Freezing of bank accounts for cybercrime investigations must be restricted to the disputed amount only.

The petitioner, Smt. Mayuri Kanmadikar, filed a writ petition under Article 226 of the Constitution of India seeking a direction to Union Bank of India to unfreeze her bank account (A/c No. 616102010009003).

Her account was frozen in its entirety due to a dispute involving a specific amount of ₹19,090/-.

The petitioner contended that her case was squarely covered by the precedent in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024), where the court addressed similar grievances regarding account freezes initiated by cyber cell police stations without following proper statutory procedures.

1. Whether the bank is justified in freezing the entire bank account of the petitioner when the disputed amount involved in the alleged cyber fraud is significantly lower than the total balance.

2. Whether the freezing of the account complied with the procedural mandates of Section 102 of the Cr.P.C. (or relevant provisions of the BNSS).

The court primarily relied on the principles governing the seizure of property under Section 102 of the Code of Criminal Procedure (Cr.P.C.), now relevant under the Bharatiya Nagarik Suraksha Sanhita (BNSS), which requires investigating agencies to inform the concerned Magistrate about such seizures.

It further applied the ratio from Malcolm Murayis & Ors. Vs. State Bank of India and Others, which establishes that a lien should be restricted to the disputed amount to balance investigative interests with the account holder's right to operate their funds.

The court found the facts of the present case to be identical to the Malcolm Murayis case, applying that judgment mutatis mutandis.

The court noted a recurring issue where cyber crime cells instruct banks to freeze accounts but fail to respond to legal proceedings or comply with the mandatory reporting requirements under Section 102 Cr.P.C.

The reasoning holds that freezing an entire account for a small disputed sum is disproportionate. Therefore, the court determined that the disputed amount should be isolated in a fixed deposit, allowing the investigating agency a timeframe (three months) to obtain a formal order from a competent Judicial Magistrate, while the remainder of the account is released for the petitioner's use.

The bank was ordered to keep only the disputed amount in a fixed deposit (FD), which can only be liquidated upon orders from a competent Judicial Magistrate within three months. If the police agency fails to proceed in accordance with the law (BNSS/Cr.P.C.) within this period, the petitioner is entitled to withdraw the FD amount under intimation to the agency.