Bank Accounts Frozen on Cyber Fraud Allegations Must Be Unfrozen Subject to Term Deposit of Disputed Amounts

The petitioner, Shivendra Pandey, filed a writ petition under Article 226 of the Constitution of India seeking a direction to IndusInd Bank to remove a "hold" or "freeze" placed on his bank account (No. 100272611758) at the Indore branch

The account was frozen based on intimations from cyber crime agencies regarding alleged involvement in cyber fraud

The petitioner contended that he received no formal notice and that the investigating agencies failed to comply with statutory procedures regarding the seizure of bank accounts

1. Whether the respondent bank can indefinitely freeze a petitioner's bank account solely based on police intimation without the investigating agency following statutory procedures under the BNSS or Cr.P.C.

2. Whether the petitioner is entitled to operate the frozen account subject to safeguards regarding the specific disputed amount linked to the alleged fraud

The court relied on the precedent established in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), which mandates that investigating agencies must follow Section 102 of the Cr.P.C. (now relevant provisions of the Bharatiya Nagarik Suraksha Sanhita/BNSS) when seizing property or freezing accounts

This includes the duty of the police to inform the concerned Magistrate about such seizures and to proceed in accordance with law rather than placing indefinite holds via mere email instructions

The Court observed that the petitioner’s situation was identical to the Malcolm Murayis case, where cyber cells frequently requested banks to freeze accounts without subsequent follow-up or legal compliance

The Court noted the "poor functioning and irresponsible approach" of cyber crime cells that freeze accounts without responding to bank inquiries or court proceedings

Consequently, the Court determined that the principle of mutatis mutandis applied

It reasoned that while the disputed amount must be secured to protect the integrity of the investigation, the petitioner should not be deprived of his entire account indefinitely if the police fail to obtain a formal order from a competent Judicial Magistrate within a reasonable timeframe

The bank was ordered to keep the specific "disputed amount" informed by the crime agency in a fixed deposit. This amount is to be liquidated only upon orders from a competent Judicial Magistrate within three months; if the police agency fails to proceed under the BNSS or relevant law within that period, the petitioner is permitted to withdraw the funds in the fixed deposit under intimation to the agency