Bank accounts frozen on cybercrime allegations must be unfrozen subject to placing disputed amounts in fixed deposits.

The petitioner filed a writ petition under Article 226 of the Constitution of India seeking a direction to the respondent bank to remove a "hold" or "freeze" placed on his bank account

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 accounts were frozen by banks solely based on intimations from cyber cells regarding alleged cyber fraud involvement without adhering to statutory procedures

In the referenced precedent, accounts were frozen without notice to the account holders or compliance with mandatory reporting to the Magistrate

1. Whether the bank account of the petitioner can remain frozen indefinitely based on an investigative intimation without compliance with statutory procedural safeguards

2. Whether the petitioner is entitled to the same relief as granted in the case of Malcolm Murayis & Ors. v. SBI regarding the unfreezing of accounts and treatment of disputed amounts

The court applied the principles governing the seizure of property by police officers under Section 102 of the Code of Criminal Procedure (Cr.P.C.) (now corresponding to the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS))

The rule requires investigating agencies to inform the concerned Magistrate regarding the seizure/freezing of bank accounts.

Furthermore, the court relied on the doctrine of mutatis mutandis to apply the judicial precedent of Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), which establishes that while disputed amounts must be secured, the account holder cannot be deprived of the use of the entire account indefinitely due to administrative lapses or non-responsiveness of investigative agencies

The court found that the petitioner’s situation was "squarely covered" by the decision in Malcolm Murayis

It observed that cyber crime cells often direct banks to freeze accounts but fail to respond to judicial inquiries or follow the procedural mandates of Section 102 Cr.P.C. / BNSS

The court reasoned that in the absence of a "clean chit" or a concluded investigation, a balance must be struck: the specific disputed amount allegedly linked to fraud should be secured in a fixed deposit, while the remainder of the account should be accessible to the holder

The court noted that if the police agency fails to proceed in accordance with law before a competent Judicial Magistrate within a specified timeframe, the hold on the funds cannot be sustained

The bank was ordered to keep only the specific "disputed amount" (as informed by the crime agencies) in a fixed deposit

This deposit 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 said three months, the petitioner is permitted to withdraw the amount kept in the fixed deposit under intimation to the agency