Bank account freezing for alleged cyber fraud requires adherence to Section 102 Cr.P.C. and judicial oversight.

The petitioner, Deepak Manghani, filed a writ petition under Article 226 of the Constitution of India challenging the action of the Respondent Bank in freezing his bank account (No. 43939190733).

The account was frozen based on intimations from cyber crime cells alleging involvement in cyber fraud.

The petitioner sought a direction to defreeze the account, contending that his case is identical to the precedent set in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024), where crypto-traders' accounts were frozen without proper notice or compliance with statutory procedures.

1. Whether the Respondent Bank is justified in freezing the petitioner’s entire bank account indefinitely based solely on police intimation regarding alleged cyber fraud.

2. Whether the disputed amount should be isolated in a fixed deposit to allow the petitioner to operate the remainder of the account.

Article 226 of the Constitution of India regarding the protection of civil rights against arbitrary state action.

Section 102 of the Code of Criminal Procedure (Cr.P.C.) (now relevant provisions of the Bharatiya Nagarik Suraksha Sanhita/BNSS), which mandates that investigating agencies must inform the concerned Magistrate regarding the seizure of property.

The precedent established in Malcolm Murayis & Ors. Vs. State Bank of India and Others (2024), which balances the interests of investigation with the account holder's right to operate their funds.

The Court noted that in similar instances, cyber crime cells had directed banks to freeze accounts but failed to respond to judicial inquiries or comply with the mandatory reporting requirements under Section 102 Cr.P.C.

By applying the Malcolm Murayis precedent mutatis mutandis, the Court reasoned that the petitioner should not be deprived of his entire account for an indefinite period due to the "poor functioning and irresponsible approach" of the investigating agencies.

The court determined that the interests of justice are served by segregating only the specific "disputed amount" flagged by the agencies into a fixed deposit, thereby allowing the petitioner to regain access to the rest of the account while ensuring the allegedly fraudulent funds remain secured pending a Magistrate's order.

The Bank was ordered to place the specific disputed amount in a fixed deposit (FD), which can 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/Cr.P.C.) within this timeframe, the petitioner is permitted to withdraw the FD amount under intimation to the agency.

The petition was disposed of with these directions.