Bank accounts frozen due to cybercrime allegations must be unfreezed, keeping only the disputed amount in fixed deposits.

The petitioner, Vipendra Baghel, filed a writ petition under Article 226 of the Constitution of India seeking a Mandamus to compel the Central Bank of India to unfreeze his bank account (Account No. 5230496768) at the Indore Branch.

The petitioner contended that his case was identical to the precedent set in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100/2024), involving bank accounts frozen by cyber cell authorities on allegations of cyber fraud related to cryptocurrency trading.

In such cases, accounts were often frozen without prior notice to the account holders or compliance with statutory reporting requirements.

1. Whether the bank account of the petitioner, frozen on the instructions of investigating agencies, can be unfrozen subject to certain conditions if the agencies fail to proceed in accordance with the law?

2. Whether the principles laid down in Malcolm Murayis & Ors. v. State Bank of India regarding frozen accounts apply mutatis mutandis to the present petitioner?

Section 102 of the Code of Criminal Procedure (Cr.P.C.) and its contemporary equivalent under the Bharatiya Nagarik Suraksha Sanhita (BNSS), which mandates that investigating officers report the seizure of property (including bank account freezes) to the concerned Magistrate.

The precedent of Malcolm Murayis & Ors. v. State Bank of India and Others (2024), which established that while disputed amounts must be secured, account holders should not be indefinitely deprived of the use of their accounts due to administrative or investigative delays.

The Court noted that in similar matters involving cyber crime allegations, investigating agencies often show an "irresponsible approach" by failing to respond to bank inquiries or fulfill statutory obligations under Section 102 Cr.P.C.

Upon considering the facts, the Court determined that the petitioner's situation was squarely covered by the Malcolm Murayis decision.

To balance the interests of the investigation with the petitioner's rights, the Court reasoned that the specific "disputed amount" identified by the crime agencies (totaling Rs. 298/-) should be isolated in a fixed deposit. This ensures that the potential proceeds of crime are preserved while allowing the petitioner access to the remainder of the account, provided the police agency fails to obtain a judicial order within a specified timeframe.

The bank was ordered to keep the disputed amount of Rs. 298/- in a fixed deposit, which may only be liquidated upon orders from a competent Judicial Magistrate. If the police agency fails to proceed in accordance with the BNSS or relevant law within three months, the petitioner is permitted to withdraw the amount kept in the FD under intimation to the agency.