Bank accounts frozen on cybercrime allegations must be unfrozen except for the specific disputed amount.

The petitioner, Raksha Gawande, filed a writ petition under Article 226 of the Constitution of India challenging the freezing of her bank account by R.B.L. Bank.

The account was purportedly frozen due to suspicions of cyber fraud involving a specific amount of ₹20,000/-.

The petitioner sought directions to unfreeze the account and allow its operation, arguing that the action was taken without due process of law.

The petitioner contended that her case is squarely covered by a prior coordinate bench decision in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024).

1. Whether the bank is entitled to freeze the entire account of a petitioner when only a specific portion of the funds is allegedly linked to a cybercrime.

2. Whether the investigating agencies and banks must comply with the procedural requirements of the Bharatiya Nagarik Suraksha Sanhita (BNSS) or Cr.P.C. when seizing bank accounts.

The court primarily applied the principles governing the seizure of property under Section 102 of the Cr.P.C. (and the corresponding provisions of the Bharatiya Nagarik Suraksha Sanhita/BNSS), which require investigating agencies to report seizures to the concerned Magistrate.

It further relied on the precedent established in Malcolm Murayis & Ors. Vs. State Bank of India and Others, which held that while disputed amounts linked to fraud may be secured, the remainder of the account should not be frozen indefinitely without following due process.

The court found that the facts of the present case were identical to the Malcolm Murayis case, where bank accounts were frozen based solely on intimations from cyber cells without the investigators responding to court inquiries or proving compliance with statutory seizure procedures.

The court reasoned that freezing an entire account for a disputed amount of ₹20,000/- is disproportionate.

By applying the mutatis mutandis principle, the court determined that the disputed amount should be isolated in a fixed deposit to protect the interests of the investigation, while the rest of the account should be released to the petitioner to ensure their right to operate their account is not unlawfully curtailed.

The bank was ordered to keep the disputed amount of ₹20,000/- 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 is permitted to withdraw the FD amount under intimation to the agency.