Court Orders Unfreezing of Bank Account Subject to Creating Fixed Deposit for Disputed Cyber-Fraud Amount

The petitioner, Akash Solanki, filed a writ petition under Article 226 of the Constitution of India challenging the freezing of his bank account (Account No. 2157001500029354) held with Punjab National Bank.

The account was frozen following allegations of cyber fraud involving a disputed amount of Rs. 9,800/-.

The petitioner sought a mandamus to unfreeze the account, arguing that only the disputed amount should be secured while allowing him to operate the remaining balance and digital services.

The petitioner relied on a previous coordinate bench decision in Malcolm Murayis & Ors. Vs. State Bank of India and Others.

1. Whether the respondent bank should be directed to unfreeze the petitioner's account and limit the "freeze" only to the specific disputed amount allegedly linked to cybercrime.

2. Whether the principles laid down in Malcolm Murayis & Ors. Vs. State Bank of India and Others regarding the freezing of accounts under Section 102 of the Cr.P.C. (now relevant provisions of BNSS) are applicable to the present case.

The court primarily applied the principles governing the seizure of bank accounts under Section 102 of the Code of Criminal Procedure, 1973 (Cr.P.C.), and the corresponding provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS).

It relied on the precedent of Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024), which establishes that investigating agencies must comply with procedural safeguards when freezing accounts and that banks should not indefinitely freeze the entire balance if only a portion is disputed.

The court found that the petitioner’s situation was squarely covered by the Malcolm Murayis decision, where the court noted a recurring issue of cyber crime cells freezing entire accounts via email without notifying the concerned Magistrate or providing due process to the account holder.

Applying this to the present facts, the court reasoned that while the integrity of the investigation must be maintained regarding the disputed amount (Rs. 9,800/-), freezing the entire account and all digital services was disproportionate.

The court emphasized that the police are expected to proceed in accordance with law under the BNSS within a reasonable timeframe (three months), failing which the restrictive measures cannot continue.

The court ordered the bank to keep only the disputed amount in a fixed deposit, which is to be liquidated only upon orders from a competent Judicial Magistrate. If the investigating agency fails to take appropriate legal action under the BNSS or relevant law within three months, the petitioner is permitted to withdraw the amount kept in the fixed deposit under intimation to the agency. The petition was disposed of with these directions.