Bank Accounts Frozen Due to Alleged Cyber Fraud Must Be Unfrozen Subject to Securing Disputed Amounts in Fixed Deposits

The petitioner, Anil Ojha, filed a writ petition under Article 226 of the Constitution of India seeking a mandamus to direct the State Bank of India (Respondent No. 1) to defreeze his bank account (No. 53043134656).

The account had been frozen following intimations from cyber cell police authorities alleging involvement in cyber fraud.

The petitioner contended that his case is identical to the precedent set in Malcolm Murayis & Ors. v. State Bank of India, W.P. No. 1100 of 2024, where accounts were frozen without prior notice or strict adherence to procedural safeguards.

1. Whether the bank account of the petitioner, frozen on the instructions of law enforcement agencies regarding alleged cyber-crimes, should be unfrozen subject to certain conditions.

2. Whether the disputed amount involved in the alleged fraud should be segregated to allow the petitioner to operate the remainder of the account.

The Court primarily relied on the precedent established in Malcolm Murayis & Ors. v. State Bank of India and Others (2024), which addressed the freezing of bank accounts linked to crypto-trading and alleged cyber fraud.

It applied the procedural requirements of Section 102 of the Code of Criminal Procedure (Cr.P.C.)—now corresponding to the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS)—which mandates that investigating agencies report seizures of property to the concerned Magistrate and proceed in accordance with law.

The Court observed that the petitioner’s situation was squarely covered by the Malcolm Murayis judgment, where it was noted that cyber cell authorities often request account freezes via email but fail to respond to subsequent court proceedings or follow statutory mandates under Section 102 Cr.P.C.

The Court reasoned that to balance the interests of justice and the investigation, the respondent bank should not freeze the entire account indefinitely. Instead, only the specific "disputed amount" flagged by the agencies should be secured in a fixed deposit, thereby allowing the petitioner to utilize the remaining balance.

The Court emphasized that it is the responsibility of the police agency to proceed under the BNSS or other relevant laws within a stipulated timeframe.

The Bank was ordered to keep only the disputed amount (as informed by the crime agencies) in a fixed deposit (FD), which shall not be liquidated for three months unless ordered by a competent Judicial Magistrate. If the police agency fails to proceed in accordance with the law (BNSS) within the three-month period, the petitioner may be allowed to withdraw the FD amount under intimation to the agency.

The petition was disposed of with these directions.