Bank account freeze for cyber fraud must be restricted to disputed amounts and converted into fixed deposits.

The petitioner filed a writ petition under Article 226 of the Constitution of India seeking a direction to unfreeze his bank account (IndusInd Bank, Shujalpur)

The account was frozen following intimations sent by cyber cells of various police stations alleging involvement in cyber fraud

The petitioner contended that no notice was received regarding any offense, that he was lawfully engaged in business, and that investigating agencies failed to comply with statutory procedures regarding the seizure

1. Whether the bank account of the petitioner should be unfrozen and access restored given the alleged procedural non-compliance by investigating agencies

2. Whether the disputed amounts allegedly linked to cybercrime can be secured through alternative means (Fixed Deposits) while allowing the petitioner to operate the account

Section 102 of the Code of Criminal Procedure (Cr.P.C.)

The corresponding provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS)

Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No.1100 of 2024), which mandates that investigating agencies must proceed in accordance with law and inform the Magistrate regarding seizures, failing which accounts cannot remain indefinitely frozen

The Court observed that the petitioner’s case was squarely covered by the decision in Malcolm Murayis

In that precedent, the Court noted the "irresponsible approach" of cyber crime cells that freeze accounts via email but fail to respond to court notices or follow the mandate of Section 102 Cr.P.C.

The Court reasoned that to balance the interests of the investigation with the petitioner's right to operate his account, the specific disputed amounts should be isolated into fixed deposits. This ensures the funds are preserved for the investigation while the rest of the account remains accessible, preventing the petitioner from being deprived of his funds without due process

The Court ordered the bank account of the petitioner to be unfrozen. The bank was directed to keep only the disputed amount (as informed by crime agencies) in a Fixed Deposit (FD), which shall not be liquidated without an order from a competent Judicial Magistrate. If the police agency fails to proceed in accordance with the law (BNSS or other relevant statutes) within three months, the petitioner is permitted to withdraw the FD amount under intimation to the agency