Farhan Khan vs. Reserve Bank Of INDIA Through Regional Director

Held

The High Court held that the principles laid down in the cases of "Malcolm Murayis" and "Archana" were applicable to the present case. The Court directed that the disputed amount of ₹16,878 be kept in a fixed deposit. This amount would be liquidated only upon orders from the competent Judicial Magistrate within three months, with the expectation that the police agency would proceed according to law under the relevant provisions of the BNSS or other applicable laws. If the police agency did not proceed within the stipulated time, the amount in fixed deposit could be withdrawn by the petitioner under intimation to the police agency. The Court further directed that the petitioner's bank account be unfrozen, and the petitioner be permitted to operate the account. The judgment did not expressly leave any issue undecided.

Facts

The petitioner, Farhan Khan, filed a writ petition seeking to unfreeze his business current account maintained with Equitas Small Finance Bank. The account was frozen based on intimation from cyber crime authorities, alleging involvement in cyber fraud. The petitioner sought directions to unfreeze the account, keep the disputed amount of ₹16,878 in fixed deposit pending judicial orders, and restore all digital banking services. The petitioner argued that his case was covered by previous High Court judgments in "Malcolm Murayis & Ors. Vs. State Bank of India and Others" and "Archana Vs. The State of Madhya Pradesh and Others," which dealt with similar issues of frozen bank accounts due to cyber crime allegations. The bank stated it froze the account only upon instructions from investigating authorities.

Key Issues

1. Whether the petitioner's bank account, frozen due to allegations of cyber fraud without prior notice or adherence to statutory procedures, should be unfrozen or partially unfrozen pending investigation, considering the principles laid down in "Malcolm Murayis" and "Archana"? 2. Whether the disputed amount in the bank account should be kept in fixed deposit and liquidated only upon orders of a competent Judicial Magistrate, as per the established practice in similar cases? Petitioner's Arguments: - The petitioner contended that his business operations were severely hampered by the freeze on his current account. - He argued that the freezing was done without providing him an opportunity to be heard and without following the procedure under Section 102 of the Cr.P.C. - The petitioner relied on the High Court's decisions in "Malcolm Murayis" and "Archana," which directed the unfreezing of accounts or keeping disputed amounts in fixed deposits pending investigation and judicial orders. Revenue/State's Arguments: - The respondent bank argued that it acted solely on the instructions received from cyber crime police stations and was bound by such directives. - The judgment does not record specific arguments from the cyber crime authorities or the State beyond the bank's submission.