Banks must unfreeze accounts while securing disputed amounts in fixed deposits pending orders from the Judicial Magistrate.

The petitioner 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. 188495514)

The petitioner sought the restoration of operational rights, a declaration that the freezing was illegal and violative of constitutional rights, and the production of the underlying complaints/orders

The petitioner contended that the matter was squarely covered by the precedent in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), where accounts were frozen by cyber cells without following due process under Section 102 of the Cr.P.C.

1. Whether the action of the bank in freezing the petitioner’s account based on instructions from investigating agencies was arbitrary or illegal

2. Whether the directions issued in Malcolm Murayis v. SBI regarding the conversion of disputed amounts into fixed deposits apply mutatis mutandis to the present case

The Court primarily applied the principles governing the seizure of property by police under Section 102 of the Code of Criminal Procedure (Cr.P.C.) and the corresponding relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS)

It relied on the precedent set in Malcolm Murayis & Ors. v. State Bank of India and Others, which established that investigative agencies must proceed in accordance with law and inform the concerned Magistrate of such seizures, failing which the freeze cannot be indefinitely maintained

The Court also considered Articles 14, 19(1)(g), 21, and 300A of the Constitution of India concerning arbitrary state action and the right to property

The Court observed that the petitioner’s situation was identical to the Malcolm Murayis case, where accounts were frozen by banks solely on intimations from cyber cells alleging cyber fraud without providing notices to the account holders

In the referenced precedent, the Court criticized the "irresponsible approach" of cyber crime cells for failing to respond to inquiries or comply with the procedural mandate of Section 102 Cr.P.C.

Applying this reasoning mutatis mutandis to the present case, the Court found that while the investigation must be protected, the petitioner’s right to operate the account should not be entirely curtailed

The Court reasoned that keeping only the "disputed amount" in a fixed deposit (FD) balances the interests of the investigation with the petitioner's rights

the bank was directed to keep the specific "disputed amount" (as informed by the crime agencies) in a fixed deposit

This FD is to remain frozen and can only be liquidated upon orders from a competent Judicial Magistrate within three months

If the police/investigating agency fails to proceed in accordance with the law (BNSS or other relevant statutes) within those three months, the petitioner is permitted to withdraw the FD amount under intimation to the agency

All pending interlocutory applications were also disposed of