Cyber-fraud account freezes must be limited to disputed amounts pending Magistrate’s orders.

The petitioner filed a writ petition under Article 226 of the Constitution seeking removal of the hold/freeze imposed on her current bank account No. 60585582110 maintained with the Bank of Maharashtra in the name of Ritika Bhavsar.

The Court found that the case was covered by its earlier decision in Malcolm Murayis & Ors. v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024.

In the present case, the disputed amount reported by the police/cyber-crime agencies was Rs. 6,750; the remaining balance was not alleged to be connected with the suspected offence.

Whether the petitioner’s bank account, frozen pursuant to communications from police/cyber-crime authorities, could continue to remain wholly frozen without further legal proceedings before the competent Judicial Magistrate.

Whether the disputed amount of Rs. 6,750 should be preserved separately while permitting the petitioner to operate the remainder of the account.

The Court applied the principles governing seizure or freezing of property under Section 102 of the Code of Criminal Procedure, and the corresponding relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, requiring the investigating agency to proceed in accordance with law and place the matter before the competent Judicial Magistrate.

It relied on Malcolm Murayis & Ors. v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024, which held that a bank may preserve the disputed amount in a fixed deposit, subject to orders of the competent Judicial Magistrate, but the entire account should not remain frozen indefinitely.

The Court further applied the principle that only the amount allegedly linked to the cyber fraud may be restricted, while the undisputed balance should be released.

Since the present matter was materially identical to Malcolm Murayis, the Court applied that decision mutatis mutandis.

It balanced the investigative interest in preserving the suspected proceeds of cyber crime against the petitioner’s right to access undisputed funds.

The Court found no justification for continuing a blanket freeze over the entire account and directed that the account be unfrozen, with the remaining funds released to the petitioner.

The petition was disposed of. The Bank was directed to keep Rs. 6,750 in a fixed deposit, to be liquidated only pursuant to an order of the competent Judicial Magistrate within three months.

If the police agency failed to obtain such an order within that period, the fixed-deposit amount could also be released to the petitioner, under intimation to the police agency.

The petitioner’s bank account was directed to be unfrozen, and any balance other than the disputed amount was ordered to be released.