Bank must unfreeze account while retaining disputed amounts in fixed deposits pending Magistrate's orders.

The Petitioner, Aman, filed a writ petition under Article 226 of the Constitution of India challenging the action of HDFC Bank (Respondent No. 1) in freezing his Savings Bank Account No. 33179948887.

The Petitioner sought a declaration that the freezing was illegal and arbitrary, and requested the restoration of full operational rights.

The Petitioner contended that his case is identical to the precedent set in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100/2024), where accounts were frozen based on cyber cell intimations regarding alleged fraudulent transactions without prior notice to the account holders.

1. Whether the unilateral freezing of the Petitioner’s bank account by the Bank on the instructions of investigating agencies is legally sustainable without compliance with statutory procedural safeguards.

2. Whether the Petitioner is entitled to operate the account with respect to the undisputed portion of the funds while the investigation is pending.

The Court applied the constitutional protections under Articles 14, 21, and 300A, which safeguard against arbitrary state action and the right to property.

It primarily relied on the procedural requirements of Section 102 of the Code of Criminal Procedure (Cr.P.C.) [now relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS)], which mandates that investigating agencies inform the concerned Magistrate regarding the seizure of property.

The Court applied the precedent of Malcolm Murayis & Ors. Vs. State Bank of India and Others, which established that undisputed funds should remain accessible to the account holder while disputed amounts are secured in fixed deposits.

The Court observed that the Petitioner’s situation was squarely covered by the Malcolm Murayis decision, where the Court found 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.

The Court reasoned that the Bank acted solely on instructions from investigative agencies without independent cause.

The Court determined that justice is served by balancing the needs of the investigation with the Petitioner's right to access his funds. By directing the Bank to secure only the specific "disputed amount" (₹1,200/-) in a fixed deposit, the Court ensured that the remainder of the account could be utilized by the Petitioner, preventing an arbitrary total freeze on his personal finances.

The Bank was ordered to keep only the disputed amount of ₹1,200/- in a fixed deposit (FD), which can only be liquidated upon orders from a competent Judicial Magistrate.

The investigating agency was granted three months to proceed in accordance with the law; should they fail to do so within this period, the Petitioner is permitted to withdraw the FD amount under intimation to the agency.

The holding in Malcolm Murayis was applied mutatis mutandis to this case.