Investigating agencies must unfreeze bank accounts while securing only the disputed amount in fixed deposits.

The petitioner, Rajeev Sharma, filed a writ petition under Article 226 of the Constitution of India.

He challenged the action of the respondent bank in freezing his current bank account (No. 20132744123) and creating a lien of Rs. 1,73,218/- at the Patrakar Colony Branch, Indore.

The petitioner contended that his case is squarely covered by the precedent in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100 of 2024), where accounts were frozen based on intimations from cyber crime cells regarding alleged cyber fraud without following proper legal procedures.

1. Whether the respondent bank’s action of freezing the petitioner’s bank account and creating a lien is sustainable in the absence of a clean chit or specific orders from a Magistrate.

2. Whether the directions rendered in Malcolm Murayis & Ors. Vs. State Bank of India and Others apply mutatis mutandis to the present case.

The court primarily relied on the principles governing the seizure of property by police under Section 102 of the Code of Criminal Procedure (Cr.P.C.), now corresponding to relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS).

It further applied the judicial precedent set in Malcolm Murayis & Ors. Vs. State Bank of India and Others, which mandates that disputed amounts allegedly linked to cybercrime must be kept in fixed deposits (FDs) rather than freezing entire accounts indefinitely, ensuring investigative agencies proceed in accordance with law within a stipulated timeframe.

The court observed that the petitioner’s grievance regarding the freezing of his account mirrored the circumstances in Malcolm Murayis.

In that precedent, the court noted a "poor functioning and irresponsible approach" by cyber crime cells, who requested account freezes via email but often failed to respond to subsequent judicial inquiries or comply with Section 102 of the Cr.P.C. regarding reporting seizures to the Magistrate.

The court determined that the petitioner in the present case is entitled to similar relief to balance the interests of the investigation with the petitioner's right to operate his account.

By directing the disputed amount to be placed in a fixed deposit, the court ensured the funds remain secured for potential legal action while allowing the petitioner to regain access to the remaining account functions.

The Court directed the respondent bank to: (i) unfreeze the petitioner’s bank account; (ii) keep only the disputed amount as informed by the crime agencies in a fixed deposit; and (iii) allow the liquidation of said FD only upon orders from a competent Judicial Magistrate within three months.

If the police/investigative agency fails to proceed in accordance with the law (BNSS) within three months, the petitioner is permitted to withdraw the amount kept in the FD under intimation to the agency.