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

The petitioner filed a writ petition under Article 226 of the Constitution of India seeking a direction to the State Bank of India (Respondent No. 1) to defreeze and remove the hold/lien on his bank account (No. 6305057716)

The petitioner contended that his case is identical to the matter of Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), where bank accounts were frozen by cyber cells of various police stations alleging involvement in cyber fraud or crypto-trading crimes without providing prior notice to the account holders or complying with statutory seizure procedures

1. Whether the petitioner is entitled to the defreezing of his bank account based on the principles established in Malcolm Murayis & Ors. v. State Bank of India?

2. What procedure should be followed by the bank and investigative agencies regarding the disputed amounts held in frozen accounts?

The court applied Article 226 of the Constitution of India regarding the High Court's power to issue writs

It relied on the procedural requirements of Section 102 of the Code of Criminal Procedure (Cr.P.C.)—and its successor provisions under the Bharatiya Nagarik Suraksha Sanhita (BNSS)—which mandate that investigative agencies must inform the concerned Magistrate about the seizure/freezing of property

the court applied the precedent from Malcolm Murayis & Ors. v. State Bank of India, which established a balanced approach between investigative needs and the rights of account holders

The court observed that the petitioner’s situation was squarely covered by the Malcolm Murayis decision

In that precedent, the court noted that investigative agencies often request banks to freeze accounts via email but fail to respond to subsequent inquiries or follow the legal mandate of reporting such seizures to the Magistrate

The court reasoned that while the disputed amount (the portion linked to alleged fraud) must be secured to protect the investigation, the account holder should not be indefinitely barred from their entire account

Applying this logic mutatis mutandis to the present case, the court determined that the disputed portion should be converted into a fixed deposit to ensure its availability, while the rest of the account is restored to the petitioner

However, the bank was ordered to keep the specific "disputed amount" (as informed by the crime agencies) in a fixed deposit (FD)

This FD is only to be liquidated upon an order from a competent Judicial Magistrate within a period of three months

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