Frozen Bank Accounts Must Be Unfrozen Subject to Placing Disputed Amounts in Fixed Deposits Pending Adjudication

The petitioner, Sachin Kushwah, filed a writ petition under Article 226 of the Constitution of India seeking a Mandamus to defreeze his bank account (No. 1713699475) held with Kotak Mahindra Bank, Indore Branch

The petitioner contended that his case is identical to previous matters involving bank accounts frozen by cyber cell authorities without following due procedure

The procedural history reflects a reliance on the precedent set in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024), where accounts were frozen based on unilateral intimations from police authorities regarding alleged cyber fraud

1. Whether the bank account of the petitioner can be kept frozen indefinitely without following the statutory procedure for seizure

2. Whether the directions issued in Malcolm Murayis regarding the treatment of disputed amounts in frozen accounts apply to the petitioner

Section 102 of the Code of Criminal Procedure (Cr.P.C.)—now corresponding to relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS)—which mandates that investigating agencies must inform the concerned Magistrate about the seizure of property

Principle of parity and mutatis mutandis application of judicial precedents, specifically the ruling in Malcolm Murayis & Ors. Vs. State Bank of India and Others, which balances the investigative powers of cyber cells with the account holder's right to operate their bank account

The Court observed that in similar cases, cyber crime cells often direct banks to freeze accounts via email but fail to respond to judicial notices or comply with the mandatory reporting requirements under Section 102 Cr.P.C.

In the present case, the Court found that the facts were squarely covered by the Malcolm Murayis precedent

By applying this rule mutatis mutandis, the Court reasoned that while investigation into alleged cyber fraud must be protected, the petitioner cannot be deprived of his total funds indefinitely. The Court determined that the most equitable approach is to secure only the "disputed amount" (linked to the crime) in a fixed deposit, thereby allowing the rest of the account to be functional, provided the police agency acts within a defined three-month window to obtain a judicial order

The Bank must keep the specific disputed amount, as identified by the crime agencies, in a fixed deposit (FD). This FD cannot be liquidated unless an order is passed by a competent Judicial Magistrate within three months. If the police agency fails to proceed under the BNSS or other applicable laws within this period, the petitioner is entitled to withdraw the FD amount under intimation to the agency

The petition was disposed of with these directions