Police must follow statutory procedures for account freezing or funds will be released to the petitioner.

The petitioner, Dharmendra, filed a writ petition under Article 226 of the Constitution of India challenging the action of the respondents in freezing his HDFC Bank savings account.

The petitioner claimed that his case was identical to a previously decided matter involving bank accounts frozen by cyber cells and police stations across various states on allegations of cyber fraud.

In the referenced precedent (Malcolm Murayis), it was noted that accounts were often frozen without prior notice to the account holders or compliance with statutory reporting requirements to the Magistrate.

1. Whether the action of freezing the petitioner's bank account without following statutory procedure is sustainable in law.

2. Whether the petitioner is entitled to relief consistent with the directions issued in Malcolm Murayis & Ors. Vs. State Bank of India and Others.

The Court primarily applied the principles governing the seizure of property by police officers under Section 102 of the Code of Criminal Procedure, 1973 (Cr.P.C.), now corresponding to the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS).

The precedent set in Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No. 1100/2024), which establishes that while investigative agencies can freeze accounts linked to crime, they must proceed in accordance with law and report such seizures to the competent Magistrate; failing which, account holders must be allowed access to their funds.

The Court found that the petitioner’s situation was squarely covered by the Malcolm Murayis decision, making the same principles applicable mutatis mutandis.

It observed that in such cyber-fraud investigations, police authorities frequently instruct banks to freeze accounts but often fail to respond to court inquiries or follow the mandatory procedural safeguards under Section 102 of the Cr.P.C. (or the BNSS).

Consequently, the Court reasoned that the petitioner’s right to operate his account should be restored, provided that the specific "disputed amount" flagged by the agencies is secured in a fixed deposit to protect the interests of the investigation for a limited period.

The bank is ordered to keep the disputed amount in a fixed deposit (FD), which can only be liquidated upon orders from a competent Judicial Magistrate. If the police/investigative agency fails to take appropriate legal action under the BNSS or relevant law within three months, the petitioner is permitted to withdraw the amount kept in the FD under intimation to the agency.