Bank accounts must be unfrozen while disputed amounts remain secured in fixed deposits pending Magistrate orders.

The petitioner approached the High Court under Article 226 of the Constitution challenging the imposition and continuation of a lien/debit freeze over his HDFC Bank account, contending that the freeze restricted operation of the entire account.

The petitioner’s counsel relied upon the High Court’s earlier decision in Malcolm Murayis & Others v. State Bank of India and Others, W.P. No. 1100 of 2024, decided on 26 April 2024.

In that case, the Court had directed that the disputed amount linked to alleged cyber-crime transactions be kept in fixed deposits, subject to orders of the competent Magistrate, while permitting operation of the remaining account.

Applying that decision, the Court noted that the disputed amount in the present case was ₹5,065, as informed by the concerned crime agencies.

Whether the continued debit freeze over the petitioner’s entire HDFC Bank account was liable to be set aside when only ₹5,065 was identified as the disputed amount by the crime agencies?

Whether the Bank should retain the disputed amount in a fixed deposit, while unfreezing the remainder of the petitioner’s account, subject to proceedings before the competent Judicial Magistrate under the applicable law?

The Court exercised its jurisdiction under Article 226 of the Constitution of India to examine the legality of the restriction placed on the petitioner’s bank account.

It relied on the principles laid down in Malcolm Murayis & Others v. State Bank of India and Others, where, in the context of accounts frozen on the instructions of cyber-crime authorities, the Court directed that the disputed amount be placed in fixed deposits and permitted liquidation only upon orders of the competent Judicial Magistrate within the prescribed period.

The earlier decision referred to compliance with Section 102 of the Code of Criminal Procedure, 1973, or the corresponding applicable law, concerning seizure/freezing of property during investigation.

In the present matter, the Court applied the corresponding provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) or any other law relied upon by the police agency.

The Court found that the factual and legal circumstances of the petitioner’s case were materially covered by Malcolm Murayis and held that the earlier decision would apply mutatis mutandis.

Since the crime agencies had identified only ₹5,065 as the disputed amount, freezing the entire bank account was not considered necessary.

The Court therefore balanced the investigative interest in preserving the allegedly tainted funds with the petitioner’s right to operate the undisputed portion of his account.

It directed that ₹5,065 be placed in a fixed deposit, to be liquidated only pursuant to an order of the competent Judicial Magistrate within three months, while the bank account itself was to be unfrozen.

HDFC Bank was directed to unfreeze the petitioner’s account, while retaining ₹5,065 in a fixed deposit.

The amount could be liquidated only after an order of the competent Judicial Magistrate within three months, pursuant to proceedings under the applicable provisions of the BNSS or other relevant law.

If the police agency failed to proceed in accordance with law within that period, the fixed-deposit amount could also be withdrawn by the petitioner after intimation to the concerned police agency.