Police must follow legal procedures to keep disputed bank funds frozen or accounts will be defreezed.

The petitioner, Shubham Karode, challenged the freezing of his bank account (State Bank of India Account No. 38230659991) by bank authorities

The freeze was initiated based on intimations from various cyber crime cells alleging involvement in cyber fraud related to crypto-currency trading

The petitioner contended that no prior notice was served, no involvement in offenses existed, and investigating agencies failed to comply with mandatory procedural requirements under the Code of Criminal Procedure/BNSS

1. Whether the unilateral freezing of the petitioner's bank account by the Respondent Bank, based solely on police intimations without following statutory procedure, is legally sustainable.

2. Whether the petitioner is entitled to operate the bank account or utilize funds not directly linked to the alleged fraudulent transactions.

Section 102 of the Code of Criminal Procedure, 1973 (now relevant provisions of the Bharatiya Nagarik Suraksha Sanhita/BNSS), which mandates that any seizure of property/bank accounts must be reported to the concerned Magistrate

The doctrine established in Malcolm Murayis & Ors. v. State Bank of India and Others, W.P. No. 1100 of 2024, which established that while disputed amounts can be secured, the entire account cannot be indefinitely frozen without legal compliance by investigating agencies

The Court observed that the case was squarely covered by the Malcolm Murayis precedent

It noted a pattern where cyber crime cells instruct banks to freeze accounts but fail to respond to judicial inquiries or follow the procedural mandate of Section 102 Cr.P.C. regarding reporting seizures to a Magistrate

The Court reasoned that the petitioner’s right to operate his account must be balanced against the investigation; therefore, only the specific "disputed amount" flagged by agencies should be secured, rather than the entire account balance

The Court emphasized that the "poor functioning and irresponsible approach" of cyber cells cannot justify the indefinite and total freezing of a citizen’s financial resources

These FDs are to be liquidated only upon orders from a competent Judicial Magistrate within three months, failing which the petitioner may withdraw the amounts under intimation to the police; crucially, the rest of the balance in the account must be defreezed immediately for the petitioner's use