Frozen bank accounts must be released by sequestering only disputed amounts in time-bound fixed deposits.

The petitioner, Mr. Ashish Mittal (proprietor of “Shyam Traders”), filed a writ petition under Article 226 of the Constitution of India seeking a Writ of Mandamus to de-freeze/unblock his bank account held at the State Bank of India (SBI), Vallabh Nagar Indore Branch

The account was frozen by the bank following instructions from various cyber crime agencies (Respondents 2, 3, and 4) regarding alleged involvement in cyber fraud

The petitioner sought to operate the account for daily sustenance and business expenses, claiming the case was squarely covered by the precedent in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024)

1. Whether the petitioner’s bank account should be unfrozen based on the principles established in Malcolm Murayis & Ors. v. State Bank of India and Others

2. What procedure should be followed to balance the needs of the police investigation with the petitioner’s right to operate his bank account

The court primarily applied the statutory 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)

It followed the precedent of Malcolm Murayis & Ors. v. State Bank of India and Others, which established that accounts frozen due to cyber fraud investigations should have the disputed amounts secured in fixed deposits (FDs) while allowing the account holder to operate the remaining balance if the investigating agencies fail to follow proper legal procedures or respond to inquiries

The court found that the facts and legal grievances in the present petition were identical to those in Malcolm Murayis

In the cited precedent, the court noted a "poor functioning and irresponsible approach" by cyber crime cells that instructed banks to freeze accounts but failed to respond to legal proceedings or comply with Section 102 of the Cr.P.C.

Applying the mutatis mutandis principle, the court reasoned that the petitioner is entitled to similar relief

The court determined that rather than a total freeze, the disputed amount should be isolated in an FD to satisfy the investigation's requirements, while the rest of the account remains accessible to the petitioner to ensure business continuity and sustenance

The bank was ordered to keep only the specific disputed amount—as identified by the crime agencies—in a fixed deposit

This FD is to be liquidated only upon the order of a competent Judicial Magistrate within a three-month period

Should the police agency fail to proceed in accordance with the law (BNSS) within those three months, the petitioner is permitted to withdraw the FD amount under intimation to the agency