Bank accounts must be unfrozen; suspected proceeds of crime should be held in fixed deposits pending Magistrate orders.

The Petitioner, a firm engaged in business, challenged the freezing of its firm bank account (No. 50200105354956) and the proprietor's individual account (No. 50100787569721) by HDFC Bank.

The accounts were placed on hold following intimations from cyber cell police stations alleging involvement in cyber fraud.

The Petitioner contended that no prior notice was received and that they were carrying out lawful business, suggesting that any fraudulent transactions were likely conducted by third parties through their accounts.

The Petitioner sought a writ under Article 226 for the restoration of account operations.

1. Whether the freezing of bank accounts by investigative agencies without notification or adherence to statutory procedures is legally sustainable.

2. Whether the Petitioner is entitled to operate the accounts while ensuring the disputed amounts remain secured for investigation.

The Court primarily relied on the precedent set in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), which addresses the arbitrary freezing of accounts by cyber cells.

The court emphasized compliance with Section 102 of the Code of Criminal Procedure (Cr.P.C.) [now relevant sections of the Bharatiya Nagarik Suraksha Sanhita (BNSS)], which mandates that any seizure of property/bank accounts must be reported to the concerned Magistrate.

The "mutatis mutandis" principle was applied to extend the relief from the cited precedent to the current facts.

The Court observed that the Respondent Bank froze the accounts solely based on police instructions without independent verification.

Referencing the Malcolm Murayis decision, the Court noted a recurring pattern where cyber cells freeze accounts but fail to respond to court inquiries or follow the mandatory reporting procedures under Section 102 Cr.P.C.

To balance the interests of the investigation with the Petitioner's right to carry on business, the Court determined that the "disputed amounts" (the specific sums linked to the alleged fraud) should be isolated into fixed deposits rather than freezing the entire account.

The Bank was directed to place the specific disputed amounts into fixed deposits (FDs), which can only be liquidated upon orders from a competent Judicial Magistrate within three months; if investigative agencies fail to proceed according to law within that timeframe, the Petitioner may withdraw the amounts.