Bank accounts must be defreezed, excluding the specifically disputed amount which remains as a fixed deposit.

The petitioner filed a writ petition under Article 226 of the Constitution of India seeking a direction to Axis Bank (Respondent No. 1) to unfreeze and remove a lien from their savings bank account.

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

The petitioner contended they were lawfully conducting business, received no prior notice of the investigation, and that investigating agencies failed to comply with procedural requirements under the Code of Criminal Procedure/BNSS.

1. Whether the bank is justified in freezing the entire balance of an account based on a police intimation regarding a specific disputed amount.

2. Whether the freezing of the account complied with the procedural mandates of Section 102 of the Cr.P.C. (now under relevant BNSS provisions) regarding notice and reporting to the Magistrate.

Article 226 of the Constitution of India regarding the High Court’s writ jurisdiction.

The precedent set in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024), which established that freezing an entire account for a specific disputed sum is disproportionate.

Section 102 of the Cr.P.C. (and its equivalent in the Bharatiya Nagarik Suraksha Sanhita/BNSS), which governs the power of police officers to seize property and requires such seizures to be reported to a Magistrate.

The court found the petitioner’s case squarely covered by the Malcolm Murayis precedent.

It observed that while banks act on instructions from cyber cells, the investigative agencies often fail to respond to court inquiries or follow the statutory mandate of reporting seizures to the Magistrate.

The court reasoned that the interest of justice is served by balancing the need for investigation with the petitioner's right to operate their account; hence, only the specific "disputed amount" should be secured.

The court noted that keeping the entire account frozen when only a fraction (Rs. 19,311/-) was flagged is unnecessary.

It directed the Respondent Bank to: (i) earmark the disputed amount of Rs. 19,311/- and place it in a Fixed Deposit, (ii) unfreeze the rest of the account balance for the petitioner’s use, and (iii) only liquidate the FD 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 may withdraw the FD amount under intimation to the agency; the petition was disposed of with these directions.