Frozen bank accounts must be released, securing disputed amounts in fixed deposits pending judicial orders.

The petitioner approached the High Court under Article 226 of the Constitution of India seeking a writ to unfreeze his bank account held with Axis Bank.

The petitioner argued that his case was identical to the precedent established in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), where accounts were frozen by various cyber crime cells on allegations of fraud—often related to cryptocurrency trading—without the investigating agencies providing notice or complying with statutory requirements.

In the cited precedent, the court noted that cyber cells frequently failed to respond to bank inquiries or report seizures to the relevant Magistrate.

1. Whether the petitioner is entitled to the unfreezing of his bank account based on the precedent set in Malcolm Murayis & Ors. v. State Bank of India and Others?

2. What conditions must be imposed to balance the interests of the investigating agencies regarding the disputed funds while allowing the petitioner to operate the account?

The Court relied on Section 102 of the Code of Criminal Procedure (Cr.P.C.), and its successor provisions under the Bharatiya Nagarik Suraksha Sanhita (BNSS), which mandate that investigating agencies must inform the concerned Magistrate regarding the seizure of property.

It further applied the principle of mutatis mutandis to the directions issued in Malcolm Murayis & Ors. v. State Bank of India and Others, which mandates a balance between investigative necessity and the account holder's right to operate their account when procedural lapses occur by the police.

The Court found that the petitioner’s situation was squarely covered by the Malcolm Murayis decision.

In that case, the court criticized the "irresponsible approach" of cyber crime cells that freeze accounts via email but fail to follow through with legal proceedings or respond to judicial notices.

The Court reasoned that rather than a total freeze on the account, the disputed amount should be isolated.

This ensures that the specific funds suspected to be the proceeds of crime are secured in a fixed deposit (FD) for a limited period, while the remainder of the account is made available to the petitioner, thereby preventing indefinite financial hardship caused by procedural delays.

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

This FD is only to be liquidated upon the order of a competent Judicial Magistrate within three months.

Should the investigating agency fail to proceed in accordance with the BNSS or relevant law within that three-month window, the petitioner is permitted to withdraw the FD amount under intimation to the agency.