Bank Accounts Freezed Due to Alleged Cyber Fraud Must be Unfrozen Except for the Disputed Amount.

The petitioner, Ankit Shukla, filed a writ petition under Article 226 of the Constitution of India seeking a Mandamus to unfreeze his bank account (No. 159977935646) held at IndusInd Bank, Indore

The account had been frozen following instructions from cyber crime agencies due to alleged involvement in cyber fraud

The petitioner maintained that he was not served notice regarding any offense and that the investigating agencies failed to comply with statutory reporting requirements to the Magistrate

1. Whether the bank is authorized to keep an entire account frozen indefinitely based solely on police intimations without compliance with statutory procedural safeguards

2. Whether the petitioner is entitled to operate the portion of the bank account balance that is not linked to the alleged fraudulent transactions

The court primarily applied the principles governing the seizure of property under Section 102 of the Code of Criminal Procedure (Cr.P.C.)

transitioned to relevant provisions under the Bharatiya Nagarik Suraksha Sanhita (BNSS)

The court relied on the precedent set in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100/2024), which established that while disputed amounts can be secured, the entirety of an account should not remain frozen indefinitely if investigating agencies fail to respond to court proceedings or follow statutory reporting duties to a Magistrate

The court found that the petitioner’s case was squarely covered by the Malcolm Murayis precedent

It observed a recurring pattern where cyber crime cells instruct banks to freeze accounts but subsequently fail to respond to judicial inquiries or comply with the mandatory requirement of informing the concerned Magistrate about the seizure

Applying this logic to the present facts, the court determined that only the specific disputed amount mentioned by the agencies (₹51,999/-) needed to be secured

The court reasoned that the petitioner should not be deprived of his entire account balance when the police agency has not yet proven the extent of the fraud or followed proper legal procedure under BNSS/Cr.P.C.

The bank was ordered to set aside the disputed amount of ₹51,999/- 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 within this timeframe, the petitioner may withdraw the FD amount under intimation to the agency

Crucially, the court held that the remainder of the balance in the account must be unfrozen immediately