Frozen bank accounts must be released by securing only the disputed amount in fixed deposits.

The petitioner approached the High Court under Article 226 of the Constitution of India seeking a writ to direct the respondent authorities and banks to remove a freeze/hold placed on the petitioner’s bank account

The petitioner contended that the facts of the case were identical to Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), where bank accounts were frozen by cyber cells of various police stations on allegations of cyber fraud without issuing notice to the account holders or complying with statutory procedures

In the cited precedent, the court noted that investigative agencies often failed to inform the concerned Magistrate about such seizures as required by law

1. Whether the freeze imposed on the petitioner’s bank account by investigative agencies should be lifted in light of the procedural safeguards established in previous judicial pronouncements.

2. Whether the investigative agencies are required to comply with specific statutory provisions under the Bharatiya Nagarik Suraksha Sanhita (BNSS) or Cr.P.C. when seizing bank accounts.

The court primarily exercised its writ jurisdiction under Article 226 of the Constitution of India

It applied the principle of mutatis mutandis to follow the precedent set in Malcolm Murayis & Ors. v. State Bank of India and Others

The court relied on the statutory requirements for the seizure of property (including bank accounts) under the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS), specifically the duty of the police to proceed in accordance with law and notify the competent Magistrate

The court observed that the petitioner’s situation was squarely covered by the decision in Malcolm Murayis

In that precedent, the court found that cyber crime cells frequently directed banks to freeze accounts via email but failed to respond to legal notices or demonstrate compliance with Section 102 of the Cr.P.C. (the predecessor to the relevant BNSS provisions)

The court reasoned that while investigation into cyber fraud is necessary, the indefinite freezing of an entire account without following due process is impermissible.

To balance the interests of the investigation and the petitioner’s right to operate their account, the court determined that only the "disputed amount" linked to the alleged crime should be secured in a fixed deposit, rather than keeping the entire account frozen

However, the bank was ordered to keep the specific "disputed amount" (as identified by the crime agencies) in a fixed deposit (FD)

This FD may only be liquidated or withdrawn upon the orders of a competent Judicial Magistrate within three months

The court further held that if the police agency fails to proceed in accordance with the law under the BNSS within these three months, the petitioner shall be permitted to withdraw the FD amount under intimation to the agency