Bank Must Unfreeze Account and Keep Only Disputed Proportion in Fixed Deposits Pending Investigative Action

The petitioner, Mukesh Vishvakarma, approached the High Court under Article 226 of the Constitution of India seeking a direction to the respondents to unfreeze his bank account (No. 885610110000020) held with the Bank of India, Index Medical branch, Indore.

The petitioner contended that his case was identical to the grievance addressed in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024), where bank accounts were frozen by banks solely based on intimations from cyber cell police stations regarding alleged cyber fraud without following statutory procedures.

1. Whether the respondent bank should be directed to remove the hold/freeze on the bank account of the petitioner in light of the precedent set in Malcolm Murayis.

2. Whether the investigating agencies complied with the mandatory procedural requirements for the seizure of bank accounts.

The court primarily relied on the principles established in Malcolm Murayis & Ors. Vs. State Bank of India and Others, which mandates that while banks must follow instructions from investigating authorities, such seizures must comply with Section 102 of the Code of Criminal Procedure (Cr.P.C.)—now corresponding to relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS)—requiring agencies to inform the concerned Magistrate regarding such seizures.

The court underscored the necessity of balancing investigative needs with the petitioner’s right to operate their account by securing only the "disputed amount" rather than freezing the entire account.

The Court found that the petitioner's situation was squarely covered by the Malcolm Murayis precedent, where accounts were frozen indefinitely by cyber cells without adequate legal follow-up or response to judicial inquiries.

The Court reasoned that the bank account should be unfrozen to allow the petitioner to conduct business, provided that the specific "disputed amount" identified by the crime agencies is secured in a fixed deposit. This ensures that the alleged proceeds of crime remain available if the investigation yields a charge, while preventing the arbitrary total freezing of assets in violation of due process.

The Bank was ordered to keep the specific disputed amount in a fixed deposit (FD), which shall only be liquidated upon orders from a competent Judicial Magistrate. If the police agency fails to proceed in accordance with the law (BNSS) within three months, the petitioner is permitted to withdraw the FD amount under intimation to the agency.