Bank accounts must be unfrozen, securing only disputed amounts in fixed deposits pending investigation or judicial orders.

The Petitioner, a unisex salon and academy, filed a writ petition under Article 226 of the Constitution of India seeking a direction to the Respondent-bank to remove a hold/freeze placed on its bank account

The Petitioner contended that the facts of the case were identical to those in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100/2024), wherein bank accounts were frozen by cyber cells and police stations across various states on allegations of cyber fraud without providing notice to the account holders or complying with the mandatory reporting requirements to the Magistrate

In the present matter, the Petitioner sought the unfreezing of the account to allow continued business operations while segregating any disputed funds

1. Whether the Petitioner is entitled to the unfreezing of its bank account and the operation thereof, subject to the segregation of disputed amounts allegedly linked to cybercrime

2. Whether the directions and principles established in Malcolm Murayis & Ors. v. State Bank of India and Others regarding procedural compliance by investigating agencies are applicable to the present case

The Court primarily relied on Article 226 of the Constitution of India regarding the High Court's discretionary power to issue directions for the enforcement of rights

It applied the precedent set in Malcolm Murayis & Ors. v. State Bank of India and Others, which mandates that investigating agencies must proceed in accordance with Section 102 of the Code of Criminal Procedure (Cr.P.C.)—now substituted by the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS)—when seizing or freezing bank accounts

The doctrine of mutatis mutandis was applied to extend the relief granted in the cited precedent to the current Petitioner

The Court noted that the Petitioner’s grievance regarding the freezing of its bank account by investigative agencies was "squarely covered" by its previous decision in Malcolm Murayis

In that precedent, the Court observed that cyber crime cells often exhibit an "irresponsible approach" by directing banks to freeze accounts via email without subsequent legal follow-up or response to judicial inquiries

The Court reasoned that to balance the interests of justice and the investigation, the "disputed amount" involved in the alleged fraud should be isolated in a fixed deposit (FD) rather than freezing the entire account

This ensures the Petitioner can operate their business while the specific funds remain secured for the Magistrate's ultimate determination.

The Court further emphasized that the police must act under the BNSS within a stipulated timeline of three months, failing which the frozen funds would be released

The Court ordered that the specific disputed amount informed by the crime agencies be kept in a fixed deposit, which shall only be liquidated upon the orders of a competent Judicial Magistrate

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