Only disputed amounts may be frozen, permitting normal operation of the remaining bank balance.

The petitioner, Rangesh Garwal, filed a writ petition under Article 226 of the Constitution of India seeking a mandamus to unfreeze his Savings Bank Account at Indusind Bank.

The account was frozen due to intimations from cyber crime/police agencies regarding alleged cyber fraud.

The petitioner contended that while only Rs. 6,798/- was disputed, the entire account and associated digital banking services were restricted.

The petitioner argued that the investigating agencies had failed to comply with statutory requirements under Section 102 of the Cr.P.C.

The petitioner sought relief based on the precedent set in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024).

Whether a bank account frozen at the instance of investigating agencies can be unfrozen by segregating the disputed amount into a fixed deposit when procedural lapses occur under the governing criminal procedure laws.

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

It further relied on the precedent Malcolm Murayis & Ors. v. State Bank of India and Others, which established that if investigating agencies fail to respond to bank inquiries or follow the mandate of Section 102 Cr.P.C. regarding reporting to the Magistrate, the account holder is entitled to operate the account provided the disputed amount is secured in a fixed deposit.

The Court observed that the petitioner’s case was squarely covered by the decision in Malcolm Murayis.

In that precedent, the Court noted the "irresponsible approach" of cyber crime cells that freeze accounts without timely responses to bank communications or adherence to Section 102 Cr.P.C.

Applying this logic mutatis mutandis to the present facts, the Court reasoned that the petitioner should not be deprived of their entire account balance for a specific disputed amount.

The Court determined that justice is served by balancing the investigative needs of the police with the petitioner’s right to access their undisputed funds.

Consequently, it directed the bank to unfreeze the account while isolating the specific disputed sum.

The Court ordered the bank to keep the disputed amount, as identified by the investigating agencies, in a fixed deposit.

This deposit shall only be liquidated upon orders from a competent Judicial Magistrate within a three-month period.

Should the police agency fail to proceed in accordance with the BNSS or relevant law within those three months, the petitioner is permitted to withdraw the fixed deposit amount under intimation to the agency.