Bank account freeze for cyber fraud must be restricted to the disputed amount via fixed deposits.

The petitioner, Yashraj Bhadoriya, filed a writ petition under Article 226 of the Constitution of India seeking a direction to HDFC Bank (Respondent No. 1) to unfreeze his bank account.

The account had been put on hold/frozen following intimations from police/cyber agencies regarding alleged involvement in cyber fraud.

The petitioner contended that the freezing was arbitrary, violated fundamental rights, and caused financial hardship.

The petitioner relied on the precedent of Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), where similar freezes were challenged on the grounds that investigating agencies failed to comply with statutory procedures.

1. Whether the freezing of the petitioner's bank account by the respondent bank at the instance of police agencies was legal and sustainable.

2. Whether the petitioner is entitled to operate the account while the investigation into the alleged cyber fraud is pending.

The Court primarily applied the principles governing the seizure of property under Section 102 of the Code of Criminal Procedure (Cr.P.C.)—now relevantly governed by the Bharatiya Nagarik Suraksha Sanhita (BNSS).

These provisions require investigating agencies to inform the concerned Magistrate regarding the seizure/freeze of accounts.

The Court applied the precedent established in Malcolm Murayis & Ors. v. State Bank of India and Others, which mandates a balance between investigative interests and the account holder's right to access funds by directing the creation of Fixed Deposits (FDs) for disputed amounts.

The Court observed that the case was squarely covered by the Malcolm Murayis decision, where it was noted that cyber cell agencies often fail to respond to court proceedings or follow statutory mandates under Section 102 Cr.P.C. after requesting a freeze.

The Court reasoned that since the bank froze the account solely on police instructions without an independent finding of guilt, the petitioner should not be indefinitely deprived of his funds.

To protect the interests of justice and the investigation, the Court determined that the specific "disputed amount" should be secured in a Fixed Deposit, while the rest of the account should be accessible to the petitioner.

The bank was ordered to keep only the "disputed amount" (as identified by the crime agencies) in a Fixed Deposit, which shall not be liquidated for three months unless ordered by a competent Judicial Magistrate.

If the police agency fails to proceed in accordance with the BNSS or relevant law within those three months, the petitioner is permitted to withdraw the FD amount under intimation to the agency.

The petition was disposed of with these directions.