Bank account freeze for cyber fraud must be limited to the disputed amount placed in fixed deposits.

The petitioner, Jyoti Jain, approached the High Court under Article 226 of the Constitution of India seeking a direction to Bank of Baroda to remove a freeze/hold placed on her bank account (Account No. 1148100027262).

The freeze was reportedly initiated following intimations from cyber crime cells regarding alleged involvement in cyber fraud.

The petitioner contended that the investigating agencies failed to comply with procedural requirements, such as informing the Magistrate of the seizure under Section 102 of the Cr.P.C. (now relevant provisions of BNSS).

1. Whether the bank account of the petitioner can remain frozen indefinitely without the investigating agencies following the statutory procedural requirements under the criminal code.

2. Whether the petitioner is entitled to operate her bank account, subject to safeguarding the disputed amount allegedly linked to cyber crime.

The court primarily applied the principles governing the seizure of property by police as laid down in Section 102 of the Code of Criminal Procedure (Cr.P.C.)—now the corresponding provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS)—which requires investigating agencies to report seizures to the concerned Magistrate.

The Court further relied on its own recent precedent in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024), which established a balanced approach between investigative needs and the account holder's rights by directing the segregation of disputed funds into fixed deposits.

The Court observed that the case was squarely covered by the Malcolm Murayis decision.

In that precedent, the Court noted the "irresponsible approach" of various cyber crime cells that freeze accounts via email but fail to respond to judicial notices or comply with mandatory reporting to Magistrates under Section 102 Cr.P.C.

Applying this logic mutatis mutandis to the present facts, the Court reasoned that while the integrity of a criminal investigation must be maintained, the petitioner cannot be deprived of their entire account indefinitely due to procedural lapses by the state agencies.

Consequently, the Court determined that the specific disputed amount should be secured in a fixed deposit while the remainder of the account is unfrozen.

The Bank was ordered to keep the specific disputed amount (as informed by the crime agencies) in a fixed deposit, which may only be liquidated upon orders from a competent Judicial Magistrate. If the police agency fails to proceed in accordance with the BNSS or relevant law within three months, the petitioner shall be allowed to withdraw the FD amount under intimation to the agency.

The writ petition was disposed of with these directions.