Bank Account Freezes for Alleged Cyber Fraud Must Be Restricted to Disputed Amounts Only

The petitioner, Dilip Yadav, filed a writ petition under Article 226 of the Constitution of India seeking to unfreeze his Savings Bank Account maintained with Punjab National Bank, Indore Branch.

The account had been subjected to a blanket debit restriction/freeze following intimations from cyber crime agencies regarding suspicious transactions.

The petitioner sought the removal of the freeze, or alternatively, the freezing of only the specific disputed amount while allowing operation of the remaining balance.

The petitioner relied on the precedent set in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024).

1. Whether a bank account can remain under a blanket freeze indefinitely based on cyber cell intimations without the investigating agency following due process under the law.

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

The Court primarily applied the principles governing the seizure of property by police officers under Section 102 of the Code of Criminal Procedure (Cr.P.C.) (now relevant provisions of the Bharatiya Nagarik Suraksha Sanhita [BNSS]).

It relied on the precedent established in Malcolm Murayis & Ors. Vs. State Bank of India and Others, which mandates that investigating agencies must report seizures to the Magistrate and that accounts should not be frozen in their entirety if the disputed amount is identifiable.

The Court observed that in similar cyber-fraud cases, police agencies often instruct banks to freeze accounts via email but fail to follow the statutory mandate of informing the concerned Magistrate or responding to subsequent judicial inquiries.

Linking the present facts to the Malcolm Murayis precedent, the Court reasoned that a balance must be struck between the interests of the investigation and the petitioner's right to access his funds.

Since the specific disputed amount was identified as Rs. 47,499.05/-, the Court determined that the blanket freeze was unnecessary.

The Court held that protecting the specific "tainted" amount in a Fixed Deposit (FD) satisfies the investigative requirements while allowing the petitioner to regain access to the remainder of his account.

It ordered the bank to unfreeze the petitioner’s account; however, the Bank was directed to keep the disputed amount of Rs. 47,499.05/- in a Fixed Deposit, which may only be liquidated upon orders from a competent Judicial Magistrate within three months.

If the police agency fails to proceed in accordance with the law (BNSS) within that timeframe, the petitioner may withdraw the FD amount under intimation to the agency.

The petition was disposed of with these directions.