Bank accounts must be unfrozen while disputed amounts are secured in fixed deposits pending judicial orders.

The petitioner, Prashant Jain, filed a writ petition under Article 226 of the Constitution of India seeking a direction to unblock and de-freeze his Savings Bank Account (No. 20284079501).

The petitioner’s account was frozen following instructions from cyber cell police authorities regarding alleged involvement in cyber fraud.

The petitioner contended that the case is identity-aligned with a previous ruling of the same court regarding crypto-trading and sudden account freezing without notice or compliance with procedural safeguards.

1. Whether the banking operations of the petitioner can be restricted indefinitely without adherence to statutory procedures for seizure.

2. Whether the petitioner is entitled to have his account unfrozen subject to securing the specific disputed amount linked to the alleged crime.

Section 102 of the Code of Criminal Procedure (Cr.P.C.), now corresponding to the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS), mandates that investigating agencies must inform the concerned Magistrate regarding the seizure of property (including bank accounts).

In Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024), it was established that while disputed amounts must be secured, the entire account operation cannot be halted indefinitely if investigating agencies fail to respond or follow due process.

The court found that the petitioner's situation was squarely covered by the Malcolm Murayis precedent, where bank accounts were frozen merely on police intimation without following the mandate of informing the Magistrate under Section 102 Cr.P.C.

The court observed a pattern of "poor functioning and irresponsible approach" by cyber crime cells, who issue freeze instructions via email but fail to respond to judicial or bank communications.

To balance the interests of the investigation with the petitioner's right to operate his account, the court reasoned that only the specific disputed amount should be isolated in a fixed deposit, rather than locking the entire account, thereby allowing the petitioner to resume regular banking operations while the legal status of the disputed funds is determined by a Magistrate.

The bank was ordered to keep only the specific "disputed amount" in a Fixed Deposit (FD), which can only be liquidated upon orders from a competent Judicial Magistrate; the police agency is expected to proceed in accordance with the BNSS within three months, otherwise, the petitioner may withdraw the FD amount under intimation.