Frozen accounts must be unfrozen by securing disputed amounts in fixed deposits pending judicial orders within three months.

The petitioner, Rahul, filed a writ petition under Article 226 of the Constitution of India seeking a writ of mandamus to defreeze his bank account (No. 431100050301517) maintained with respondent No. 2.

The petitioner argued that his case is squarely covered by the precedent in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024).

In that referenced case, accounts were frozen by banks at the behest of cyber cells investigating alleged cyber fraud without following the statutory notification procedures required for seizure.

1. Whether the petitioner’s bank account should be unfrozen in light of the directions passed in Malcolm Murayis & Ors. v. State Bank of India and Others.

2. Whether the investigative agencies complied with the mandatory procedural requirements of seizure under the relevant criminal procedure laws.

The court relied on the procedural mandates of Section 102 of the Code of Criminal Procedure (Cr.P.C.), and the corresponding relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS), which require investigating agencies to report seizures to the concerned Magistrate.

The court followed the principle established in Malcolm Murayis (supra), holding that while disputed amounts linked to cybercrime must be secured, the total freezing of accounts is unsustainable if the agencies fail to proceed in accordance with law or respond to judicial inquiries.

The court observed that the petitioner’s circumstances were identical to those in Malcolm Murayis, where the court noted a "poor functioning and irresponsible approach" of cyber crime cells that freeze accounts via email but fail to respond to court notices or follow Section 102 Cr.P.C.

The court applied the same reasoning mutatis mutandis to the present case, finding that the interests of justice are met by segregating the disputed amount from the rest of the account.

By directing the disputed sum to be held in a Fixed Deposit (FD), the court ensured the funds remain available for legal adjudication while restoring the petitioner’s access to the remainder of his account.

The bank was ordered to place the specific disputed amount into a fixed deposit, which may only be liquidated upon an order from a competent Judicial Magistrate within three months.

If the police agency fails to obtain such an order within three months, the petitioner is entitled to withdraw the FD amount under intimation to the agency.