Bank Accounts Frozen on Cyber Crime Intimations Must be Unfrozen After Securing Disputed Amounts in Fixed Deposits

The petitioner, Shivraj, approached the High Court under Article 226 of the Constitution of India seeking a writ to direct IDFC First Bank Ltd. to defreeze or remove the lien/hold on his bank account (No. 10021742070).

The account had been rendered inoperable following intimations sent by cyber crime cells to the bank regarding alleged involvement in cyber fraud.

The petitioner contended that they were carrying out lawful business and that many investigating agencies often fail to comply with statutory requirements under the Code of Criminal Procedure/BNSS when seizing accounts.

1. Whether the bank account of the petitioner can be frozen indefinitely without a formal notice or compliance with statutory procedures by investigating agencies.

2. Whether the petitioner is entitled to operate the account while ensuring the disputed amounts related to the alleged fraud remain secured.

The court primarily applied the legal principles established in the precedent Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024), which addresses the freezing of bank accounts in cybercrime investigations.

Section 102 of the Code of Criminal Procedure (Cr.P.C.), now governed by relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS), which mandates that investigating officers inform the concerned Magistrate about property seizures.

The Court observed that the case was squarely covered by the Malcolm Murayis decision.

In that precedent, the court noted a "poor functioning and irresponsible approach" by cyber crime cells that freeze accounts via email but fail to respond to legal proceedings or comply with Section 102 Cr.P.C.

The Court reasoned that to balance the interests of justice and investigation, the "disputed amount" (the specific figure flagged by agencies) should be isolated into a fixed deposit, while the remainder of the account should be accessible to the petitioner.

This ensures the suspected proceeds of crime are preserved without completely paralyzing the account holder's financial liberties during prolonged investigations.

The bank was ordered to keep only the specific "disputed amount" in a fixed deposit (FD), which can 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 may be allowed to withdraw the FD amount under intimation to the agency.