Bank Accounts Frozen for Cyber Crimes Must Be Unfrozen Except for Disputed Amounts Placed Under Lien

The petitioner, an entity represented by Sukhdev Ahirwar, filed a writ petition under Article 226 of the Constitution of India seeking to unfreeze its bank account (A/c No. 42674308460) maintained with the State Bank of India.

The account was frozen in its entirety following intimations from cyber crime agencies regarding a disputed amount of Rs. 43,750/- allegedly linked to cyber fraud.

The petitioner contended that the entire account should not be restricted and requested that only the disputed amount be kept under lien, citing a precedent set by the same court in Malcolm Murayis & Ors. Vs. State Bank of India and Others.

1. Whether a bank account can remain frozen in its entirety when only a specific portion of the funds is allegedly linked to a cyber crime.

2. Whether the investigating agencies are required to follow the procedural mandates of Section 102 of the Cr.P.C. (now under relevant BNSS provisions) regarding the seizure of bank accounts.

The principle of proportionality and procedural compliance under Section 102 of the Cr.P.C. (and corresponding provisions of the Bharatiya Nagarik Suraksha Sanhita/BNSS), which requires investigating officers to report seizures to the Magistrate.

The precedent of Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024), which established that banks should only secure the disputed amount in a fixed deposit rather than freezing the entire operational account, especially when cyber crime cells fail to respond or proceed in a timely legal manner.

The court found that the petitioner’s case was squarely covered by the Malcolm Murayis decision.

In that precedent, the court noted that cyber crime cells often request freezes via email but fail to follow up or respond to court inquiries, representing an "irresponsible approach".

Applying this logic, the court reasoned that the petitioner’s right to operate their account should not be entirely curtailed due to a specific disputed transaction. The court determined that the interests of justice and the investigation are balanced by directing the bank to segregate the disputed amount into a Fixed Deposit (FD) while releasing the remainder of the account for the petitioner’s use.

The Court ordered the bank to keep the disputed amount 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 in accordance with the law (BNSS) within that timeframe, the petitioner is permitted to withdraw the FD amount under intimation to the agency. The petition was disposed of with these directions.