Freeze on bank accounts for cyber fraud must be limited only to the disputed amount.

The petitioner, Chirag Jain, filed a writ petition under Article 226 of the Constitution of India seeking to unfreeze his savings account (No. 1936000100513867) and release a lien marked on the funds.

The account had been frozen following instructions from crime agencies regarding alleged cyber fraud.

The petitioner contended that his case is identical to a prior decision of the same High Court involving accounts frozen due to cybercrime investigations without proper adherence to procedural safeguards.

1. Whether the petitioner is entitled to have his bank account unfrozen and the lien removed based on the precedent set in Malcolm Murayis & Ors. Vs. State Bank of India and Others?

2. Whether the disputed amount should be secured in a fixed deposit pending a decision by a competent Magistrate while allowing the operation of the rest of the account?

The court applied the precedent established in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024), which mandates that investigative agencies must follow Section 102 of the Code of Criminal Procedure (now under relevant provisions of the Bhartiya Nagarik Suraksha Sanhita/BNSS) when seizing bank accounts.

The principle ensures a balance between investigative requirements and the account holder's right to operate their legal funds by isolating only the "disputed amount" in a fixed deposit.

The Court observed that the facts of the present case are squarely covered by the Malcolm Murayis decision, where it was noted that cyber cell agencies often fail to respond to court inquiries or follow the mandatory reporting requirements under Section 102 Cr.P.C.

By applying this precedent mutatis mutandis (with necessary changes), the Court determined that the respondent bank acted solely on the instructions of crime agencies.

To protect the interests of both the investigation and the petitioner, the Court reasoned that the specific disputed amount of ₹12,339/- should be ring-fenced in a fixed deposit, thereby allowing the petitioner access to the remainder of his account functions.

It directed the respondent Bank to unfreeze the petitioner’s savings account (No. 1936000100513867) and keep only the disputed amount of ₹12,339/- in a fixed deposit. This deposit is to remain frozen for three months; if no further orders are passed by a competent Judicial Magistrate within that timeframe, the petitioner may withdraw the amount.