Freezing of bank accounts for cyber fraud investigation must be restricted to the specific disputed amount.

The petitioner filed a writ petition under Article 226 of the Constitution of India seeking a direction to the State Bank of India (SBI) to remove a freeze/hold placed on his bank account

The account had been frozen following intimations from cyber cell agencies alleging involvement in cyber fraud

The case follows a pattern where bank accounts are frozen by banks solely on police instructions without following mandatory procedural safeguards

The court noted that the matter is 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 respondent bank can indefinitely freeze a petitioner's entire bank account based on a police intimation regarding a specific disputed amount

2. Whether the investigating agencies must comply with Section 102 of the Cr.P.C. (now relevant provisions of BNSS) regarding the seizure of bank accounts

Article 226 of the Constitution of India regarding the High Court’s power to issue writs for the enforcement of rights

Procedural requirements of Section 102 of the Cr.P.C. (and corresponding provisions of the Bharatiya Nagarik Suraksha Sanhita/BNSS), which mandates that investigating agencies must inform the concerned Magistrate about seizures

Principle of proportionality established in Malcolm Murayis & Ors. Vs. State Bank of India and Others, which dictates that only the disputed amount should be secured while the remainder of the account should remain operational

The Court observed that the cyber crime cells often exhibit an "irresponsible approach" by directing banks to freeze accounts but failing to respond to subsequent judicial or bank inquiries

Applying the Malcolm Murayis precedent, the Court reasoned that the freezing of an entire account for a relatively small disputed amount (Rs. 2,610/- in this case) is unjustified

The court held that the interests of justice are served by segregating the specific disputed amount into a fixed deposit while allowing the petitioner access to the rest of the funds, ensuring that the police are given a limited timeframe (three months) to proceed in accordance with the law (BNSS/Cr.P.C.)

It directed the Respondent Bank to keep only the disputed amount of Rs. 2,610/- in a fixed deposit, which may only be liquidated upon orders from a competent Judicial Magistrate

If the police agency fails to proceed under the BNSS or relevant law within three months, the petitioner may withdraw the FD amount

The Court ordered that the petitioner’s bank account be unfrozen and that the remaining balance (beyond the disputed Rs. 2,610/-) be made available for use immediately