Bank accounts may be unfrozen except for disputed amounts, which must be secured in fixed deposits.

The petitioner, Aman Verma, filed a writ petition under Article 226 of the Constitution of India seeking a direction to revoke the freeze imposed on his bank account maintained at the SBI IET Campus Branch, Indore

The account was frozen based on intimations from cyber cell police stations alleging involvement in cyber fraud

The petitioner contended that they were lawfully carrying out trading business and had received no prior notice or involvement in any offense

Procedurally, the petitioner argued that the case was squarely covered by the precedent established in Malcolm Murayis & Ors. Vs. State Bank of India and Others

1. Whether the respondent bank can indefinitely freeze a customer's account based solely on instructions from investigative agencies without adhering to statutory procedural safeguards

2. Whether the disputed amount can be segregated to allow the petitioner to operate the remainder of the bank account

Section 102 of the Code of Criminal Procedure (Cr.P.C.) (now relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS)), which governs the power of police officers to seize property and requires reporting such seizure to a Magistrate

Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024), which established that while banks must comply with investigative directions, such freezes cannot be absolute or indefinite if the investigating agencies fail to respond to court proceedings or follow statutory mandates

The court observed that investigative agencies often request banks to freeze accounts but fail to respond to judicial inquiries or proceed in accordance with Section 102 Cr.P.C./BNSS, characterizing this as a "poor functioning and irresponsible approach"

Applying the principle of mutatis mutandis from the Malcolm Murayis case, the court reasoned that the interests of justice are served by balancing the needs of the investigation with the petitioner's right to operate their account

Since the cyber cell agencies in the precedent case failed to respond to emails or provide evidence of statutory compliance, the court determined that the disputed amount should be kept in a fixed deposit, thereby freeing the rest of the account for the petitioner's use

The bank was ordered to keep the specific disputed amount in a fixed deposit (FD), which may 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 that timeframe, the petitioner is permitted to withdraw the FD amount under intimation to the agency

The petition was disposed of with these directions