Banks must unfreeze accounts by segregating only disputed cyber-fraud amounts into fixed deposits.

The Petitioner, a boutique proprietor, approached the High Court seeking a writ of mandamus to unfreeze Current Account No. 44940190742 maintained at State Bank of India (SBI), Khatiwala Tank Branch, Indore

A lien/restriction of Rs. 1,02,300/- was imposed on the account following instructions from cybercrime authorities regarding alleged fraudulent activities

The Petitioner contended that the entire account was blocked, hindering normal business operations, and sought to segregate only the disputed amount while restoring banking facilities for the remaining balance

The Petitioner relied on a prior coordinate bench decision in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024)

1. Whether the bank is justified in freezing the entire bank account of the Petitioner based on a cybercrime investigation involving only a specific disputed amount

2. Whether the Petitioner is entitled to operate the bank account for the undisputed balance amount pending investigation

Principles governing the seizure of property under Section 102 of the Code of Criminal Procedure (Cr.P.C.), now relevantly addressed under the Bharatiya Nagarik Suraksha Sanhita (BNSS)

Investigative agencies must act with responsibility and follow due process; specifically, that freezing orders should not indefinitely paralyze an account when the dispute pertains to a quantifiable sum.

The Court observed that in similar cybercrime-related freezes, investigating agencies often fail to respond to bank communications or follow the mandatory reporting requirements to the Magistrate

Applying the Malcolm Murayis precedent mutatis mutandis, the Court reasoned that the interests of justice are served by balancing the needs of the investigation with the Petitioner's right to conduct business

The Court determined that the bank should only secure the "disputed amount" as identified by the crime agencies, rather than keeping the entire account inaccessible

By directing the conversion of the disputed amount into a Fixed Deposit, the Court ensured the funds remain available for legal adjudication while allowing the Petitioner to resume normal banking operations for the remainder of the balance

The Bank was directed to keep only the disputed amount in a Fixed Deposit, which shall not be liquidated for three months unless ordered by a competent Judicial Magistrate

The Police/Cybercrime agencies were instructed to proceed in accordance with the law (BNSS) within these three months; failing which, the Petitioner is permitted to withdraw the amount kept in the FD under intimation to the agency

All other banking facilities were ordered to be restored