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

The petitioner filed a writ petition under Article 226 of the Constitution of India seeking a direction to IndusInd Bank to defreeze his bank account and remove the lien/hold placed upon it

The petitioner’s account was frozen following instructions from cyber crime investigative agencies regarding alleged cyber fraud

The petitioner contended that his case was squarely covered by the High Court's earlier decision in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), where accounts were frozen without prior notice or strict adherence to statutory seizure procedures

1. Whether the respondent bank is liable to unfreeze the petitioner's account based on the procedural safeguards established in the Malcolm Murayis precedent

2. Whether the disputed funds can be isolated to allow the petitioner to operate the remainder of the account pending legal proceedings

The Court primarily relied on the procedural requirements for the seizure of property as contemplated under Section 102 of the Code of Criminal Procedure (Cr.P.C.) and the corresponding relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS)

It applied the judicial principle established in Malcolm Murayis & Ors. v. State Bank of India and Others, which mandates that investigating agencies must follow due process and inform the concerned Magistrate of such seizures to prevent indefinite and arbitrary freezing of accounts

The Court found that the facts and grievances in the present petition were identical to those in Malcolm Murayis, and thus the earlier decision applied mutatis mutandis

The Court noted that investigative agencies frequently request banks to freeze accounts but fail to follow up with the necessary legal steps under Section 102 Cr.P.C./BNSS or respond to communications, leading to an "irresponsible approach"

To balance the investigative needs of the police with the petitioner's right to operate his account, the Court reasoned that the specific disputed amount—rather than the entire account—should be secured in a fixed deposit (FD)

This ensures that the alleged proceeds of crime are preserved while the petitioner regains access to his account for legitimate transactions

The bank was ordered to keep the specific disputed amount in a fixed deposit, which shall only be liquidated upon the orders of a competent Judicial Magistrate within a period of three months

The Court further held that if the police agency fails to proceed in accordance with the law (BNSS) within this three-month window, the petitioner shall be permitted to withdraw the amount kept in the FD under intimation to the agency