Banks Directed to Unfreeze Accounts Subject to Fixed Deposits for Alleged Cyber Fraud Amounts

The petitioner, Sonam Bai, filed a writ petition under Article 226 of the Constitution of India seeking a direction to the respondent bank to defreeze her current bank account (bearing no. 094501004530 at Rajwada branch, Indore) and remove a lien of Rs. 2,907/-.

The account had been frozen based on intimations from cyber crime agencies regarding alleged involvement in cyber fraud.

The petitioner contended that her 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 without proper notice or compliance with statutory procedures.

1. Whether the action of the respondent bank in freezing the petitioner’s account and creating a lien solely on the instruction of investigative agencies is legally sustainable.

2. Whether the investigative agencies complied with the mandatory procedural requirements of Section 102 of the Cr.P.C. (now relevant provisions of BNSS) regarding the seizure of bank accounts.

The court primarily applied the principles governing the seizure of property under Section 102 of the Code of Criminal Procedure (Cr.P.C.), now substituted by the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS), which require investigating officers to report seizures to the concerned Magistrate.

The court also relied on the precedent Malcolm Murayis & Ors. Vs. State Bank of India and Others, which established that while banks must cooperate with cyber cell instructions, the rights of account holders must be protected by segregating disputed amounts into fixed deposits rather than freezing entire accounts indefinitely without legal recourse.

The Court found that the facts of the present case were squarely covered by the Malcolm Murayis decision, making the principles therein applicable mutatis mutandis.

In the predecessor case, the Court noted a "poor functioning and irresponsible approach" of cyber crime cells that freeze accounts via email but fail to respond to judicial inquiries or comply with Section 102 Cr.P.C.

The Court reasoned that to balance the interests of the investigation and the petitioner’s right to operate her account, only the disputed amount (the lien) should be secured.

By directing the disputed amount to be placed in a fixed deposit (FD), the Court ensures the funds remain available for the investigation’s outcome while allowing the petitioner to access the remainder of her funds.

The respondent bank was directed to keep the disputed amount (Rs. 2,907/-) in a fixed deposit, which may only be liquidated upon orders from a competent Judicial Magistrate within three months.

If the police agency fails to proceed in accordance with the law (BNSS) within that period, the petitioner is permitted to withdraw the FD amount under intimation to the agency.

The petition stood disposed of with these directions.