Bank Accounts Freezed via Police Intimation Must Be Unfrozen After Subjecting Disputed Amounts to Fixed Deposits

The petitioner, Nandani Senani, filed a writ petition under Article 226 of the Constitution of India seeking a Mandamus to unfreeze her bank account (No. 50100618912045) held at HDFC Bank Ltd., Indore.

The account was frozen based on instructions from police/cyber cell agencies alleging involvement in cyber fraud.

The petitioner contended that her case was identical to the precedent set in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024), where the court addressed similar instances of accounts being frozen without proper notice or compliance with statutory procedures.

1. Whether the bank account of the petitioner should be unfrozen in light of the guidelines established in the Malcolm Murayis case.

2. Whether the investigating agencies complied with the mandatory procedural requirements under the law before freezing the account.

The Court primarily applied Section 102 of the Code of Criminal Procedure (Cr.P.C.) [now relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS)], which empowers police officers to seize property suspected to be stolen or linked to an offense but requires immediate reporting of such seizure to the Magistrate.

The Court further relied on the judicial precedent of Malcolm Murayis & Ors. Vs. State Bank of India and Others, which established that while disputed amounts can be secured, the entire account should not remain frozen indefinitely if procedural lapses occur or if the account holder is not served with notice.

The Court observed that the facts of the present case are squarely covered by the Malcolm Murayis decision mutatis mutandis.

In the cited precedent, the Court noted a "poor functioning and irresponsible approach" by cyber crime cells, which freeze accounts via email but fail to respond to court inquiries or follow the mandate of Section 102 Cr.P.C.

By applying this reasoning, the Court determined that the petitioner’s right to operate her account should be restored, provided the specific "disputed amount" linked to the alleged fraud (identified here as Rs. 1,964/-) is secured to protect the interests of justice while the investigation proceeds.

The Court ordered that the disputed amount of Rs. 1,964/- be kept in a Fixed Deposit (FD), which can only be liquidated upon orders from a competent Judicial Magistrate; if the police agency fails to proceed in accordance with the BNSS/law within three months, the petitioner may withdraw the FD amount under intimation to the agency.