Bank accounts frozen on mere police intimation must be unfrozen, reserving only the disputed amounts in fixed deposits.

The petitioner, Satish Rathore, filed a writ petition under Article 226 of the Constitution of India seeking a direction to Bank of Baroda (Respondent No. 1) to defreeze his bank account

The account had been frozen following intimations from cyber cell agencies alleging involvement in cyber fraud

The petitioner maintained that he was lawfully trading in crypto and virtual currency and had received no prior notice from the police regarding any offense

The petitioner contended that his case was squarely covered by the precedent in Malcolm Murayis & Ors. v. State Bank of India and Others

1. Whether the bank account of the petitioner, frozen on the instructions of investigating agencies regarding alleged cyber fraud, can be unfrozen subject to certain conditions

2. Whether the investigating agencies are required to comply with Section 102 of the Cr.P.C. (now under relevant BNSS provisions) and inform the Magistrate regarding such seizures

The Court applied the principles governing the seizure of property by police under Section 102 of the Code of Criminal Procedure (Cr.P.C.), noting the transition to relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS)

It strictly followed the precedent set by the Indore Bench of the Madhya Pradesh High Court in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), which established that while investigating agencies may freeze accounts during a probe, they must adhere to statutory reporting requirements to the Magistrate and cannot indefinitely obstruct the account holder's access to undisputed funds

The Court found that the petitioner’s situation was identical to the Malcolm Murayis case, where accounts were frozen based solely on cyber cell intimations without subsequent follow-up or response from the agencies to Court notices

The Court reasoned that to balance the interests of the investigation with the petitioner’s right to operate his account, a distinction must be made between the "disputed amount" linked to any alleged fraud and the remainder of the account balance

It noted that a failure by the police to proceed in accordance with the BNSS/Cr.P.C. within a reasonable timeframe (three months) entitles the petitioner to full access to the funds

The Court ordered the Respondent Bank to keep the specific "disputed amount" (as identified by the crime agencies) in a Fixed Deposit (FD), which can only be liquidated upon orders from a competent Judicial Magistrate within three months; if the police agency fails to proceed under the relevant provisions of the BNSS or law within this period, the petitioner is permitted to withdraw the FD amount under intimation to the agency