Frozen bank accounts must be unfrozen after segregating disputed amounts into fixed deposits pending investigative proceedings.

The petitioner filed a writ petition under Article 226 of the Constitution of India seeking a direction to IndusInd Bank (Respondent No. 1) to unfreeze his bank account, bearing No. 159425103146.

The petitioner contended that his case was identical to the matter of Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), wherein bank accounts were frozen by cyber cells of various police stations on allegations of cyber fraud without complying with the mandatory procedural requirements of the law.

In the cited precedent, it was noted that investigating agencies often failed to inform the concerned Magistrate regarding such seizures as required under the Code of Criminal Procedure.

The Court exercised its discretionary jurisdiction under Article 226 of the Constitution of India.

It applied the principle of mutatis mutandis to the precedent set in Malcolm Murayis & Ors. v. State Bank of India and Others, which addressed the procedural failures of cybercrime cells in freezing accounts.

The Court relied upon the procedural mandates of Section 102 of the Code of Criminal Procedure (Cr.P.C.)—now corresponding to the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS)—which requires investigating agencies to proceed in accordance with law and notify the competent Magistrate regarding the seizure of property.

The Court found that the petitioner's grievances were squarely covered by the decision in Malcolm Murayis.

In that precedent, the Court observed a "poor functioning and irresponsible approach" by cyber crime cells, which directed banks to freeze accounts but failed to respond to inquiries or comply with Section 102 Cr.P.C.

Reasoning that the petitioner’s situation was analogous, the Court determined that the account should not remain frozen indefinitely without legal progress.

To protect the disputed funds during the investigation, the Court adopted the mechanism of converting the specific disputed amount into a Fixed Deposit (FD) rather than keeping the entire account inaccessible, thereby allowing the petitioner to operate the account while ensuring the suspect funds remain under judicial oversight.

However, the bank was directed to keep the disputed amount (as informed by the crime agencies) in a Fixed Deposit.

The Court held that this FD shall only be liquidated upon orders from a competent Judicial Magistrate within a three-month period.

If the police agency fails to proceed under the BNSS or other relevant laws within these three months, the petitioner is entitled to withdraw the FD amount under intimation to the agency.