Bank accounts must be unfrozen by securing only the disputed amount in fixed deposits pending judicial orders.

The petitioner, Pankaj Kalra, filed a writ petition under Article 226 of the Constitution of India challenging the action of Respondent No. 2 (NSDL Payments Bank) in freezing his savings bank account.

The freeze was reportedly initiated following intimations from cybercrime cells regarding alleged fraudulent transactions.

The petitioner contended that the disputed amount was limited to ₹1,000 and sought the unfreezing of the remaining balance and restoration of digital banking services, including UPI and NEFT.

The petitioner argued that his case was squarely covered by the precedent in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100/2024).

1. Whether the respondent bank is justified in freezing the entirety of a petitioner's bank account based on instructions from investigative agencies when only a specific amount is disputed.

2. Whether the failure of investigative agencies to comply with statutory procedures under the Cr.P.C. or BNSS warrants the unfreezing of the account.

The court applied the principles established in Malcolm Murayis & Ors. Vs. State Bank of India and Others (2024), which emphasized the necessity of investigative agencies to comply with Section 102 of the Cr.P.C. (now reflected in the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita/BNSS) regarding the seizure of property and reporting to the Magistrate.

The rule mandates that while the state may secure disputed funds, it cannot indefinitely restrict the operation of an entire account without following due process of law.

The court observed that the petitioner’s circumstances were identical to those in the Malcolm Murayis case, where accounts were frozen based on police emails without subsequent legal follow-up or notice to the account holders.

The court noted the "poor functioning and irresponsible approach" of cyber crime cells that freeze accounts but fail to respond to judicial inquiries or proceed under Section 102 of the Cr.P.C.

Applying this logic mutatis mutandis to the present case, the court reasoned that the interest of justice would be served by segregating the disputed amount from the undisputed balance.

By directing the disputed sum to be held in a Fixed Deposit (FD), the court ensured that the potential evidence/proceeds of crime remain secured while restoring the petitioner’s right to access his undisputed funds and banking facilities.

The bank was ordered to keep the disputed amount in a Fixed Deposit, which shall only be liquidated upon the orders of a competent Judicial Magistrate within three months.

If the investigative agency fails to obtain such an order within the stipulated three months, the petitioner is permitted to withdraw the FD amount under intimation to the agency.

All digital and online banking services were ordered to be restored.