Bank account freezing for cyber fraud requires following legal procedures, otherwise disputed amounts must be placed in fixed deposits.

The petitioner, Amit Panchal, approached the High Court under Article 226 of the Constitution of India seeking to unfreeze his bank account (Account No. 880618210022231) held with the Bank of India.

The account was blocked following Complaint No. 33303260007768 registered at Mohan Nagar Thana, Durg, Chhattisgarh.

The petitioner contended that a mutual settlement had been reached and the disputed amount was fully repaid.

The petitioner argued that his case was squarely covered by the precedent established in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024).

1. Whether the bank account of the petitioner should be unfrozen in light of stalled investigations and the principle of proportionality regarding disputed amounts.

2. Whether the disputed amount should be secured in a fixed deposit pending further legal proceedings by the investigating agency.

The court applied the precedent of Malcolm Murayis & Ors. Vs. State Bank of India and Others (2024), which mandates that bank accounts frozen due to cybercrime allegations should be unfrozen if the investigating agencies fail to respond or proceed in a timely manner, provided the disputed amount is secured.

The court further referenced Section 102 of the Cr.P.C. (now relevant provisions of the Bharatiya Nagarik Suraksha Sanhita/BNSS), which requires investigating agencies to inform the concerned Magistrate regarding the seizure or freezing of property.

The court observed that in the relied-upon Malcolm Murayis case, despite notices, cybercrime cells often exhibited an "irresponsible approach" by failing to respond to inquiries after freezing accounts.

Applying this logic mutatis mutandis to the present facts, the court determined that the petitioner’s right to operate his account must be balanced against the state's interest in the disputed funds.

Since the petitioner claimed a settlement and the matter was covered by existing jurisprudence, the court reasoned that the specific disputed amount of ₹7,98,000/- should be sequestered in a fixed deposit to protect the investigation, while the remainder of the account should be restored to the petitioner's control.

However, the Bank was ordered to keep the disputed amount of ₹7,98,000/- in a fixed deposit (FD). This FD is only to be liquidated upon orders from a competent Judicial Magistrate within three months, pending the police agency’s adherence to the relevant provisions of the BNSS. If the agency fails to act within this period, the petitioner may withdraw the FD amount under intimation to the agency.