Bank accounts frozen for alleged cyber fraud may be unfrozen subject to fixing disputed amounts in deposits.

The petitioner, a proprietary firm, approached the High Court under Article 226 of the Constitution of India challenging the freezing/holding of its bank account (Account No. 21077610000082) by HDFC Bank

The freeze was initiated based on instructions from cybercrime agencies investigating alleged fraudulent transactions

The petitioner contended that they were carrying out lawful business and that the investigating agencies failed to comply with statutory procedural requirements, such as informing the Magistrate regarding the seizure

The petitioner sought a direction to unfreeze the account, relying on the precedent set in Malcolm Murayis & Ors. Vs. State Bank of India and Others

1. Whether the respondent bank can indefinitely freeze a customer's account based solely on police intimation without the investigating agency following statutory procedures under the BNSS/Cr.P.C

2. Whether the disputed amount in a cybercrime investigation can be secured in a manner that allows the account holder to operate the remainder of the account

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 reporting seizures to the concerned Magistrate

Malcolm Murayis & Ors. Vs. State Bank of India and Others, W.P. No. 1100 of 2024, which provides a balanced approach to protecting state interests (disputed funds) while preventing undue hardship to account holders

The court found that the facts of the present case were squarely covered by the Malcolm Murayis decision

In that precedent, the court observed a "poor functioning and irresponsible approach" by cybercrime cells that freeze accounts via email but fail to respond to court notices or follow the mandate of Section 102 Cr.P.C.

Applying this to the petitioner, the court reasoned that while the disputed amount (specifically identified as Rs. 3,240/-) must be secured to protect the integrity of the investigation, the entire account should not remain frozen indefinitely if the police fail to proceed in accordance with law

By directing the disputed sum to be kept in a Fixed Deposit (FD), the court balanced the investigative requirements with the petitioner's right to operate their bank account

The bank was ordered to keep the disputed amount of Rs. 3,240/- in a Fixed Deposit, which may only be liquidated upon orders from a competent Judicial Magistrate within three months. If the police agency fails to proceed under the BNSS or relevant laws within this period, the petitioner is permitted to withdraw the FD amount under intimation to the agency.

The petition was disposed of with these directions