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

The petitioner filed a writ petition under Article 226 of the Constitution of India challenging the freezing of her bank account by the State Bank of India

The account was placed on hold/frozen based on intimations from cyber crime agencies regarding alleged involvement in cyber fraud

The petitioner contended that her case is identical to the precedent set in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), where crypto-traders' accounts were frozen without proper notice or compliance with statutory seizure procedures

1. Whether the freezing of the petitioner's bank account by the respondent bank at the instance of cyber crime agencies was sustainable in the absence of procedural compliance.

2. Whether the petitioner is entitled to operate the bank account subject to securing the specific disputed amounts linked to the alleged fraud.

The court primarily applied the principles governing the seizure of property under Section 102 of the Code of Criminal Procedure (Cr.P.C.), now corresponding to the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS)

It relied on the precedent Malcolm Murayis & Ors. v. State Bank of India and Others, which establishes that investigative agencies must inform the concerned Magistrate of bank account seizures and that frozen accounts may be partially unfrozen to allow operations of undisputed funds if the disputed amounts are secured via fixed deposits

The court found that the petitioner’s situation was squarely covered by the Malcolm Murayis decision

In that precedent, the court had noted that cyber crime cells often exhibit a "poor functioning and irresponsible approach" by failing to respond to bank inquiries or court proceedings after ordering accounts to be frozen

The court reasoned that while the bank is bound by instructions from investigating authorities, the petitioner's right to operate her account cannot be indefinitely suspended without legal progress. Therefore, the court determined that the disputed amount should be isolated in a fixed deposit to protect the interests of the investigation while allowing the petitioner access to the remaining balance

The bank was ordered to keep only the specific "disputed amount" informed by the crime agencies in a fixed deposit (FD). This FD is to remain liquidated only upon orders from a competent Judicial Magistrate within three months, contingent on the police agency proceeding in accordance with the BNSS. If the agency fails to act within this period, the petitioner may be allowed to withdraw the FD amount under intimation to the agency