Court May Order Unfreezing of Bank Accounts Linked to Cyber Fraud Subject to Safe-Guarding Disputed Amounts in Fixed Deposits

The petitioner, Nitin Shrivastava, filed a writ petition under Article 226 of the Constitution of India challenging the "debit freeze/hold" placed on his Savings Bank Account (No. 53032048147) at the State Bank of India, Chouk Bazar Branch, Shajapur.

The petitioner asserted he is the complainant and victim in FIR No. 0207/2024 rather than an accused.

He sought the revocation of the freeze to access his salary and lawful funds, arguing the restriction was arbitrary and violative of Articles 14 and 21 of the Constitution.

The petitioner contended his case was squarely covered by the precedent in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024).

1. Whether the continued debit freeze on the petitioner's bank account, where he is the complainant and not the accused, is legally sustainable.

2. Whether the Court should direct the unfreezing of the account subject to specific conditions regarding the disputed amounts.

Section 102 of the Code of Criminal Procedure (Cr.P.C.) [now corresponding to relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS)] governing the seizure of bank accounts.

Precedent in Malcolm Murayis & Ors. Vs. State Bank of India and Others, establishing that investigating agencies must comply with statutory reporting requirements to the Magistrate and that undisputed funds should remain accessible to the account holder.

Extraordinary jurisdiction under Article 226 of the Constitution of India to address violations of fundamental rights under Articles 14 and 21.

The court observed that the petitioner’s situation mirrored the facts in Malcolm Murayis, where accounts were frozen by banks solely on the intimation of cyber cells without adequate follow-up or compliance with procedural law.

The court noted the "poor functioning and irresponsible approach" of cyber crime cells that freeze accounts via email but fail to respond to judicial proceedings or provide clean chits.

Applying the mutatis mutandis principle, the court reasoned that while disputed amounts (alleged proceeds of crime) must be secured, the petitioner cannot be indefinitely deprived of his entire account, including legitimate salary credits.

The court determined that statutory compliance under the BNSS (or Cr.P.C.) regarding the reporting of seizures to a Magistrate is mandatory for the continuation of such freezes.

The bank was ordered to keep the specific "disputed amount" (as identified by crime agencies) in a fixed deposit, which can only be liquidated upon orders from a competent Judicial Magistrate within three months, failing which the petitioner may withdraw the funds.

The petitioner was permitted to freely operate the account and access all other legitimate credits.