Unfrozen Bank Accounts Must Be Restored Subject to Fixed Deposits of Disputed Cyber Crime Amounts

The petitioner, Karan Saini, filed a writ petition under Article 226 of the Constitution of India seeking to de-freeze his bank account (No. 001921712460623) maintained with Jio Payments Bank, Indore.

The account had been restricted/frozen following intimations from cyber crime cells regarding alleged involvement in cyber fraud.

The petitioner contended that his case is identical to the precedent set in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024), where accounts were frozen without proper notice or compliance with statutory investigative procedures.

1. Whether the respondent authorities should be directed to de-freeze the petitioner’s bank account and permit operations subject to certain safeguards regarding the disputed amount.

2. Whether the procedural requirements for seizure of bank accounts under Indian law were complied with by the investigating agencies.

The Court primarily relied on the precedent established in Malcolm Murayis & Ors. Vs. State Bank of India and Others, which mandates that while investigating cyber fraud, agencies must proceed in accordance with Section 102 of the Code of Criminal Procedure (Cr.P.C.).

The Court further noted the transition to the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS) for current procedural compliance.

The principle applied is that total freezing of an account is disproportionate if the disputed amount can be isolated to protect the interests of both the investigation and the account holder.

The Court found that the petitioner’s situation was squarely covered mutatis mutandis by the Malcolm Murayis decision.

In that precedent, the Court observed a "poor functioning and irresponsible approach" of cyber crime cells that freeze accounts via email but fail to respond to judicial inquiries or comply with Section 102 Cr.P.C. regarding reporting seizures to Magistrates.

Applying this reasoning, the Court determined that the petitioner should not be indefinitely deprived of his entire account. Instead, the "disputed amount" flagged by the agencies should be sequestered into a fixed deposit (FD), thereby balancing the State's need to secure suspected proceeds of crime with the petitioner's right to operate his remaining legitimate funds.

The holding mandates that the specific disputed amount must be kept in a fixed deposit, which can only be liquidated upon orders from a competent Judicial Magistrate within three months. If the police agency fails to proceed in accordance with the BNSS or relevant law within that period, the petitioner is permitted to withdraw the FD amount under intimation to the agency.

The petition was disposed of with these specific directions.