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

The petitioner, Anjani Kumar Gautam, filed a writ petition under Article 226 of the Constitution of India seeking a direction to HDFC Bank to defreeze his bank account (No. 50100374733675) and remove a lien/hold placed upon it

The petitioner argued that his case was identical to the precedent established in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), where bank accounts were frozen by cyber cells of various police stations on allegations of cyber fraud—often involving crypto-trading—without the account holders receiving prior notice or the agencies following statutory seizure procedures

1. Whether the respondent bank is justified in maintaining an indefinite freeze on the petitioner's account based on instructions from investigative agencies when those agencies have failed to follow mandatory procedural laws

2. Whether the disputed funds can be secured in a manner that allows the petitioner to operate the remainder of the account while investigations are pending

The Court applied the principles governing the seizure of property by police as found in Section 102 of the Code of Criminal Procedure (Cr.P.C.), now corresponding to the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS)

This rule requires investigating agencies to report seizures to the concerned Magistrate and follow due process

The Court further relied on the precedent Malcolm Murayis & Ors. v. State Bank of India and Others, which mandates that while banks must follow investigative instructions, such freezes must be balanced against the account holder's rights if the agency fails to proceed in accordance with law

The Court found that the facts of the present case were squarely covered mutatis mutandis by the Malcolm Murayis decision

In that case, the Court noted the "irresponsible approach" of cyber crime cells that freeze accounts via email but fail to respond to subsequent legal inquiries or comply with Section 102 of the Cr.P.C.

The Court reasoned that the petitioner’s right to operate his account should not be entirely suspended due to investigative delays

By directing the bank to segregate only the "disputed amount" into a Fixed Deposit (FD), the Court sought to protect the potential proceeds of crime while allowing the petitioner access to his other funds

The Court placed the burden on the police agency to justify the seizure before a Judicial Magistrate within a specific three-month window

The Bank was ordered to keep only the specific disputed amount (as identified by the crime agencies) in a Fixed Deposit

This FD is to remain frozen and can only be liquidated upon the orders of a competent Judicial Magistrate

However, if the police 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