Frozen Bank Accounts Must Be Restored Subject to Placing Disputed Cyber Fraud Amounts in Fixed Deposits

The petitioner, Anuj Verma, approached the High Court under Article 226 of the Constitution of India seeking the unfreezing of his credit card (No. 9326) and access to linked funds

The bank account/credit card facilities had been subjected to a regulatory/cyber block by respondent IDFC First Bank, presumably following intimations from cyber crime agencies regarding alleged involvement in cyber fraud

The petitioner contended that the case is squarely covered by the precedent in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), where the court addressed similar instances of "sudden" account freezes without proper notice or compliance with procedural laws

1. Whether the respondent bank can indefinitely freeze the petitioner's credit card and linked funds based solely on investigative intimations without the police following due procedural safeguards?

2. Whether the petitioner is entitled to the restoration of banking facilities and access to undisputed funds?

The court primarily applied the principles governing the seizure of property under Section 102 of the Code of Criminal Procedure (CrPC), now reflected in the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS), which requires investigating agencies to report seizures to the concerned Magistrate

It further relied on the judicial precedent set in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100/2024), which established that while banks are bound by instructions from cyber cells, such freezes cannot be indefinite and must balance the interests of the account holder with the investigation

The Court observed that the grievance was nearly identical to Malcolm Murayis, where the court criticized the "poor functioning and irresponsible approach" of cyber crime cells that freeze accounts via email but fail to respond to subsequent legal inquiries or follow statutory mandates under Section 102 of the CrPC

Applying the mutatis mutandis principle, the Court reasoned that the petitioner’s credit card facilities should not remain blocked indefinitely if the investigating agencies fail to proceed in accordance with the law

The Court determined that a middle ground was necessary: securing the "disputed amount" (the specific funds linked to the alleged crime) in a fixed deposit while allowing the restoration of the petitioner's overall banking facilities and access to legitimate funds

The bank was ordered to keep only the specific "disputed amount" identified by the crime agencies in a fixed deposit, which may only be liquidated upon orders from a competent Judicial Magistrate within three months. If the police agency fails to proceed under the BNSS or relevant laws within this period, the petitioner is permitted to withdraw the amount kept in the FD under intimation to the agency.