Frozen accounts must be unfrozen, securing disputed amounts in fixed deposits pending Judicial Magistrate orders.

The petitioner, Anshuman Tayal, filed a writ petition under Article 226 of the Constitution of India seeking a direction to HDFC Bank to defreeze/remove a lien from his bank account (No. 50100286606769).

The petitioner contended that his case was squarely covered by the court’s previous decision in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024).

In that precursor case, bank accounts were frozen by various cyber cell police stations on allegations of cyber fraud without complying with the procedural mandates of Section 102 of the Cr.P.C., and often without giving notice to the account holders.

1. Whether the petitioner is entitled to have his bank account unfrozen based on the precedent set in Malcolm Murayis v. State Bank of India?

2. What conditions should be imposed regarding the disputed funds to balance investigative requirements with the account holder's rights?

The court primarily applied the legal principles established in the precedent Malcolm Murayis & Ors. v. State Bank of India and Others.

It further relied on the procedural requirements for the seizure of property by police under Section 102 of the Code of Criminal Procedure (Cr.P.C.) and the corresponding provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS), which require investigating agencies to proceed in accordance with law and inform the competent Magistrate of such seizures.

The Court found that the petitioner’s grievances were identical to those in Malcolm Murayis, where the court criticized the "irresponsible approach" of cyber crime cells for freezing accounts via email while failing to respond to subsequent bank communications or court proceedings.

The Court held that the same reasoning applied mutatis mutandis to the present case.

It reasoned that while investigations into cyber fraud must be protected, account holders should not be indefinitely deprived of their funds due to procedural lapses by investigative agencies.

Consequently, the court determined that the account should be unfrozen, provided the specific "disputed amount" is secured in a fixed deposit to await a Magistrate’s order or the expiration of a three-month period for police action.

The bank was ordered to keep only the specific "disputed amount" informed by the crime agencies in a fixed deposit (FD).

The FD can only be liquidated upon an order from a competent Judicial Magistrate within three months.

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