Banks must segregate disputed cyber-fraud amounts in fixed deposits and defreeze the remaining account balance.

The petitioner, Bombay Tyre Services, challenged the debit freeze and banking restrictions imposed on its current account maintained with Jana Small Finance Bank Ltd.

The freeze was stated to be connected with cybercrime complaint acknowledgement No. 20805250033288.

The petitioner sought restoration of normal banking operations and, alternatively, segregation of only the disputed amount while permitting operation of the remaining balance of approximately ₹2,77,418.87.

The petitioner relied on the High Court’s earlier decision in Malcolm Murayis & Ors. v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024, concerning freezing of bank accounts on instructions of cybercrime authorities.

Whether the petitioner’s bank account, frozen pursuant to a cybercrime-related complaint, should remain completely restricted or be unfrozen subject to preservation of the specifically disputed amount

Whether the disputed amount of ₹88,000 should be kept in a fixed deposit pending orders of the competent Judicial Magistrate, while the petitioner is permitted to operate the remaining balance

Whether the police agency was required to proceed in accordance with the applicable provisions of the BNSS or other governing law concerning seizure/freezing of property connected with an alleged offence

The Court exercised its writ jurisdiction under Article 226 of the Constitution of India to regulate the continued freezing of the petitioner’s bank account.

It applied the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024, that where a bank account is frozen on the basis of cybercrime allegations, only the amount specifically linked to the alleged fraud should be preserved in a fixed deposit, while the undisputed balance should be released; liquidation of the fixed deposit should ordinarily depend on orders of the competent Judicial Magistrate within the stipulated period.

The earlier decision referred to compliance with Section 102 of the CrPC, whereas the present order directed the police agency to proceed under the relevant provisions of the BNSS or any other applicable law.

The Court found that the present case was squarely covered by the principles in Malcolm Murayis and applied that decision mutatis mutandis.

Since the cybercrime authorities had identified ₹88,000 as the disputed amount, the Court considered it unnecessary to continue a blanket freeze over the petitioner’s account.

It therefore balanced the investigative interest in preserving the allegedly tainted amount against the petitioner’s right to access the undisputed funds by directing that ₹88,000 be placed in a fixed deposit.

The police agency was expected to obtain appropriate orders from the competent Judicial Magistrate within three months in accordance with the applicable law; failing that, the fixed-deposit amount could also be withdrawn by the petitioner after intimation to the police agency.

The remainder of the account balance was not required to remain frozen.

Jana Small Finance Bank Ltd. was directed to keep ₹88,000, being the amount claimed by the cybercrime agencies as disputed, in a fixed deposit.

The amount could be liquidated only pursuant to orders of the competent Judicial Magistrate within three months; failing such orders, it could be released to the petitioner upon intimation to the police agency.

The petitioner’s bank account was directed to be unfrozen, and the remaining amount, if any, was ordered to be released from the freeze for the petitioner’s use.