Bank accounts must be unfrozen except for disputed amounts held in time-bound fixed deposits.

The petitioner, Mohd. Aijaz, filed a writ petition under Article 226 of the Constitution of India seeking a mandamus to direct Axis Bank (Respondent No. 2) to unfreeze his savings bank account and restore digital banking services.

The petitioner’s account had been frozen due to a cyber-crime investigation involving a disputed amount of Rs. 10,000.

The petitioner argued that his case was squarely covered by the court's earlier decision in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), which dealt with the freezing of accounts of crypto-traders by cyber cells without proper notice or compliance with statutory procedures.

1. Whether the bank is justified in freezing the entirety of the petitioner’s savings account for a specific disputed amount arising from a cyber-crime investigation.

2. Whether the petitioner is entitled to operate the remaining balance of his account by placing the disputed amount in a fixed deposit.

The court primarily applied the procedural requirements of Section 102 of the Code of Criminal Procedure (Cr.P.C.), now corresponding to the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS), regarding the power of police officers to seize property.

The precedent established in Malcolm Murayis & Ors. v. State Bank of India and Others (2024), which held that accounts frozen at the behest of cyber cells must be unfrozen if the agencies fail to follow legal procedures, provided the disputed amount is secured in a fixed deposit.

The court found that the facts and reliefs sought in the present petition were identical to those in the Malcolm Murayis case.

In that precedent, the court noted that cyber crime cells often exhibit an "irresponsible approach" by directing banks to freeze accounts without responding to inquiries or informing the concerned Magistrate as required under Section 102 Cr.P.C.

Applying this reasoning mutatis mutandis, the court determined that the petitioner should not be deprived of his entire account balance.

By directing the bank to keep only the disputed amount in a fixed deposit (FD), the court balanced the needs of the investigating agency with the petitioner’s right to access his funds, ensuring that the investigation remains secured while preventing undue hardship to the account holder.

The bank was ordered to keep the disputed amount in a fixed deposit, which can only be liquidated upon orders from a competent Judicial Magistrate.

The court further held that if the police agency fails to proceed in accordance with the law (BNSS) within three months, the petitioner shall be permitted to withdraw the amount kept in the FD under intimation to the agency.

Digital and online banking services were ordered to be restored.