Bank accounts must be unfrozen upon retention of disputed amounts in fixed deposits pending judicial orders.

The petitioner, Sakina Ali, filed a writ petition under Article 226 of the Constitution of India seeking a direction to HDFC Bank to defreeze her bank account (Account No. 50100528239636)

The account was subjected to a debit freeze based on intimations from cyber crime agencies regarding alleged cyber fraud

The petitioner sought the removal of the freeze or, alternatively, permission to operate the account while retaining the disputed amount of ₹6,500 during the investigation

The petitioner relied on a precedent involving similar circumstances where crypto traders’ accounts were frozen without proper statutory notice or compliance

1. Whether a bank account frozen at the request of cyber crime agencies can be unfrozen subject to the retention of the disputed amount

2. Whether the investigating agencies must comply with procedural mandates under the Bharatiya Nagarik Suraksha Sanhita (BNSS) or Cr.P.C. when seizing bank accounts

precedent set in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100/2024), which established that while banks are bound by police instructions to freeze accounts, such freezes cannot be indefinite if the agencies fail to proceed in accordance with law

Section 102 of the Cr.P.C. (and its successor provisions in the Bharatiya Nagarik Suraksha Sanhita/BNSS), which requires investigating officers to report seizures to the jurisdictional Magistrate and follow specific procedural safeguards to ensure the seized property is handled legally

The court determined that the petitioner’s case was "squarely covered" by the Malcolm Murayis decision

It noted that in such cyber-fraud cases, investigating agencies often freeze entire accounts based on disputed transactions without following the mandate of informing the Magistrate or issuing notice to the account holder

The court reasoned that the interests of justice are served by balancing the needs of the investigation with the petitioner's right to access their funds.

Consequently, by directing the bank to segregate the disputed amount into a fixed deposit, the court ensured that the alleged "tainted" money remains secured for the investigation while allowing the petitioner to operate the remainder of the account

The bank was ordered to keep the disputed amount in a fixed deposit, which may only be liquidated upon orders from a competent Judicial Magistrate within three months

The police agencies were directed to proceed according to the relevant provisions of the BNSS; should they fail to do so within the three-month period, the petitioner is permitted to withdraw the fixed deposit amount under intimation to the agency

The petition was disposed of with these directions