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

The petitioner, Awdesh Kumar Chauhan, maintained a savings bank account with HDFC Bank (Respondent No. 3) in Ahmedabad

The account was frozen by the bank following intimations from law enforcement/cyber crime agencies regarding alleged involvement in cyber fraud

The petitioner sought a writ of mandamus to unfreeze the account, arguing that only a specific disputed amount of ₹1,88,100/- should be lien-marked, while the remaining balance and digital services should be restored

The petitioner relied on a precedent where no prior notice was given to the account holder and the investigating agencies failed to comply with statutory reporting procedures

1. Whether a bank account can remain frozen in its entirety by investigating agencies without following the mandatory reporting procedures under the law

2. Whether the petitioner is entitled to operate the undisputed portion of the funds in the frozen account pending investigation

Section 102 of the Code of Criminal Procedure (Cr.P.C.) [para. 4 of the cited judgment]—and its successor provisions under the Bharatiya Nagarik Suraksha Sanhita (BNSS) [para. 5]—which empowers police officers to seize property suspected to be stolen or linked to an offense, provided such seizure is reported to a Magistrate.

Principle of proportionality in freezing accounts, allowing disputed amounts to be kept in fixed deposits while unfreezing the remainder as established in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024).

The court found the petitioner's case to be squarely covered by the Malcolm Murayis decision

It observed that cyber crime cells often direct banks to freeze accounts without adequate follow-up or compliance with the procedural safeguards under Section 102 Cr.P.C. (or BNSS), such as informing the competent Magistrate

The court reasoned that indefinitely freezing an entire account causes undue hardship to the holder; therefore, the interest of justice is served by isolating only the specific "disputed amount" informed by the agencies

By requiring this amount to be placed in a Fixed Deposit (FD), the court ensures the funds remain available for legal recovery if fraud is proven, while restoring the petitioner’s right to access undisputed funds and digital banking services

The bank was ordered to keep only the disputed amount 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 law (BNSS) within three months, the petitioner is permitted to withdraw the FD amount under intimation to the agency. All digital and online banking services were ordered to be restored.