Frozen bank accounts must be unfrozen while securing only disputed amounts in fixed deposits.

The petitioner, Dipak, filed a writ petition under Article 226 of the Constitution of India seeking a direction to Utkarsh Small Finance Bank to lift a freeze/hold imposed on his bank account (No. 1764018962692646) at the New Palasia Branch

The petitioner argued that the freeze was arbitrary and illegal.

Procedurally, the petitioner was permitted to amend the cause title to correct his name during the proceedings

The petitioner relied on the precedent set by the Indore Bench in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024), where the court dealt with bank accounts frozen by cyber cells without proper notice or compliance with statutory seizure procedures

1. Whether the freeze imposed on the petitioner’s bank account by investigative agencies is sustainable when procedural safeguards are not followed?

2. Whether the directions issued in Malcolm Murayis & Ors. v. State Bank of India apply mutatis mutandis to the present case?

The court primarily exercised its jurisdiction under Article 226 of the Constitution of India

It applied the principle of procedural compliance for the seizure of property as contemplated under Section 102 of the Cr.P.C. (and the corresponding provisions of the Bharatiya Nagarik Suraksha Sanhita [BNSS]), which requires investigating agencies to report seizures to the Magistrate

Furthermore, the court relied on the precedent of Malcolm Murayis & Ors. v. State Bank of India and Others (2024), which established a balanced approach between investigative needs and the account holder's rights by utilizing fixed deposits for disputed amounts

The court observed that the petitioner’s case was squarely covered by the Malcolm Murayis decision

In that precedent, the court had criticized the "poor functioning and irresponsible approach" of cyber crime cells that freeze accounts via email without subsequent response or compliance with Section 102 Cr.P.C.

The court reasoned that since the bank acted solely on instructions from crime agencies, the account should be unfrozen to prevent indefinite hardship to the petitioner

To protect the integrity of any potential investigation, the court applied the "FD mechanism": sequestering only the specific disputed amount in a fixed deposit while allowing the rest of the account to be operated

This ensures that the police have a finite period (three months) to seek a legal order from a Magistrate, failing which the petitioner regains full access

The bank was ordered to keep the disputed amount—as identified by the crime agencies—in fixed deposits

These deposits are to be liquidated only upon the order of a competent Judicial Magistrate within a three-month period

If the police agency fails to proceed according to the BNSS or relevant law within those three months, the petitioner is permitted to withdraw the fixed deposit amount under intimation to the agency