Restoration of Access to Frozen Bank Accounts Subject to Withholding Disputed Proceeds in Fixed Deposits

The petitioner, engaged in crypto and virtual currency trading, challenged the sudden freezing of his ICICI Bank account (No. 346901503653).

The freeze was initiated following instructions from various cyber crime cells (respondent Nos. 3 to 9) alleging that the account received funds linked to cyber fraud.

The petitioner contended that he received no prior notice of involvement in any offense, is conducting lawful business, and that investigating agencies failed to comply with mandatory procedural requirements under Section 102 of the Cr.P.C.

The respondent bank maintained they acted solely on the instructions of investigating authorities.

Procedural history shows an interim order was passed on 14/03/2024 allowing the petitioner to withdraw Rs. 50,000 per month.

1. Whether the indefinite and complete freezing of the petitioner's bank account by investigative agencies, without following the procedural mandates of the Bharatiya Nagarik Suraksha Sanhita (BNSS) or Cr.P.C., is legally sustainable.

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

Section 102 of the Cr.P.C. (and its successor provisions under Sections 106 and 107 of the BNSS, 2023), which governs the power of police officers to seize property suspected to be stolen or found under circumstances which create suspicion of the commission of any offense and requires investigating agencies to report such seizures to the concerned Magistrate.

Constitutional protections under Articles 14, 19(1)(g), 21, and 300A, regarding the right to trade and the right against arbitrary deprivation of property.

The Court observed that despite notices and emails sent to the various cyber crime cells, only one agency (Bangalore) responded, highlighting a "poor functioning and irresponsible approach" by the investigating authorities.

The court noted that while the agencies have the power to freeze accounts, they cannot do so indefinitely without following due process or responding to court proceedings.

The court reasoned that the interests of justice would be served by balancing the need for investigation with the petitioner’s right to operate his account. By directing the disputed amount (Rs. 20,820/-) to be placed in a Fixed Deposit (FD), the "tainted" funds remain secured for the investigation while the remainder of the account becomes accessible to the petitioner.

The Court further held that if the cybercrime police fail to proceed in accordance with law (specifically Section 102 Cr.P.C.) within three months, the petitioner shall be allowed to withdraw the FD amount under intimation to the agencies, and the remainder of the account was effectively unfrozen for the petitioner's use.