Bank accounts frozen on police intimation must be unfrozen, keeping only the disputed amount in fixed deposits.

The petitioner, an industrial entity, approached the High Court under Article 226 of the Constitution of India seeking a writ to unfreeze its bank account (SBI A/c No. 43461032664).

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

The petitioner contended that no prior notice was served, they were carrying out lawful business, and any disputed transactions likely involved third parties.

The petitioner sought parity with the Court’s earlier decision in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024).

1. Whether the bank account of the petitioner can remain frozen indefinitely without adherence to procedural safeguards by investigating agencies.

2. Whether the petitioner is entitled to operate the bank account while securing the specific amount alleged to be the proceeds of crime.

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

Precedential framework established in Malcolm Murayis & Ors. v. State Bank of India and Others, which balances the investigative powers of cyber cells with the account holder's right to trade and livelihood by allowing the freezing of only the "disputed amount" rather than the entire account.

The Court observed that investigating agencies often send freeze instructions via email but fail to respond to judicial notices or bank communications, demonstrating an irresponsible approach.

It noted that the petitioner’s case was squarely covered by the Malcolm Murayis precedent.

The reasoning was based on the fact that if investigating agencies fail to comply with statutory mandates—such as informing the Magistrate or proceeding with the investigation within a reasonable timeframe—the petitioner should not be deprived of their entire account.

The Court determined that the "disputed amount" should be isolated in a fixed deposit (FD), while the rest of the account should be functional to prevent undue hardship.

The Court directed the respondent Bank to unfreeze SBI account No. 43461032664 and ordered to keep only the specific disputed amount in a fixed deposit, which shall remain frozen for three months.

If the investigating agency fails to obtain an order from a competent Judicial Magistrate within these three months, the petitioner is entitled to withdraw the FD amount under intimation to the agency.

The petition was disposed of with these directions.