Frozen bank accounts must be unfrozen, securing disputed funds in fixed deposits pending time-bound statutory investigation.

The petitioner, Shivam Thakre, maintained a bank account with Fino Payments Bank, which was frozen/placed on hold regarding an amount of ₹26,200 following instructions from cyber police agencies alleging involvement in cyber fraud

The petitioner challenged this action as illegal and unconstitutional, asserting that the Bank and Cyber Police failed to comply with the procedural mandates of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023

The petitioner sought a direction to de-freeze the account and isolate only the disputed amount into a Fixed Deposit (FD)

The petitioner contended that the matter is squarely covered by the precedent established in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024)

1. Whether the complete freezing of the petitioner's bank account by the Bank and Cyber Police without compliance with statutory procedural safeguards is sustainable in law

2. Whether the disputed amount should be separated into a Fixed Deposit to allow the petitioner to operate the remainder of the account

The Court primarily relied on the precedent set in Malcolm Murayis & Ors. v. State Bank of India and Others, which held that while banks are bound by instructions from investigating agencies, such agencies must act in accordance with the law

The Court applied the principles of Section 102 of the Cr.P.C. (now reflected in the relevant provisions of the BNSS, 2023, specifically Sections 106 and 107), which govern the power of police officers to seize property and require reporting such seizures to a Magistrate

The Court considered the petitioner’s rights under Articles 14, 19(1)(g), 21, and 300A of the Constitution of India regarding the arbitrary deprivation of property and the right to carry on business

The Court observed that the facts of the present case were mutatis mutandis identical to the Malcolm Murayis case, where it was noted that cyber crime cells often direct banks to freeze accounts but fail to follow up or respond to judicial inquiries, demonstrating an irresponsible approach

The Court reasoned that a total freeze on an account is disproportionate when only a specific portion of the funds is allegedly linked to a crime.

By applying the rationale from the cited precedent, the Court determined that the interests of justice would be served by isolating the disputed amount into a Fixed Deposit. This ensures that the potential "proceeds of crime" are secured for the investigation while restoring the petitioner’s ability to utilize the undisputed funds in their account

The Court emphasized that investigative agencies must proceed under the BNSS within a strictly defined timeline of three months

The Court ordered that the disputed amount be kept in a Fixed Deposit, which shall only be liquidated upon orders from a competent Judicial Magistrate. If the police/investigating agency fails to proceed in accordance with the relevant provisions of the BNSS within three months, the petitioner shall be permitted to withdraw the FD amount under intimation to the agency

Additionally, the Court directed the return of any uncancelled additional court fees to the petitioner's counsel