Banks Directed to Unfreeze Accounts While Placing Disputed Cyber Fraud Amounts into Fixed Deposits.

The petitioner, Darshan Nigam, filed a writ petition under Article 226 of the Constitution of India challenging the "illegal and arbitrary" freezing/hold placed on his State Bank of India (SBI) account (A/c No. 40525838889)

The petitioner contended that the bank account was frozen without lawful authority or order

The petitioner argued that the matter was squarely covered by a previous High Court decision in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), where accounts were frozen based on cyber cell intimations regarding crypto-trading and alleged cyber fraud without following statutory procedures

1. Whether the respondent bank can indefinitely freeze a customer's account based solely on police/cyber cell intimations without the investigating agencies following the mandatory requirements of the Code of Criminal Procedure or Bharatiya Nagarik Suraksha Sanhita

2. Whether the petitioner is entitled to the unfreezing of the bank account and access to funds not directly linked to the alleged crime

Section 102 of the Code of Criminal Procedure (Cr.P.C.) [para. 3, sub-para. 4], now corresponding to the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS)

The precedent set in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), which established that while disputed amounts can be secured in fixed deposits, the entire account should not remain frozen indefinitely if procedural laws are not followed

The Court observed that the investigating agencies often fail to respond to bank inquiries or follow the procedural mandates of Section 102 Cr.P.C. (or BNSS), demonstrating an "irresponsible approach" toward account holders

In line with the Malcolm Murayis precedent, the Court reasoned that the interests of justice are met by segregating the "disputed amount" from the rest of the account. By directing the disputed amount to be placed in a Fixed Deposit (FD), the Court ensures the recovery of potential proceeds of crime remains possible while the petitioner regains access to the remaining legitimate funds

The Court emphasized that investigative agencies must act within a three-month window to obtain orders from a competent Judicial Magistrate, failing which the petitioner gains full rights over the FD

It directed the Respondent Bank to unfreeze the petitioner’s account (A/c No. 40525838889). However, the Bank was ordered to keep the specific "disputed amount" (as informed by the crime agencies) in a Fixed Deposit. This FD is only to be liquidated upon orders from a competent Judicial Magistrate within three months; should the police fail to proceed in accordance with the BNSS/law within that time, the petitioner is permitted to withdraw those funds under intimation to the agency