Bank accounts frozen due to cyber fraud allegations must be unfrozen, with disputed amounts held in fixed deposits.

The petitioner’s savings account (No. 156261567455) at the YN Road Branch, Indore, was subjected to an illegal debit freeze on January 1, 2026

The freeze was initiated following intimations by cyber cell police stations alleging that the account was involved in cyber fraud

The petitioner challenged this action under Article 226 of the Constitution of India, seeking the unfreezing of the account and claiming the case was squarely covered by the precedent Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024)

1. Whether the respondent bank can indefinitely freeze the petitioner’s entire account based solely on police intimations without the investigating agencies following statutory procedures

2. Whether the petitioner is entitled to operate the bank account while securing the disputed amount alleged to be linked to cybercrime

Section 102 of the Code of Criminal Procedure (Cr.P.C.), now corresponding to relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS), which mandates that police officers report seizures to the concerned Magistrate.

Precedent in Malcolm Murayis & Ors. Vs. State Bank of India and Others, which established that investigating agencies must act within a reasonable timeframe and follow due process, and that accounts should not be frozen in their entirety if only a specific amount is disputed.

The court found that the petitioner’s situation was identical to the Malcolm Murayis case, where cyber crime cells froze accounts via email but failed to respond to court inquiries or follow the procedural mandates of Section 102 Cr.P.C.

Applying the doctrine of mutatis mutandis, the court determined that the police agency's failure to effectively communicate or proceed with the investigation according to law necessitated a balanced approach.

The court reasoned that while the disputed funds must be protected to facilitate potential recovery, the petitioner cannot be deprived of the entire account indefinitely without an order from a competent Judicial Magistrate.

The bank was ordered to keep only the specific "disputed amount" in a fixed deposit (FD), which can 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 may withdraw the FD amount under intimation to the agency.

The petition was disposed of with these directions