Bank accounts frozen on police intimation for cyber fraud must be unfrozen, preserving only disputed amounts in fixed deposits.

The petitioner, Pankaj Patidar, filed a writ petition under Article 226 of the Constitution of India seeking a direction to the respondent, Bank of Maharashtra, to de-freeze his bank account (No. 60109308262).

The account had been frozen following intimations from cyber crime cells regarding alleged involvement in cyber frauds.

The petitioner contended that his case was identical to the matter of Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100/2024), where the court provided relief for frozen accounts linked to crypto-trading disputes.

1. Whether the respondent bank can indefinitely freeze the petitioner's entire bank account based on instructions from investigating agencies without those agencies following statutory procedural mandates.

2. Whether the petitioner is entitled to operate his account, subject to certain conditions regarding the disputed amount alleged to be the proceeds of cyber crime.

The Court primarily applied the principles governing the seizure of bank accounts under Section 102 of the Code of Criminal Procedure (Cr.P.C.).

The Court relied on the precedent set in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), which established that while investigating agencies may request freezes, they must proceed in accordance with law and report such seizures to the competent Magistrate, failing which the account holder's right to operate their account must be protected.

The principles under Section 102 Cr.P.C. now correspond to the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS).

The Court observed that the case was squarely covered by the Malcolm Murayis precedent, where it was noted that cyber crime cells often issue freeze instructions but fail to respond to judicial proceedings or comply with the mandatory reporting requirements of Section 102 Cr.P.C.

Applying the doctrine of mutatis mutandis, the Court found that the petitioner’s bank account should be unfrozen to allow regular operations, while the specific disputed amount—identified as potential proceeds of fraud—must be secured.

The Court reasoned that since the investigating agencies are expected to proceed under BNSS or other applicable laws within a reasonable timeframe, the disputed amount should be kept in a fixed deposit for a period of three months to await orders from a competent Judicial Magistrate.

The Bank was ordered to keep the specific disputed amount in a fixed deposit (FD), which can only be liquidated upon orders from a competent Judicial Magistrate.

If the investigating agency fails to obtain such orders or proceed in accordance with law within three months, the petitioner shall be permitted to withdraw the amount kept in the FD under intimation to the agency.