Banks must unfreeze accounts while securing only the disputed amount in fixed deposit.

The petitioner sought unfreezing of his Kotak Mahindra Bank account, which had been frozen following action by a crime agency.

He asked that the disputed amount of ₹4,417, and any further amount identified by the agency, be set aside while the balance was released.

He challenged the complete freeze, including on the grounds that Section 106 of the BNSS, 2023 and constitutional protections had not been complied with.

Relying on Malcolm Murayis & Ors. v. State Bank of India and Others, W.P. No. 1100 of 2024, decided on 26 April 2024, the petitioner sought similar relief.

1. Whether the petitioner’s bank account should remain completely frozen when only ₹4,417 was identified as disputed.

2. Whether the disputed amount should be preserved separately while the petitioner is allowed to operate the remainder of the account.

The Court applied its decision in Malcolm Murayis, which directed that a disputed amount identified by cybercrime agencies be kept in a fixed deposit pending orders of a competent Judicial Magistrate, with the investigating agency expected to proceed under Section 102 of the Code of Criminal Procedure or other applicable law.

In that precedent, the fixed deposit could be withdrawn by the petitioners if the required orders were not obtained within three months.

In the present case, the Court applied that approach mutatis mutandis, directing the police agency to proceed under the relevant provisions of the BNSS or other law on which it relied.

The Court considered the earlier Malcolm Murayis decision applicable to the petitioner’s case mutatis mutandis.

Applying its approach, the Court distinguished the identified disputed sum of ₹4,417 from the balance of the account: the disputed amount was to be secured in a fixed deposit pending action before the competent Judicial Magistrate, while the rest of the funds did not need to remain frozen.

The Court did not separately determine the petitioner’s constitutional challenges or interpret Section 106 of the BNSS; it resolved the petition by applying the precedent’s procedure to the facts before it.

The police agency was expected to proceed under the relevant law within three months; failing that, the petitioner could withdraw the fixed-deposit amount under intimation to the police agency.

The bank account was to be unfrozen, and any remaining amount in it was not to remain frozen.