Bank accounts frozen on police intimation must be unfrozen while keeping disputed amounts in fixed deposits.

The petitioner, Akash Singhal, filed a writ petition under Article 226 of the Constitution of India seeking to defreeze his bank account (No. 10078818783) held with IDFC First Bank

The account had been placed under a "hold/lien" following intimations from cyber crime agencies regarding alleged involvement in cyber fraud

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

The specific disputed amount identified in the petitioner’s account was ₹3,80,888/-

1. Whether the respondent bank can indefinitely freeze the petitioner’s entire account based on cyber crime allegations without the investigating agencies following statutory procedures

2. Whether the petitioner is entitled to the same relief granted in the precedent Malcolm Murayis, allowing for the partial operation of the account while securing the disputed amount

Section 102 of the Code of Criminal Procedure (Cr.P.C.), which governs the power of police officers to seize property and requires reporting such seizure to a Magistrate.

Bharatiya Nagarik Suraksha Sanhita (BNSS) provisions reflecting the reporting requirements of property seizure.

Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100/2024), establishing that while disputed amounts tied to fraud must be secured, the remainder of the account should not be restricted if the investigating agencies fail to respond or follow due process.

The court found that the facts of the present case were "squarely covered" by the Malcolm Murayis decision.

In that precedent, the court noted that cyber crime cells often request banks to freeze accounts but fail to follow through with the procedural mandates of Section 102 Cr.P.C., such as informing the concerned Magistrate.

The court observed a pattern of "poor functioning and irresponsible approach" where agencies freeze accounts via email but do not respond to judicial inquiries or bank follow-ups.

The court reasoned that the interest of justice is served by balancing the need for investigation with the petitioner's right to access their funds. By directing the bank to convert only the disputed amount (₹3,80,888/-) into a Fixed Deposit (FD), the Court ensured the money remained available for legal resolution while allowing the petitioner to operate the rest of the account.

The bank was ordered to keep the disputed amount of ₹3,80,888/- in a Fixed Deposit, which can only be liquidated upon orders from a competent Judicial Magistrate.

The investigating agency is expected to proceed under the BNSS or relevant law within three months; if they fail to do so, the petitioner may be allowed to withdraw the FD amount under intimation to the agency.

The ruling of Malcolm Murayi was held to apply mutatis mutandis to this case.