Police must act under Section 102 Cr.P.C. to freeze bank accounts; disputed amounts must be held in fixed deposits.

The petitioner, Nikita Patel, filed a writ petition under Article 226 of the Constitution of India challenging the freezing of her bank accounts.

The accounts were frozen following communications from cyber crime cells regarding suspected involvement in cyber fraud. The petitioner sought the de-freezing of Rs. 1,85,772/-.

The court noted that the facts were identical to a previously decided batch of petitions involving crypto traders whose accounts were frozen by banks solely on the instructions of investigating agencies without prior notice to the account holders.

1. Whether the respondent authorities are required to follow the statutory procedure under Section 102 of the Cr.P.C. (now under relevant BNSS provisions) when freezing bank accounts during an investigation?

2. Whether the petitioner is entitled to operate her bank account for amounts exceeding the disputed sum allegedly linked to cyber crime?

The court applied the principles governing the seizure of property under Section 102 of the Code of Criminal Procedure, 1973 (Cr.P.C.), and the corresponding provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS). This includes the mandatory requirement for investigating officers to report the seizure/freezing of assets to the jurisdictional Magistrate.

The court also relied on the precedent established in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100/2024), which held that a total freeze on an account is impermissible if only a specific portion of the funds is disputed.

The court observed that the petitioner’s case was squarely covered by the Malcolm Murayis precedent.

It noted that cyber crime cells often issue freeze orders to banks via email but fail to follow up with a formal report to a Magistrate or respond to judicial inquiries, which reflects an "irresponsible approach".

The court reasoned that while the disputed amount (Rs. 1,85,772/-) must be secured to protect the integrity of the investigation, the petitioner cannot be deprived of the use of her entire account indefinitely without due process of law.

By directing the disputed amount to be placed in a Fixed Deposit (FD), the court balanced the state's interest in investigating fraud with the petitioner's right to access her undisputed funds.

The bank was ordered to keep the disputed amount of Rs. 1,85,772/- in a Fixed Deposit, which can only be liquidated upon orders from a competent Judicial Magistrate within three months. If the investigating agency fails to proceed in accordance with the law (BNSS/Cr.P.C.) within this period, the petitioner may withdraw the FD amount.

Finally, the court explicitly held that any amount in the account exceeding the disputed sum must be immediately de-frozen for the petitioner's use.