not pressed against by the petitioner, the writ petition was dismissed against that respondent as not pressed.

Outcome

Justice Ravi Cheemalapati disposed of Writ Petition No. 969/2026 on 22 June 2026 with a direction to SBI's Mangalagiri Branch to defreeze Account No. 43461149232 of Sri Sai Wines. The petition was dismissed against the 5th respondent (Station House Officer, Bariarpur Police Station) as not pressed. No order as to costs was made. All pending miscellaneous applications, including IA No. 1 of 2026, stood closed as a consequence.