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

The petitioner challenged the freezing of his bank account maintained with Jana Small Finance Bank, Account No. 4557010061978383, allegedly pursuant to an intimation from a police/cyber-crime agency concerning a disputed credit of ₹300.

He sought removal of the freeze while permitting the Bank to retain a lien or hold over the disputed amount.

The petitioner relied on Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. Nos. 1100 and 1185 of 2024, decided on 26 April 2024, in which the High Court had directed that the disputed amount be placed in fixed deposits while the bank accounts were otherwise unfrozen.

1. Whether the petitioner’s bank account should remain frozen merely on the basis of a cyber-crime agency’s intimation concerning a disputed amount of ₹300?

2. Whether the disputed amount could be secured by placing it in a fixed deposit, while permitting the petitioner to operate the remaining bank account, subject to action by the competent Judicial Magistrate under the applicable law?

The Court applied the principles governing seizure or attachment of property connected with an alleged offence under Section 102 of the Code of Criminal Procedure, 1973, and the corresponding applicable provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS).

The investigating agency is expected to proceed in accordance with law and obtain appropriate orders from the competent Judicial Magistrate in relation to disputed funds.

The Court followed its earlier decision in Malcolm Murayis & Ors. v. State Bank of India & Ors., which held that the disputed amount may be preserved in a fixed deposit, but the bank account should not remain wholly frozen indefinitely in the absence of further lawful action by the investigating agency.

The Court found that the petitioner’s case was materially covered by Malcolm Murayis and applied that decision mutatis mutandis.

Since the alleged disputed amount was only ₹300, the legitimate investigative interest could be protected by segregating and securing that amount rather than continuing a complete freeze of the petitioner’s account.

Accordingly, the Bank was directed to place ₹300 in a fixed deposit, which could be liquidated only upon an order of the competent Judicial Magistrate within three months.

The Court further held that, if the police agency failed to proceed in accordance with the BNSS or other applicable law within that period, the fixed-deposit amount could also be released to the petitioner after intimation to the police agency.

Jana Small Finance Bank was directed to unfreeze the petitioner’s bank account while placing the disputed amount of ₹300 in a fixed deposit.

The fixed deposit could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months.

In the event of failure by the police agency to take lawful action within that period, the amount could be withdrawn by the petitioner after informing the police agency.