Bank accounts must be unfrozen, securing only disputed amounts in fixed deposits pending Magistrate orders within three months.

The petitioner, a proprietorship firm, filed a writ petition under Article 226 of the Constitution of India challenging a "hold/freeze" placed on its bank account by Axis Bank via a letter dated 05.02.2026

The petitioner sought a direction to unfreeze the account, arguing that the case was squarely covered by the High Court’s earlier decision in Malcolm Murayis & Ors. v. State Bank of India and Others

In the cited precedent, bank accounts were frozen by banks solely on the intimation of various cyber cells regarding alleged cyber fraud, often without the investigating agencies complying with statutory procedures such as notifying the Magistrate

Whether the respondent Bank’s action of freezing the petitioner’s entire bank account on the instruction of investigative agencies was sustainable

Whether the petitioner should be permitted to operate the account subject to certain conditions regarding the disputed amounts allegedly linked to cybercrime

The Court applied the principles governing the seizure of property by police under Section 102 of the Code of Criminal Procedure (Cr.P.C.), noting the transition to relevant provisions under the Bharatiya Nagarik Suraksha Sanhita (BNSS)

The Court relied on the precedent established in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), which mandates that investigating agencies must proceed in accordance with the law when seizing bank accounts and that a total freeze is often disproportionate if the disputed amount can be isolated

The Court observed that the facts of the present case were identical to those in the Malcolm Murayis case, where the court noted a "poor functioning and irresponsible approach" by cyber crime cells that freeze accounts via email but fail to respond to court notices or comply with the mandatory reporting requirements to a Magistrate

The Court reasoned that to balance the interests of justice and the necessity of the investigation, the disputed amount—rather than the entire account—should be secured

By applying this logic mutatis mutandis to the petitioner, the Court determined that the account should be unfrozen provided the specific funds flagged by the police are protected in a fixed deposit for a limited duration

The Bank was ordered to keep the disputed amount (as identified by the crime agencies) in a fixed deposit

This deposit is to be liquidated only upon orders from a competent Judicial Magistrate within a three-month period

If the police agency fails to obtain such an order within three months under the BNSS or relevant law, the petitioner is permitted to withdraw the amount from the fixed deposit under intimation to the agency