Bank Account Frozen Due to Cyber Fraud Must Be Unfrozen Except for the Specific Disputed Amount

The petitioner, Parvati Devi, filed a writ petition under Article 226 of the Constitution of India seeking a mandamus to unfreeze her savings bank account (No. 42718100000156) maintained with the Bank of Baroda at Indore.

The account was frozen due to suspected cyber fraud involving a disputed amount of ₹2,050/- (comprising two credits on 24.05.2026 and 09.06.2026).

The petitioner sought to have only the disputed amount placed under lien while allowing full operation of the remaining balance, citing parity with a prior High Court decision.

1. Whether the respondent bank can indefinitely freeze an entire bank account when only a specific, small portion of the funds is allegedly linked to a cyber-offence.

2. Whether the principles established in Malcolm Murayis & Ors. v. State Bank of India and Others apply to the present case to allow the unfreezing of the undisputed balance.

The court applied the precedent established in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100/2024), which mandates that investigating agencies must comply with Section 102 of the Cr.P.C. (now equivalent to relevant provisions of the Bharatiya Nagarik Suraksha Sanhita/BNSS) regarding the seizure of property and reporting to a Magistrate.

The principle dictates that bank accounts should not be fully frozen if the disputed amount is identifiable; instead, only the disputed amount should be secured to prevent undue hardship to the account holder.

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

In that precedent, the court observed that cyber crime cells often act irresponsibly by directing banks to freeze accounts without responding to inquiries or following the procedural safeguards of Section 102 Cr.P.C.

Applying this reasoning mutatis mutandis, the court determined that freezing the entire account for a disputed sum of only ₹2,050/- was disproportionate.

The court reasoned that the interests of justice and the investigation are sufficiently served by isolating the disputed amount into a fixed deposit while allowing the petitioner to access the remainder of her funds.

The bank was ordered to keep the disputed amount of ₹2,050/- 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 is permitted to withdraw the fixed deposit amount under intimation to the agency.

The petition was disposed of with these directions.