Rajendra Prasad Verma vs. Idbi Bank Through Its Branch Manager

Held

The Court held that the principles laid down in the cases of Malcolm Murayis and Archana would apply mutatis mutandis to the present case. The Court directed that the disputed amount of Rs. 1,150/- mentioned in the petition shall be kept in a Fixed Deposit (FD). The Court further stated that if any other complaint is received by the bank regarding other entries, the bank can take appropriate action in accordance with law, keeping in mind the Standard Operating Procedure (SOP) issued by the Government. The disputed amount in FD shall be allowed to be liquidated only after orders are passed by the competent Judicial Magistrate within three months. If the police agency fails to proceed in accordance with law within this period, the amount in FD may be allowed to be withdrawn by the petitioner under intimation to the police agency. Consequently, the bank account of the petitioner shall be unfrozen, and the petitioner will be permitted to operate the account. The petition was disposed of with these directions.

Facts

The petitioner, Rajendra Prasad Verma, filed a writ petition seeking to defreeze his bank account (Account No. 0131078064100). The petitioner's case was based on a prior judgment of the same High Court in Malcolm Murayis & Ors. Vs. State Bank of India and Others, which dealt with similar issues of frozen bank accounts due to allegations of cyber fraud. The petitioner argued that his account was frozen without notice and that he was engaged in lawful virtual currency trading. The prior judgment in Malcolm Murayis involved allegations of cyber fraud, with amounts credited to the petitioners' accounts linked to such crimes. The banks contended they froze accounts based on instructions from cyber cell police stations. The High Court in Malcolm Murayis had directed that disputed amounts be kept in fixed deposits pending orders from a competent Magistrate, and allowed monthly withdrawals of Rs. 50,000/- as an interim measure.

Key Issues

1. Whether the High Court can direct the defreezing of a bank account frozen by a bank on the intimation of cyber cell police stations, when the account holder alleges lawful business activities and lack of notice regarding involvement in cyber fraud? (Article 226 of the Constitution of India, Section 102 of Cr.P.C.) Petitioner's arguments: The petitioner contended that his bank account was frozen without any prior notice or opportunity to be heard. He argued that he was lawfully engaged in trading virtual currency and that the freezing was arbitrary. He relied on the decision in Malcolm Murayis, which allowed petitioners to operate their bank accounts with disputed amounts kept in fixed deposits. He also argued that the investigating agencies failed to comply with Section 102 of Cr.P.C. by not informing the concerned Magistrate about the seizure. Revenue/State's arguments: The respondent banks argued that they froze the accounts solely on the instructions of various cyber cell police stations and were bound by those directives. The judgment does not record specific arguments from the revenue or state police authorities in this particular writ petition, but their stance is implied through the banks' submissions and the context of the prior judgments.