Bank must unfreeze account and secure only the disputed amount in fixed deposits pending criminal investigation.

The petitioner, Balaji Ajencies, filed a writ petition under Article 226 of the Constitution of India seeking a direction to the respondent bank to unfreeze its bank account.

The account had been frozen following intimations from cyber crime agencies regarding alleged involvement in cyber fraud. This case follows the precedent set in Malcolm Murayis & Ors. Vs. State Bank of India, where accounts were held/frozen by banks solely on the instructions of police cyber cells without the account holders being served prior notice or the investigating agencies complying with statutory reporting requirements to a Magistrate.

1. Whether the respondent bank can continue to freeze the entirety of the petitioner's bank account based solely on instructions from investigating agencies regarding a specific disputed amount.

2. Whether the investigating agencies are required to follow the procedure established under the Bhartiya Nagarik Suraksha Sanhita (BNSS) or Cr.P.C. when seizing/freezing bank accounts.

The Court primarily relied on the principles established in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024).

It applied Section 102 of the Code of Criminal Procedure (Cr.P.C.), and by extension, the relevant provisions of the Bhartiya Nagarik Suraksha Sanhita (BNSS), which mandate that investigating agencies must inform the concerned Magistrate regarding seizures.

The court also applied the doctrine of proportionality, ensuring that only the specific disputed amount involved in the alleged fraud is restricted rather than the entire account.

The Court found that the petitioner’s situation was "squarely covered" by the Malcolm Murayis precedent, where it was observed that cyber crime cells often act irresponsibly by freezing accounts via email without responding to subsequent bank inquiries or following statutory mandates.

The Court reasoned that to balance the interests of the investigation with the petitioner's right to operate their business, the specific "disputed amount" (identified as Rs. 1,070/-) should be isolated into a fixed deposit.

The Court emphasized that the police are expected to proceed in accordance with law (BNSS) within a specific timeframe (three months). If the police fail to obtain an order from a competent Judicial Magistrate within that period, the petitioner regains the right to the funds, as an indefinite freeze without judicial oversight is impermissible.

The bank shall convert only the disputed amount of Rs. 1,070/- into a fixed deposit, which can only be liquidated upon orders from a competent Judicial Magistrate within three months. If no such order is obtained within three months, the petitioner may withdraw said amount after intimation to the police. Further, the remaining balance in the account must be defreezed immediately to allow the petitioner to operate the account.