Bank accounts must be unfrozen except for disputed amounts, which should be placed in fixed deposits.

The petitioner, Suraj Jariya, filed a writ petition under Article 226 of the Constitution of India challenging the complete debit freeze imposed on his Indian Bank account (No. 7958147717)

The freeze was initiated following intimations from cyber crime agencies regarding alleged suspicious transactions or cyber fraud

The petitioner contended that the entire account was frozen without prior notice or compliance with procedural mandates, disrupting his lawful business

The petitioner sought a direction to the bank to freeze only the disputed amount and allow operation of the remaining balance

1. Whether the respondent bank can legally freeze the entire balance of a petitioner’s account based on a suspicious transaction involving only a portion of the funds

2. Whether the investigating agencies and banks are required to follow the procedure under Section 102 of the Cr.P.C. (now relevant provisions of BNSS) regarding the seizure of bank accounts

This precedent establishes that while banks must act on police instructions regarding cyber fraud, only the disputed amount should be restricted to balance investigative needs with the petitioner’s right to transact

The court also referenced Section 102 of the Criminal Procedure Code (Cr.P.C.), now superseded by the Bharatiya Nagarik Suraksha Sanhita (BNSS), which mandates that any seizure of property (including bank accounts) must be reported to the competent Magistrate

The court primarily relied on the precedent set in Malcolm Murayis & Ors. v. State Bank of India and Others, W.P. No. 1100 of 2024

The Court observed that the case was squarely covered by the Malcolm Murayis decision

In that case, the Court found that cyber crime cells often exhibit an irresponsible approach by failing to respond to judicial notices or bank enquiries after ordering a freeze

The Court reasoned that keeping an entire account frozen indefinitely without a clear legal nexus to the crime is arbitrary.

By applying the mutatis mutandis principle, the Court held that the bank should protect the "disputed amount" by placing it in a Fixed Deposit (FD) or under a specific lien, thereby allowing the petitioner to utilize the remaining "lawful balance"

The Court emphasized that the police must proceed under the relevant provisions of the BNSS within a specified timeframe to justify the continued restriction of funds

The bank was ordered to transfer only the disputed amount into a Fixed Deposit, which shall not be liquidated without an order from a competent Judicial Magistrate

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

The Court declared that the petitioner is entitled to operate the remaining balance of the account immediately