Bank accounts frozen due to cyber fraud must be unfrozen except for the specific disputed amount.

The petitioner operates a bank account with Axis Bank (Respondent No. 1) which was frozen by the bank following intimations from cyber crime agencies regarding a suspicious transaction/cyber fraud involving a specific amount of ₹66,437/-

The petitioner sought a direction to freeze only the disputed amount and unfreeze the remainder of the account to allow continued business operations

The petitioner relied on a previous High Court ruling in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024), where the court addressed similar instances of accounts being frozen without following mandatory procedural safeguards

1. Whether the bank is entitled to freeze the entirety of a petitioner's bank account based on investigations into a specific disputed amount

2. Whether the investigating agencies complied with the mandatory procedural requirements of Section 102 of the Cr.P.C. (now relevant provisions of BNSS) regarding the seizure of bank accounts

Statement identifying a key statute: principles governing the seizure of property under Section 102 of the Cr.P.C. (referenced as the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS) in the current context), which requires investigating agencies to report seizures to the competent Magistrate

Statement on the doctrine derived from a case: precedent set in Malcolm Murayis & Ors. Vs. State Bank of India and Others (2024), which establishes that investigating agencies cannot indefinitely freeze accounts without due process and that banks should only secure the "disputed" amount rather than the entire balance to balance investigative needs with the petitioner's right to livelihood

The Court observed that cyber crime cells often request banks to freeze accounts without providing timely responses to legal inquiries or following the statutory mandates of Section 102 Cr.P.C.

In the Malcolm Murayis precedent, which the Court held applicable mutatis mutandis to the present case, it was noted that such "irresponsible approaches" by agencies hinder lawful business.

The Court reasoned that the ends of justice are met by segregating the "disputed amount" into a Fixed Deposit (FD) to ensure the funds remain available for the investigation, while unfreezing the rest of the account to prevent undue hardship to the petitioner.

It was emphasized that the police must proceed in accordance with law within a specific timeframe (three months), failing which even the frozen amount should be accessible to the account holder.

The bank was ordered to keep the disputed amount in a Fixed Deposit, which shall only be liquidated upon orders from a competent Judicial Magistrate.

If the police agency fails to proceed in accordance with the law (BNSS) within three months, the petitioner is permitted to withdraw the amount kept in FD under intimation to the agency.