Bank must unfreeze account upon securing only the disputed amount in fixed deposits pending investigation.

The petitioner, M/S Shree Kalki Group, filed a writ petition under Article 226 of the Constitution of India challenging the freezing of its Current Bank Account (No. 44993444959) by the State Bank of India, Barotha Branch, District Dewas

The account was allegedly frozen in its entirety based on instructions from crime agencies regarding a disputed amount of approximately Rs. 900/-

The petitioner sought the restoration of banking operations, arguing that legitimate business funds were being withheld and that the bank should, at most, only lien the specific disputed amount

1. Whether the entire bank account of the petitioner can be frozen by the bank/investigating agencies when the disputed amount is limited to a specific, identifiable sum?

2. Whether the guidelines and directions issued in the precedent Malcolm Murayis & Ors. Vs. State Bank of India and Others are applicable to the present facts?

The court primarily relied on the precedent established in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100/2024), which addressed the arbitrary freezing of bank accounts by cyber cells

The court emphasized adherence to Section 102 of the Code of Criminal Procedure (Cr.P.C.), now relevant under the Bharatiya Nagarik Suraksha Sanhita (BNSS), which governs the power of police to seize property and requires the reporting of such seizure to a Magistrate

The principle applied is that freezing should be proportionate to the disputed amount to avoid disrupting legitimate business

The court found that the petitioner’s case was squarely covered by the decision in Malcolm Murayis

In that precedent, the court noted a "poor functioning and irresponsible approach" by cyber crime cells that freeze accounts via email but fail to respond to judicial inquiries or comply with statutory mandates under Section 102 Cr.P.C.

Applying this logic to the current facts, where only Rs. 900/- was disputed, the court determined that freezing the entire account was unwarranted

It reasoned that justice would be served by securing the specific disputed amount in a fixed deposit (FD) while allowing the petitioner to operate the rest of the account, ensuring the investigation is not hampered while protecting the petitioner's right to conduct business

It ordered the bank to keep the disputed amount of Rs. 900/- in a fixed deposit, which may only be liquidated upon orders from a competent Judicial Magistrate within three months

The police agency is expected to proceed under the relevant provisions of the BNSS; if they fail to do so within three months, the petitioner is entitled to withdraw the FD amount upon intimation to the agency