Bank accounts must be unfrozen by segregating disputed funds into fixed deposits during cyber crime investigations.

The petitioner, Kalyan Singh, filed a writ petition under Article 226 of the Constitution of India seeking a direction to UCO Bank to defreeze his bank account (No. 18400110058626)

The account had been frozen/placed under lien, likely due to instructions from cyber crime investigative agencies, a situation the petitioner claimed was identical to the case of Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100/2024)

In the cited precedent, accounts were frozen based on allegations of cyber fraud without prior notice to the holders or proper compliance with statutory seizure procedures by the police

1. Whether the Respondent Bank should be directed to unfreeze the petitioner’s bank account in accordance with the precedent set in Malcolm Murayis v. SBI

2. Whether the investigative agencies complied with the mandatory procedural requirements for freezing bank accounts under the law

The Court exercised its extraordinary jurisdiction under Article 226 of the Constitution of India

It applied the procedural standards for the seizure of property by police as mandated by Section 102 of the Code of Criminal Procedure (Cr.P.C.) and the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS)

The Court followed the judicial principle established in Malcolm Murayis & Ors. v. State Bank of India and Others, which directs that disputed amounts in cyber-fraud investigations be sequestered into fixed deposits to prevent the indefinite freezing of entire accounts without due process

The Court determined that the petitioner’s case was squarely covered by the Malcolm Murayis decision and applied its findings mutatis mutandis

In that precedent, the Court critiqued the "irresponsible approach" of cyber crime cells that freeze accounts via email without responding to court notices or informing Magistrates

The Court reasoned that to balance investigative interests with the petitioner's rights, the "disputed amount" flagged by the agencies should be isolated into a fixed deposit (FD)

This allows the petitioner to operate the remainder of the account while ensuring the suspect funds remain secured pending a legal determination by a Magistrate within a specified timeframe

The Bank was ordered to keep the disputed amount in a fixed deposit, which shall only be liquidated upon an order from a competent Judicial Magistrate within three months

If the police agency fails to proceed in accordance with the law (BNSS) within said three months, the petitioner is permitted to withdraw the amount kept in the FD under intimation to the agency