Bank accounts must be unfrozen except for the disputed amount, which shall be kept in fixed deposits.

The petitioner, a proprietary firm, filed a writ petition under Article 226 of the Constitution of India seeking a direction to Respondent No. 1 (City Union Bank) to remove a freeze/hold placed on its bank account.

The account had been frozen following intimations from cyber crime cells alleging involvement in cyber fraud. The petitioner contended that no notice was received regarding any offence and prayed for the account to be unfrozen while offering to keep the disputed amount in a fixed deposit.

The court noted that the facts were identical to the precedent set in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024).

1. Whether the respondent bank can indefinitely freeze the petitioner’s entire account based on a cyber cell intimation without the investigating agency following the mandatory procedural requirements of the law.

2. Whether the disputed amount should be isolated in a fixed deposit to protect the interests of justice while allowing the petitioner to operate the remainder of the account.

The Court primarily applied Section 102 of the Code of Criminal Procedure (Cr.P.C.) [now corresponding to relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS)], which mandates that police officers must report seizures/bank freezes to the concerned Magistrate.

It further relied upon the judicial precedent established in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100/2024), which held that bank accounts cannot remain frozen indefinitely due to the "poor functioning and irresponsible approach" of cyber crime cells that fail to respond to court proceedings or follow statutory mandates.

The Court observed that the petitioner’s case was squarely covered by the Malcolm Murayis decision, where it was noted that cyber crime cells often freeze accounts via email but fail to respond to legal inquiries or comply with the procedural safeguards under Section 102 Cr.P.C.

The Court reasoned that the balance of equity is maintained by securing only the "disputed amount" (₹6,900/- in this case) in a fixed deposit (FD) rather than freezing the entire account. This ensures that the investigation is not hampered while preventing the petitioner from suffering undue financial hardship due to administrative inaction by the police agencies.

The Court ordered that the disputed amount of ₹6,900/- be kept in a fixed deposit, which shall only be liquidated upon orders from a competent Judicial Magistrate within three months; if the police agency fails to proceed in accordance with the law (BNSS/Cr.P.C.) within this period, the petitioner is entitled to withdraw the amount under intimation to the agency.