Unfreezing of Bank Account Conditional on Placing Disputed Cyber-Crime Funds into Fixed Deposits.

The petitioner, a proprietary concern, challenged the action of Respondent No. 1 (UCO Bank) in freezing/holding its bank account (No. 19110210003220) based on intimations from law enforcement agencies regarding alleged cyber frauds.

The petitioner sought a writ of mandamus to de-freeze the account, claiming a right to operate it without restriction.

The petitioner relied on a precedent set by a co-ordinate Bench involving similar issues of account freezing initiated by cyber cells without following statutory procedures.

1. Whether the bank account of the petitioner can be frozen indefinitely by banks based solely on police intimations without compliance with statutory procedural safeguards.

2. Whether the petitioner is entitled to operate the bank account while securing the disputed amount allegedly linked to cybercrime.

Article 226 of the Constitution of India regarding the High Court's power to issue writs for the enforcement of rights.

Section 102 of the Code of Criminal Procedure (Cr.P.C.) [now relevant sections of the Bharatiya Nagarik Suraksha Sanhita (BNSS)], which mandates that any seizure of property (including bank accounts) by police must be reported to the concerned Magistrate.

The principle of judicial consistency by following the precedent in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024), which balances investigative interests with the account holder's right to trade.

The Court observed that in similar cyber-fraud cases, police agencies often instruct banks to freeze accounts via email without notifying the account holders or the Magistrate, representing a "poor functioning and irresponsible approach".

In the present case, the court determined that the petitioner’s situation was squarely covered by the Malcolm Murayis decision.

The reasoning established that while the disputed amount must be protected to facilitate further investigation/restitution, the entire account should not be rendered inoperable. By directing the disputed portion to be held in a Fixed Deposit (FD) for a limited duration of three months, the court ensured that law enforcement is compelled to act under Section 102 Cr.P.C./BNSS and obtain a judicial order, failing which the petitioner regains full access.

The holding stipulates that the Bank must keep only the "disputed amount" (as identified by the crime agencies) in a Fixed Deposit. This FD can only be liquidated/withdrawn by the petitioner if the police fail to obtain an order from a competent Judicial Magistrate within three months. The petition was disposed of with a mandate for the police to proceed according to the relevant provisions of the BNSS.