Banks must unfreeze accounts and secure only the disputed amount in fixed deposits pending judicial orders.

The petitioner, Chetan Kushwah, filed a writ petition under Article 226 of the Constitution of India challenging the "illegal and arbitrary" freezing of his bank account (Account No. 60539106270) held with the Bank of Maharashtra, Kanadia Road Branch

The account was placed under "hold" by the bank based on intimations from cyber crime agencies alleging involvement in cyber fraud

The petitioner contended that no notice was received regarding any offense and that they were lawfully engaged in trading

The specific disputed amount linked to the investigation in this case was identified as ₹6,000/-

1. Whether the respondent bank can maintain a total freeze on a petitioner’s account indefinitely based solely on requests from investigating agencies without adherence to procedural safeguards

2. Whether the disputed amount should be isolated to allow the petitioner access to the remainder of their funds

The Court applied the principles governing the seizure of property under Section 102 of the Code of Criminal Procedure (Cr.P.C.)

Section 102 of the Code of Criminal Procedure (Cr.P.C.) now transitioned to relevant provisions under the Bharatiya Nagarik Suraksha Sanhita (BNSS)

The Court relied heavily on the precedent set in Malcolm Murayis & Ors. Vs. State Bank of India and Others, W.P. No. 1100/2024, which establishes that banks and investigating agencies must act with accountability, and disputed amounts should be kept in fixed deposits rather than freezing an entire account perpetually

The Court observed that the case was squarely covered by the Malcolm Murayis precedent

It noted a pattern where cyber crime cells instruct banks to freeze accounts but fail to respond to judicial inquiries or proceed diligently under the law, describing such a lack of response as "poor functioning and irresponsible"

The Court reasoned that to balance the interests of the investigation with the petitioner's right to operate their account, only the disputed amount (₹6,000/-) should be secured

By directing the conversion of the disputed amount into a fixed deposit, the Court ensured the money remains available pending a Magistrate's order while preventing the petitioner from being deprived of their entire account balance

Specifically, the bank was ordered to keep the disputed amount of ₹6,000/- in a fixed deposit, which may only be liquidated upon orders from a competent Judicial Magistrate within three months

If the police agency fails to proceed in accordance with the law (BNSS) within that timeframe, the petitioner may withdraw the FD amount under intimation to the agency

The Court explicitly held that all other funds in the account must be defreezed immediately