Bank accounts may be unfrozen provided disputed amounts are secured in fixed deposits pending judicial orders.

The petitioner, a partnership firm, filed a writ petition under Article 226 of the Constitution of India seeking a direction to Yes Bank to unfreeze and remove a lien from its bank account

The account had been restricted following intimations from enforcement agencies regarding alleged cyber fraud

The petitioner contended that they were not served with any prior notice of involvement in any offence and that the bank acted solely on the instructions of cyber cell units

The petitioner sought relief on the grounds that the matter is squarely covered by the precedent in Malcolm Murayis & Ors. v. State Bank of India & Ors.

1. Whether the respondent bank can indefinitely freeze the petitioner’s entire bank account based on an intimation of cyber fraud without adherence to procedural safeguards

2. Whether the disputed amount should be isolated in a fixed deposit to allow the petitioner to operate the remainder of the account

principles governing the seizure of property under Section 102 of the Cr.P.C. (now relevant provisions of the Bharatiya Nagarik Suraksha Sanhita/BNSS), which requires investigating agencies to inform the concerned Magistrate of such seizures

precedent established in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), which held that while disputed amounts linked to crime must be secured, the entirety of a bank account should not be frozen indefinitely, especially when investigating agencies fail to respond to judicial or bank inquiries

The Court observed that the bank had frozen the account based on instructions from cyber crime agencies

Following the reasoning in Malcolm Murayis, the Court noted that cyber cells often exhibit an "irresponsible approach" by directing banks to freeze accounts but failing to respond to subsequent communications or follow the mandatory procedure of notifying the Magistrate under Section 102 of the Cr.P.C.

To balance the interests of the investigation with the petitioner's right to conduct business, the Court determined that only the specific "disputed amount" (identified as ₹145/- in this case) needs to be secured.

By isolating this specific sum in a fixed deposit, the remainder of the account can be released for the petitioner's use without prejudice to the ongoing investigation

It directed the respondent bank to unfreeze the petitioner’s bank account. The bank was ordered to keep the disputed amount of ₹145/- in a fixed deposit (FD), which shall only be liquidated upon orders from a competent Judicial Magistrate. If the police agency fails to proceed in accordance with the law (BNSS) within three months, the petitioner is permitted to withdraw the FD amount under intimation to the agency.