Bank accounts frozen on police instructions must be unblocked except for the specifically disputed amount.

The petitioner, Mrs. Manisha Gudsariya, filed a writ petition under Article 226 of the Constitution of India seeking a Mandamus to unfreeze her bank account (No. 20376578910) held with Fino Payments Bank Ltd., Indore.

The account had been frozen following intimations from cyber crime agencies regarding alleged involvement in cyber fraud.

The petitioner contended that the case was squarely covered by the precedent Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024), where the court addressed similar grievances regarding frozen accounts linked to crypto trading and cyber investigations.

1. Whether the bank account of the petitioner should be unfrozen in light of the failure of investigative agencies to follow procedural mandates under the law.

2. Whether the disputed amount in the account should be secured in a manner that balances investigative needs with the petitioner’s right to operate their account.

Section 102 of the Code of Criminal Procedure (Cr.P.C.) [now relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS)], which mandates that police officers report seizures or freezing of property to a Magistrate.

Principles established in Malcolm Murayis & Ors. Vs. State Bank of India and Others (2024), which held that if investigative agencies fail to respond or proceed in accordance with law, the account holder is entitled to relief while securing the disputed amount in fixed deposits.

The Court observed that the petitioner’s situation was identical to the Malcolm Murayis case, where cyber cells often freeze accounts without providing notices to holders or complying with the mandatory reporting requirements to the Magistrate under the Cr.P.C./BNSS.

The Court noted that such "irresponsible approaches" by cyber crime cells necessitate judicial intervention to prevent indefinite freezing of legitimate funds.

Applying the mutatis mutandis principle, the Court reasoned that while the disputed amount (identified as ₹13,952.99) must be protected for the investigation, the petitioner cannot be deprived of the use of the entire account indefinitely.

The Bank was ordered to keep the disputed amount of ₹13,952.99 in a fixed deposit, which may only be liquidated upon orders from a competent Judicial Magistrate within three months; should the police fail to proceed in law, the petitioner shall be permitted to withdraw the amount.