Partial Bank Account Freeze Permitted; Disputed Cyber-Fraud Amounts Must Be Segregated into Fixed Deposits Pending Investigation

The petitioner, Rakesh Maida, challenged the action of Respondent No. 1 (Bank of Baroda) in freezing his savings bank account (No. 05740100020516).

The freeze was reportedly initiated following intimations from cyber crime agencies regarding a disputed amount of Rs. 2,237/- linked to alleged cyber fraud.

The petitioner sought a writ to defreeze the account or, alternatively, to permit operations subject to the retention of the disputed amount.

The petitioner relied on the precedent of Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), where the court addressed similar freezes on accounts involved in crypto trading.

1. Whether the respondent bank can maintain a total debit freeze on a bank account based on cyber crime cell intimations without complying with procedural safeguards.

2. Whether the petitioner is entitled to operate the account by segregating the disputed amount allegedly linked to cyber crime.

The Court primarily applied 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 report seizures to the concerned Magistrate.

It further relied on the judicial precedent established in Malcolm Murayis & Ors. v. State Bank of India and Others, which held that while disputed amounts must be secured, the entirety of an account should not remain frozen indefinitely due to the "irresponsible approach" of cyber crime cells failing to respond to legal inquiries or proceed in accordance with law.

The Court observed that the petitioner’s case was "squarely covered" by the decision in Malcolm Murayis.

In that precedent, the Court critiqued the practice of freezing accounts solely on police emails without subsequent legal follow-up or compliance with Section 102 Cr.P.C.

The Court reasoned that the interests of justice are served by balancing the needs of the investigation with the account holder's rights. By directing the bank to segregate only the specific "disputed amount" into a fixed deposit, the Court ensures that potential proceeds of crime remain available for the investigation while the petitioner regains access to the remaining legitimate funds.

The Court noted that if the police agency fails to obtain a specific order from a Judicial Magistrate within three months, the segregated funds should also be released.

The bank was ordered to keep the disputed amount (as informed by crime agencies) in a fixed deposit (FD), to be liquidated only upon orders from a competent Judicial Magistrate within three months; if no such order is passed or if the police fail to proceed under the BNSS, the petitioner is permitted to withdraw the FD amount under intimation to the agency.

The petition was disposed of with these directions.