Bank accounts frozen on cyber cell intimations must be unfrozen subject to securing disputed amounts in fixed deposits.

The petitioner approached the High Court under Article 226 of the Constitution of India seeking a writ to unfreeze his bank account held with HDFC Bank.

The account had been frozen following intimations from cyber crime agencies regarding alleged involvement in cyber frauds.

The petitioner contended that his case was identical to the precedent set in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024), where the court addressed accounts frozen due to crypto-trading-related investigations without proper notice or compliance with statutory procedures.

1. Whether the bank account of the petitioner should be unfrozen in light of the guidelines established in the case of Malcolm Murayis?

2. What conditions must be imposed on the disputed amount to balance the interests of the investigating agencies and the account holder?

The Court primarily relied on the precedent established in Malcolm Murayis & Ors. Vs. State Bank of India and Others, which mandates that while accounts may be frozen during cyber investigations, the process must adhere to Section 102 of the Code of Criminal Procedure (Cr.P.C.) (now relevant provisions of the Bharatiya Nagarik Suraksha Sanhita [BNSS]).

This rule requires investigating agencies to inform the competent Magistrate of seizures and justifies unfreezing the remainder of the account while securing the specific disputed amount in a fixed deposit.

The Court observed that the grievance in the present petition was squarely covered by the decision in Malcolm Murayis.

In that precedent, the Court noted the "irresponsible approach" of cyber crime cells that freeze accounts via email but fail to respond to judicial inquiries or comply with statutory mandates under Section 102 Cr.P.C.

Applying the principle of mutatis mutandis, the Court determined that the petitioner’s entire account should not remain frozen indefinitely for a relatively small disputed sum of Rs. 1,040/-.

By directing the bank to isolate the disputed amount into a fixed deposit, the Court ensured the integrity of the investigation while restoring the petitioner’s right to operate his account.

The bank was ordered to keep the disputed amount of Rs. 1,040/- in a fixed deposit, which can 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 may withdraw the FD amount under intimation to the agency.

The petition was disposed of with these directions.