Bank accounts frozen on police instructions must be released except for the specific disputed amounts.

The petitioner, Shraddha Gupta, filed a writ petition under Article 226 of the Constitution of India challenging a debit freeze/restriction placed on her Savings Bank Account (No. 42076451363) by Respondent No. 1 (State Bank of India), Laxmibai Branch, Indore

The account was frozen based on requisitions from cyber crime agencies regarding suspicious transactions

The petitioner sought an order to unfreeze the account, or alternatively, to allow operations while retaining only the disputed amount under investigation

1. Whether a blanket freeze of a bank account by a bank at the request of investigating agencies is sustainable when the specific disputed amounts can be segregated.

2. Whether the investigating agencies must follow the mandate of Section 102 of the Cr.P.C. (now relevant provisions of the BNSS) regarding the seizure of bank accounts.

The court primarily relied on the precedent established in Malcolm Murayis & Ors. Vs. State Bank of India and Others, W.P. No. 1100 of 2024, dated 26.04.2024

This precedent clarifies the application of Section 102 of the Code of Criminal Procedure (Cr.P.C.)—now superseded by the Bharatiya Nagarik Suraksha Sanhita (BNSS)—which requires investigating agencies to report seizures/freezing of property to the concerned Magistrate and proceed in accordance with due process

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

In that precedent, the Court noted that while banks freeze accounts upon instructions from cyber cells, investigating agencies often fail to respond to inquiries or comply with the mandatory procedural requirements of Section 102 Cr.P.C.

The Court reasoned that to balance the interests of the investigation and the petitioner's right to access their funds, the specific "disputed amount" should be identified and secured in a fixed deposit, rather than maintaining a blanket freeze on the entire account without a timeline for judicial oversight

The Bank was ordered to keep only the "disputed amount" (as informed by the crime agencies) 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 period, the petitioner may be allowed to withdraw the FD amount under intimation to the agency