Bank account freeze for cyber fraud must be restricted to disputed amounts via fixed deposit.

The petitioner, Soni Artificial Shop, represented by Deepanshu, filed a writ petition under Article 226 of the Constitution of India challenging the "debit freeze" or "hold" placed on its bank account (Account No. 60494045349) by the respondent bank.

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

The petitioner sought a direction for the removal of the hold to resume business operations.

1. Whether the respondent bank can indefinitely freeze the petitioner’s entire bank account based on cyber crime intimations without following the procedural mandates of the law.

2. Whether the petitioner is entitled to operate the bank account after securing the specific disputed amount allegedly linked to the crime.

The court primarily relied on the precedent set in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024), which established that while investigating agencies have the power to freeze accounts, they must comply with Section 102 of the Code of Criminal Procedure (Cr.P.C.)—now relevantly practiced under equivalent provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS)—including informing the concerned Magistrate.

The ruling principle dictates that only the disputed amount should be restricted, rather than freezing the entire account, to balance investigative interests with the petitioner's right to carry on business.

The court found that the petitioner’s case was "squarely covered" by the Malcolm Murayis decision.

It noted that investigative agencies often fail to respond to court inquiries or proceed in accordance with Section 102 Cr.P.C./BNSS after sending freeze instructions to banks.

Applying this to the present facts, the court determined that the disputed amount in this specific instance was identified as Rs. 5,000/-.

The court reasoned that by sequestering this specific sum into a fixed deposit, the interests of the investigation are protected while the petitioner is relieved from the disproportionate hardship of a full account freeze.

The bank was ordered to keep the disputed amount of Rs. 5,000/- in a fixed deposit (FD), which can only be liquidated upon orders from a competent Judicial Magistrate.

If the police agency fails to proceed in accordance with the law (BNSS or Cr.P.C.) within three months, the petitioner is permitted to withdraw the FD amount under intimation to the agency.

The petition was disposed of with these directions.