Bank Accounts can Only be Frozen to the Extent of Disputed Amounts Involved in Fraud.

The petitioner, Shubham Patidar, filed a writ petition under Article 226 of the Constitution of India seeking to unfreeze his Savings Bank Account (No. 10227442846) maintained with IDFC First Bank, Vijay Nagar Branch.

The account was subjected to a debit freeze/lien on September 30, 2025, following instructions from investigative agencies regarding alleged cyber fraud.

The petitioner contended that his case is identical to the precedent set in Malcolm Murayis & Ors. v. State Bank of India and Others.

1. Whether the respondent bank should be directed to lift the debit freeze on the petitioner's account and under what conditions the disputed funds should be secured during the investigation

The court applied the principles governing the seizure of property under Section 102 of the Code of Criminal Procedure (Cr.P.C.), now relevant under the Bharatiya Nagarik Suraksha Sanhita (BNSS), which requires investigating agencies to report seizures to the Magistrate.

The precedent of Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100/2024), which established that while disputed amounts must be secured in fixed deposits (FDs), the account holder should not be indefinitely restricted from operating the account if agencies fail to follow procedural law.

The Court found that the petitioner’s situation was squarely covered by the Malcolm Murayis decision, where it was noted that cyber crime cells often freeze accounts via email but fail to respond to legal proceedings or comply with statutory requirements under the Cr.P.C./BNSS.

Applying this mutatis mutandis, the Court reasoned that the interest of justice would be served by balancing the needs of the investigation with the petitioner's right to operate his account.

The Court determined that the "disputed amount" should be isolated in a fixed deposit, while the rest of the account is unfrozen, forcing the police agency to seek a formal order from a competent Judicial Magistrate within a specific timeframe.

The bank was ordered to keep the specific disputed amount 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 law (BNSS) within said three months, the petitioner is permitted to withdraw the FD amount under intimation to the agency.