Bank account unfreezing directed subject to placing disputed cyber-fraud amounts in fixed deposits under Section 102 BNSS.

The petitioner, Janki Kaoshal, filed a writ petition under Article 226 of the Constitution of India seeking a direction to the respondents to unfreeze her bank account (No. 1764010000000046) at Utkarsh Small Finance Bank, Indore

The account was placed on hold/freeze by the bank following instructions from police agencies/cyber crime cells regarding alleged involvement in cyber fraud

The petitioner contended that her case was identical to the precedent established in Malcolm Murayis & Ors. Vs. State Bank of India and Others

1. Whether the petitioner is entitled to the removal of the freeze on her bank account when the investigation into alleged cyber fraud is pending

2. Whether the disputed amount in the account can be secured in a manner that allows the petitioner to operate the remainder of the account

Section 102 of the Code of Criminal Procedure (Cr.P.C.) (now reflected in the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita [BNSS]) regarding the power of police officers to seize property suspected to be stolen or linked to an offence

Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), which establishes that investigating agencies must inform the Magistrate of such seizures and that a complete freeze of an account is disproportionate if the disputed amount can be segregated

The Court observed that in similar cyber fraud cases, accounts are often frozen indefinitely without the investigating agencies complying with statutory requirements, such as informing the competent Magistrate.

Drawing from the Malcolm Murayis precedent, the Court reasoned that the petitioner should not be entirely deprived of her funds while investigation is ongoing. It determined that the "disputed amount"—the specific sum alleged to be the proceeds of crime—should be converted into a fixed deposit to secure the interests of the investigation. This allows the rest of the account to be unfrozen, balancing the petitioner's right to access her property with the state's interest in recovering fraudulent gains.

It directed the respondent bank to unfreeze the petitioner’s bank account and convert only the specific "disputed amount" informed by the crime agencies into a fixed deposit. This deposit is to be liquidated only 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 period, the petitioner is permitted to withdraw the amount under intimation to the agency.