Frozen accounts must be released except for disputed funds secured in fixed deposits pending magistrate orders.

The petitioner filed a writ petition under Article 226 of the Constitution of India challenging the action of the respondent authorities in freezing his bank account (Account No. 091601509530) maintained at ICICI Bank, Ratlam Kothi, Indore.

The petitioner sought a declaration that the freezing was illegal and requested a direction for the account to be unfrozen.

The petitioner contended that the matter was squarely covered by the Court’s earlier decision in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024), which dealt with bank accounts frozen by cyber cells alleging cyber fraud without following statutory procedures.

1. Whether the action of the respondents in freezing the petitioner’s bank account was illegal and warrants a direction to unfreeze the same under Article 226 of the Constitution.

2. Whether the directions issued in the precedent Malcolm Murayis & Ors. regarding the treatment of disputed funds and compliance with criminal procedure are applicable to the present case.

The court primarily exercised its writ jurisdiction under Article 226 of the Constitution of India to review administrative/police actions.

It relied on the principles of criminal procedure governing the seizure of property, specifically Section 102 of the Code of Criminal Procedure (Cr.P.C.)—referenced in the context of the newer Bharatiya Nagarik Suraksha Sanhita (BNSS)—which requires investigating agencies to inform the concerned Magistrate regarding seizures.

The court further applied the doctrine of mutatis mutandis to follow its own precedent in Malcolm Murayis & Ors. Vs. State Bank of India and Others, which balances the interests of the account holder with the requirements of a criminal investigation.

The Court observed that the facts of the present case were identical to those in Malcolm Murayis, where accounts were frozen based on intimations from cyber cells without providing notice to the account holders or complying with the mandatory reporting requirements to the Magistrate.

In the cited precedent, the Court noted the "irresponsible approach" of various cyber crime cells that freeze accounts via email but fail to respond to subsequent bank inquiries or proceed according to law.

By applying the Malcolm Murayis ruling mutatis mutandis, the Court determined that the petitioner should not be indefinitely deprived of his account while the investigation is pending, provided that the specific disputed amount is secured.

The Court emphasized that the police are expected to proceed under the relevant provisions of the BNSS or other applicable laws within a reasonable timeframe.

However, the bank was ordered to keep the disputed amount (as identified by the crime agencies) in a fixed deposit (FD). This FD may only be liquidated upon the order of a competent Judicial Magistrate within three months.

If the police agency fails to proceed in accordance with the law (BNSS) within said three months, the petitioner is permitted to withdraw the amount kept in the FD under intimation to the police agency.