Bank accounts must be unfrozen, restricting the lien only to the disputed amount in fixed deposits.

The petitioner, a proprietary concern, filed a writ petition under Article 226 of the Constitution of India seeking to lift a lien/freeze imposed on its bank accounts by the State Bank of India

The accounts were frozen following intimations from cyber crime agencies alleging that the accounts were linked to cyber fraud

The petitioner contended that the investigating agencies failed to comply with the mandatory procedural requirements of Section 102 of the Cr.P.C. (now under relevant provisions of the BNSS) by not informing the concerned Magistrate of the seizure

The petitioner sought to unfreeze the accounts to continue regular business transactions

1. Whether the respondent bank is required to unfreeze the petitioner’s bank account where the investigating agencies have failed to follow statutory procedures regarding the seizure of bank accounts

2. Whether the disputed amount allegedly involved in cyber crime can be secured through a Fixed Deposit while allowing the petitioner to operate the remainder of the account

The Court relied on the procedural requirements for seizure of property by police as contemplated under Section 102 of the Code of Criminal Procedure, 1973 (Cr.P.C.) and the corresponding provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS)

It primarily applied the precedent set in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), which held that bank accounts cannot be frozen indefinitely if the investigating agencies fail to proceed in accordance with law or respond to judicial inquiries

The Court observed that the petitioner’s case was "squarely covered" by the decision in Malcolm Murayis

In the cited precedent, the Court noted a recurring "irresponsible approach" of cyber crime cells that freeze accounts without following the mandate of Section 102 Cr.P.C. or responding to court notices

The Court reasoned that to balance the interests of justice, the specific "disputed amount" flagged by the agencies should be sequestered into a Fixed Deposit (FD)

This ensures the funds remain available for the investigation while preventing the total paralysis of the petitioner’s business operations

The Court emphasized that the onus is on the police agency to move the competent Judicial Magistrate within a specific timeframe to justify the continued hold on the funds

The Bank was ordered to keep only the disputed amount in a Fixed Deposit, which shall not be liquidated for three months unless ordered by a competent Judicial Magistrate

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