Bank Accounts Frozen by Cyber Agencies Must Be Unfrozen Post-Segregation of Disputed Amounts into Fixed Deposits.

The petitioner filed a writ petition under Article 226 of the Constitution of India seeking a direction to the respondents to unfreeze his bank accounts held with IndusInd Bank (Account No. 159752137096) and Axis Bank (Account No. 923010020432251)

The petitioner contended that his case is identical to a prior decision of the High Court involving bank accounts frozen due to alleged cyber fraud without proper notification or adherence to procedural safeguards

1. Whether the petitioner is entitled to have his bank accounts unfrozen based on the precedent set in Malcolm Murayis & Ors. v. State Bank of India and Others

2. Whether the investigating agencies must comply with specific procedural requirements under the Bharatiya Nagarik Suraksha Sanhita (BNSS) or Cr.P.C. when freezing bank accounts

The court primarily relied on the precedent established in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), which addressed the freezing of accounts linked to cybercrime allegations

The court emphasized adherence to Section 102 of the Cr.P.C. (and corresponding provisions of the BNSS), which mandates that investigating agencies inform the concerned Magistrate regarding the seizure of property/accounts

The ruling also applies the principle of proportionality, allowing only the specifically "disputed amounts" to be restricted while permitting the operation of the remainder of the account

The court found that the facts of the current petition were squarely covered by the Malcolm Murayis decision and applied its findings mutatis mutandis

It observed that in cybercrime investigations, police agencies often fail to respond to bank inquiries or comply with statutory mandates under the BNSS/Cr.P.C. to notify the Magistrate

The court reasoned that to balance the interests of justice and active investigations, the specific disputed amount should be isolated in a fixed deposit (FD), thereby allowing the petitioner to otherwise operate the accounts

If the investigating agency fails to take legal action before a Magistrate within three months, even the sequestered funds are to be released

The court ordered that the specific disputed amount, as identified by the crime agencies, be kept in a fixed deposit, which may only be liquidated upon orders from a competent Judicial Magistrate within three months

Should the police agency fail to proceed in accordance with the law (BNSS/Cr.P.C.) within that timeframe, the petitioner is permitted to withdraw the FD amount under intimation to the agency