Bank accounts must be unfrozen except for disputed amounts held in fixed deposits pending criminal investigation.

The Petitioner, a proprietary firm, filed a writ petition under Article 226 of the Constitution of India challenging the "illegal and arbitrary" hold/freeze placed on its bank account (No. 925020002281515) maintained at Axis Bank, Sanchar Nagar, Indore.

The Petitioner sought a direction for the removal of the freeze, asserting that the case was identical to the matter of Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), wherein accounts were frozen by banks solely on the basis of intimations from cyber cells regarding alleged cyber fraud without following statutory safeguards.

1. Whether the freeze on the Petitioner’s bank account should be lifted in accordance with the precedent established in Malcolm Murayis?

2. What conditions must be imposed on the disputed funds to balance investigative requirements with the account holder's rights?

The Court primarily relied on the precedent of Malcolm Murayis & Ors. v. State Bank of India and Others (2024), which addressed the procedural lapses by investigative agencies in freezing bank accounts.

Compliance with Section 102 of the Cr.P.C. (now relevant provisions of the Bharatiya Nagarik Suraksha Sanhita [BNSS]), which requires investigating officers to report seizures to the concerned Magistrate.

Investigative agencies cannot indefinitely freeze accounts without active legal proceedings.

The Court found that the Petitioner’s case was "squarely covered" by the Malcolm Murayis decision and applied its findings mutatis mutandis to the present facts.

In the referenced precedent, the Court had criticized the "poor functioning and irresponsible approach" of cyber crime cells that freeze accounts via email but fail to respond to court notices or comply with Section 102 Cr.P.C.

Consequently, the Court reasoned that the disputed amount should be sequestered into a Fixed Deposit (FD) rather than freezing the entire account.

By directing the bank to unfreeze the account while placing the specific disputed sum in a time-bound FD, the Court ensured that the police have a window of three months to proceed under the BNSS, failing which the Petitioner regains full access to the funds.

The Bank was ordered to place the disputed amount (as identified by investigative agencies) into a fixed deposit.

This FD is to be liquidated only upon the order of a competent Judicial Magistrate within three months.

If the investigative agency fails to proceed in accordance with the BNSS or applicable law within said three months, the Petitioner is entitled to withdraw the FD amount under intimation to the agency.