Frozen bank accounts must be released, restricting the hold to disputed amounts kept in fixed deposits.

The petitioner, Karan Sawner, filed a writ petition under Article 226 of the Constitution of India seeking a direction to unfreeze his bank account (IDFC Bank A/c No. 0649842269)

The petitioner contended that his case is identical to the matter of Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), where bank accounts were frozen by cyber crime cells alleging involvement in cyber fraud without following statutory procedures

In the cited precedent, accounts were frozen via email instructions to banks, but investigative agencies failed to notify the Magistrate as required by law

1. Whether the petitioner is entitled to have his bank account unfrozen based on the ratio laid down in Malcolm Murayis v. State Bank of India

2. Whether the freezing of the account by investigative agencies complied with the mandatory procedural requirements of the relevant criminal statutes

The Court applied the principles established in Malcolm Murayis & Ors. v. State Bank of India and Others

The core legal rule involves Section 102 of the Cr.P.C. (now the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita/BNSS), which mandates that investigating agencies must inform the concerned Magistrate regarding the seizure or freezing of property/bank accounts

The doctrine applied holds that while disputed amounts suspected of being involved in fraud may be secured, the account holder’s right to operate the account must be balanced against the state's interest, requiring strict adherence to procedural law

The Court found that the petitioner’s case was "squarely covered" by the decision in Malcolm Murayis and applied its findings mutatis mutandis to the present facts

It noted that in such cyber-fraud investigations, agencies often exhibit an "irresponsible approach" by directing banks to freeze accounts without responding to subsequent legal inquiries or fulfilling statutory obligations under the Cr.P.C./BNSS

The Court reasoned that to meet the ends of justice, the disputed amount should be isolated to protect the investigation while allowing the petitioner to access the remainder of the account

The Court emphasized that the police agency must proceed in accordance with the law (BNSS) within a stipulated three-month window, failing which the investigative hold loses its legitimacy

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

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

If the police agency fails to take appropriate legal action under the BNSS or relevant law within those three months, the petitioner is entitled to withdraw the FD amount under intimation to the agency