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

The petitioner filed a writ petition under Article 226 of the Constitution of India seeking a Mandamus to unfreeze her bank account (No. 10140137112) held at IDFC First Bank, Bijalpur Branch

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

The petitioner contended that her case was identical to the precedent established in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100/2024), where accounts were frozen without prior notice or compliance with statutory seizure procedures

1. Whether the respondent bank should be directed to unfreeze the petitioner's bank account while securing the disputed amount allegedly linked to cyber crime

2. Whether the investigating agencies must comply with statutory procedures under the Bharatiya Nagarik Suraksha Sanhita (BNSS) or Cr.P.C. within a specific timeline to maintain a freeze on funds

The court applied the principles governing the seizure of property by police under Section 102 of the Code of Criminal Procedure (Cr.P.C.), now relevantly addressed under the Bharatiya Nagarik Suraksha Sanhita (BNSS)

It relied on the precedent Malcolm Murayis & Ors. v. State Bank of India and Others, which establishes that while investigating agencies can request a freeze on accounts suspected of involvement in fraud, they must adhere to due process, and the court may balance the rights of the account holder with the investigation by sequestering only the disputed amount in fixed deposits

The court determined that the petitioner’s situation was squarely covered by the decision in Malcolm Murayis and applied its reasoning mutatis mutandis

It noted that in the precedent case, investigating agencies often failed to respond to court inquiries or report seizures to the Magistrate as required by law

Consequently, the court reasoned that the petitioner should not be entirely deprived of her account or funds indefinitely. By directing the disputed amount to be placed in a Fixed Deposit (FD) rather than keeping the entire account frozen, the court balanced the state's interest in preserving the "proceeds of crime" for potential liquidation by a Magistrate against the petitioner’s right to operate her account

The bank was ordered to keep the specific disputed amount 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 three months, the petitioner is permitted to withdraw the FD amount under intimation to the agency

The petition was disposed of with no order as to costs