Bank accounts frozen due to cybercrime investigations must be unfrozen, provided the disputed amount is secured in a fixed deposit.

The petitioner filed a writ petition under Article 226 of the Constitution of India seeking a mandamus to direct HDFC Bank (Respondent No. 2) to unfreeze his savings bank account

The account was frozen due to alleged cyber fraud involving a disputed amount of ₹32,000

The petitioner contended that while a specific amount was disputed, the entire account and all digital banking services (UPI, NEFT, RTGS) had been restricted, preventing normal operations

The petitioner relied on a precedent involving similar circumstances of crypto-trading related account freezes

1. Whether the bank is justified in freezing the entire balance and all digital operations of an account when only a specific portion is linked to an alleged cybercrime

2. Whether the investigating agencies must comply with statutory requirements, such as notifying the Magistrate, when instructing banks to freeze accounts

principles established in Malcolm Murayis Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024), which mandates that banks should only secure the disputed amount rather than freezing the entire account

Section 102 of the Code of Criminal Procedure (Cr.P.C.)—and its successor provisions under the Bharatiya Nagarik Suraksha Sanhita (BNSS)—governing the power of police officers to seize property and the mandatory requirement to report such seizures to the competent Magistrate

The court observed that the petitioner’s situation was identical to the Malcolm Murayis case, where accounts were frozen based solely on emails from various cyber cells without formal notice to the account holders or the Magistrate

The court noted the "poor functioning and irresponsible approach" of cyber crime cells that freeze accounts but fail to respond to judicial inquiries or follow statutory procedures

By applying the mutatis mutandis principle, the court reasoned that the interest of justice is served by securing only the "tainted" amount in a fixed deposit, thereby allowing the petitioner to utilize the remaining legitimate funds and maintain banking operations while the investigation proceeds

The bank was ordered to keep the disputed amount in a fixed deposit (FD), which can only be liquidated upon orders from a competent Judicial Magistrate. If the investigating agency fails to proceed in accordance with the law/BNSS within three months, the petitioner is entitled to withdraw the FD amount under intimation to the agency. The petition was disposed of with the mandate to restore all digital and banking facilities to the petitioner immediately