Court Directs Unfreezing of Bank Accounts Linked to Cyber Fraud Claims Subject to Fixed Deposit of Disputed Amounts

The petitioner, Hemant Bairagi, challenged the freezing of his HDFC bank account (No. 50100202634510) and associated e-services

Banking authorities froze the account based on intimations from cyber crime cells regarding alleged involvement in cyber fraud

The petitioner contended that he received no prior notice of involvement in any offence and argued that the investigating agencies failed to comply with mandatory procedural requirements for seizure

1. Whether the bank account of the petitioner, frozen on the instructions of cyber crime agencies, ought to be unfrozen subject to specific conditions.

2. Whether the investigating agencies are required to follow the procedure under Section 102 of the Cr.P.C. (now relevant provisions of BNSS) when freezing bank accounts.

The Court primarily relied on the precedent set in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100/2024), which established that while banks must follow police instructions, they cannot indefinitely freeze entire accounts without formal legal proceedings

The Court applied Section 102 of the Code of Criminal Procedure, 1973 (Cr.P.C.), and its successor provisions under the Bharatiya Nagarik Suraksha Sanhita (BNSS), which govern the power of police officers to seize property and mandate reporting such seizures to a Magistrate

The Court noted that the case was squarely covered by the Malcolm Murayis decision, where it was observed that cyber crime cells often exhibit an "irresponsible approach" by freezing accounts without following up or responding to judicial inquiries

The Court reasoned that to balance the interests of the investigation with the petitioner's right to operate his account, only the "disputed amount" linked to the alleged fraud should be secured

By directing that this specific amount be placed in a Fixed Deposit (FD), the Court ensures the funds remain available for potential recovery while allowing the petitioner to regain access to the remaining balance and account services

The Court emphasized that the burden lies on the police to proceed in accordance with law within a set timeframe

It directed the HDFC Bank to unfreeze Account No. 50100202634510. However, the Bank is ordered to keep the specific disputed amount (as informed by the crime agencies) in a Fixed Deposit.

This FD shall only be liquidated upon orders from a competent Judicial Magistrate. If the police agency fails to initiate legal proceedings under the BNSS or other applicable law within three months, the petitioner shall be permitted to withdraw the FD amount upon intimation to the agency