Bank account must be unfrozen if investigating agencies fail to follow statutory procedure under Section 102 CrPC/BNSS.

The petitioner, Ramdayal, filed a writ petition under Article 226 of the Constitution of India challenging the unilateral freezing of his bank account (No. 50325160191) by Respondent No. 1

The petitioner sought a direction to defreeze the account, claiming the action was arbitrary

The petitioner contended that the matter is squarely covered by a prior decision of the High Court in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100/2024), involving mid-tier transactions linked to alleged cyber frauds where the account holders were not served notices or found directly involved in the primary offense

1. Whether the respondent bank can indefinitely freeze the petitioner’s entire bank account based on investigative intimations without following procedural safeguards

2. Whether the disputed amount should be isolated in a fixed deposit to allow the petitioner to operate the remainder of the account

The court applied the principles governing the seizure of property under Section 102 of the Code of Criminal Procedure (Cr.P.C.)

now substituted by relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS)

These provisions require investigating agencies to report seizures to the jurisdictional Magistrate.

The court also relied on the precedent set in Malcolm Murayis & Ors. v. State Bank of India and Others, which establishes that while disputed amounts linked to cybercrime must be secured, the entirety of an account should not be frozen indefinitely, especially when investigative agencies fail to respond to judicial inquiries or comply with statutory reporting

The court found that the petitioner’s situation was identical to the Malcolm Murayis case, where accounts were frozen solely on instructions from cyber cells without the account holders being informed of specific offenses

The court noted a pattern of "poor functioning and irresponsible approach" by cyber crime cells, which often fail to respond to court notices or follow the mandate of Section 102 Cr.P.C. regarding reporting to the Magistrate

By applying the mutatis mutandis principle, the court reasoned that the interests of justice would be served by balancing the need for investigation with the petitioner's right to access his funds

The court determined that segregating only the "disputed amount" into a fixed deposit (FD) satisfies the investigative requirements while allowing the petitioner to regain access to the rest of the account

The bank is ordered to keep only the specific "disputed amount" (as informed by the crime agencies) in a fixed deposit for a period of three months. If the police agency fails to obtain an order from a competent Judicial Magistrate within these three months—proceeding in accordance with BNSS or relevant law—the petitioner is permitted to withdraw the FD amount under intimation to the agency