Bank accounts frozen for alleged cybercrime must be unfrozen while keeping disputed amounts in fixed deposits.

The petitioner, a proprietorship firm, filed a writ petition under Article 226 of the Constitution of India seeking to unfreeze/defreeze its current bank account (bearing No. 45074719559) and remove the lien placed upon it by the Respondent Bank.

The petitioner contended that the facts of the case were identical to a previous decision of the High Court involving bank accounts frozen due to alleged cyber fraud or transactions linked to cybercrime.

The procedural history indicates that banks typically freeze such accounts upon intimation from cyber cells without the account holders being served prior notice or the investigating agencies complying with procedural mandates.

1. Whether the respondent bank can indefinitely freeze the petitioner's account based on instructions from investigating agencies without following statutory procedural safeguards.

2. Whether the petitioner is entitled to operate the bank account while ensuring the disputed amount involved in the alleged cyber fraud remains secured.

Article 226 of the Constitution of India regarding the issuance of writs.

The court applied the legal principles established in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024), which mandates that investigating agencies must comply with Section 102 of the Cr.P.C. (now relevant provisions under the Bharatiya Nagarik Suraksha Sanhita - BNSS) by informing the concerned Magistrate about seizures and proceeds.

The rule dictates that while crime proceeds must be secured, the entirety of an account cannot be frozen indefinitely if the suspicious transaction is limited to a specific amount.

The Court observed that the case was squarely covered by the Malcolm Murayis precedent, where it was noted that cyber crime cells often maintain an "irresponsible approach" by failing to respond to judicial or bank inquiries after freezing accounts.

The Court reasoned that to balance the interests of the investigation and the petitioner's right to carry on business, the disputed amount (identified as ₹50,000/- in this case) should be isolated in a fixed deposit.

This ensures that the state’s interest in the suspected proceeds of crime is protected while allowing the petitioner to operate the remainder of the account, as the police are expected to proceed in accordance with the law (BNSS) within a reasonable timeframe (three months).

The Court ordered the Respondent Bank to keep the disputed amount of ₹50,000/- in a fixed deposit, which may only be liquidated upon orders from a competent Judicial Magistrate within three months.

If the investigating agency fails to take appropriate legal action within this period, the petitioner is permitted to withdraw the amount under intimation to the agency.

The petition was disposed of with these directions.