Banks must unfreeze accounts and retain only disputed sums in fixed deposits pending lawful orders.

The petitioner sought a writ directing Kotak Mahindra Bank to unfreeze Account No. 1747225749 and release the ₹29,749 said to be frozen in it.

Relying on Malcolm Murayis & Ors. v. State Bank of India and Others, W.P. No. 1100 of 2024, the petitioner submitted that the principles in that decision applied to the account freeze.

The Court considered the precedent and disposed of the petition by directing that the account be unfrozen, while separately safeguarding the disputed amount reported by the crime agencies.

1. Whether the petitioner’s account should be unfrozen in light of the principles in Malcolm Murayis.

2. Whether the amount reported by the crime agencies as disputed should remain protected pending action by a competent Judicial Magistrate.

The Court applied its decision in Malcolm Murayis, which directed that an amount identified by cyber-crime agencies as disputed be placed in fixed deposits and liquidated only upon orders of a competent Judicial Magistrate within three months; failing such orders, the amount could be withdrawn by the account holder after intimating the agencies.

The precedent expected investigating agencies to proceed in accordance with Section 102 of the CrPC or other applicable law. In the present case, the Court referred to the relevant provisions of the BNSS or other law relied upon by the police.

The precedent’s safeguarding direction applied to the disputed amount, not to the account balance generally.

The Court considered Malcolm Murayis applicable mutatis mutandis.

Following that approach, it directed that the disputed amount—recorded in the order as ₹1,000, “as claimed”—be placed in a fixed deposit and kept subject to orders of a competent Judicial Magistrate within three months.

If no such orders were passed within that period, the petitioner could withdraw the amount after notifying the police agency.

The Court separately directed that the bank account be unfrozen and that any balance beyond the disputed amount need not remain frozen.

The bank was directed to unfreeze the petitioner’s account and keep ₹1,000, as identified in the order, in a fixed deposit pending the competent Judicial Magistrate’s orders within three months.

If no such orders were made, the petitioner could withdraw that amount after informing the police agency; any other funds in the account were to be defrozen.