Bank accounts frozen on cybercell instructions must be unfrozen, retaining only the disputed amount in fixed deposits.

The petitioner, Samriddhi International Pvt Ltd, filed a writ petition under Article 226 of the Constitution of India seeking to unfreeze its State Bank of India account (A/c No. 38899171017).

The account had been frozen following a complaint (No. 33303260007768) registered at Mohan Nagar Thana, Durg, Chhattisgarh.

The petitioner contended that the matter was settled through mutual agreement and full repayment of the disputed amount, and argued that the case was squarely covered by the precedent in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024).

1. Whether the bank account of the petitioner should be unfrozen in light of a mutual settlement and the precedent governing cyber-fraud related freezes.

2. Whether the disputed amount should be secured in a fixed deposit pending further orders from a competent Magistrate.

Article 226 of the Constitution of India regarding the High Court's power to issue writs for the enforcement of rights.

Section 102 of the Cr.P.C. (now corresponding to relevant provisions of the Bharatiya Nagarik Suraksha Sanhita/BNSS), which mandates that investigating agencies inform the concerned Magistrate about the seizure of property.

The principle of judicial consistency by following the precedent set in Malcolm Murayis & Ors. Vs. State Bank of India and Others, which established that banks should not indefinitely freeze entire accounts based on police intimations without active investigation or compliance with procedural laws.

The Court observed that the facts of the present case were identical to those in Malcolm Murayis, where cyber crime cells had frozen accounts without providing subsequent updates or following statutory procedures under the Cr.P.C.

In the precursor case, the court noted the "irresponsible approach" of cyber cells that freeze accounts but fail to respond to bank inquiries or Magistrate notifications.

Applying this logic mutatis mutandis, the court determined that while the interest of the investigation (the disputed amount of ₹7,98,000/-) must be secured, the petitioner cannot be indefinitely deprived of operating the entire account.

The court linked the continued freeze to the police's duty to proceed under the BNSS within a specific timeframe.

The bank was ordered to keep the disputed amount of ₹7,98,000/- in a fixed deposit (FD), to remain frozen for three months; if no orders are passed by a competent Judicial Magistrate within that period, the petitioner is permitted to withdraw the amount under intimation to the police agency.