Respondent banks must unfreeze accounts and secure only the disputed cyber-fraud amounts in fixed deposits.

The petitioner, Sohail Uddin, filed a writ petition under Article 226 of the Constitution of India seeking to unfreeze his HDFC bank account and remove a lien of ₹86,949.42

The petitioner’s account had been frozen following intimations from cyber crime cells regarding alleged involvement in cyber fraud

The petitioner contended that he is a lawful trader who received no prior notice from the police and that the investigating agencies failed to comply with the mandatory reporting requirements to the Magistrate

The petitioner argued that his case is squarely covered by the precedent set in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024)

1. Whether the respondent bank can indefinitely freeze a petitioner's account at the behest of cyber crime agencies without adherence to statutory procedural safeguards

2. Whether the petitioner is entitled to operate the frozen account subject to securing the specific disputed amount allegedly linked to the crime

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

The Court strictly followed the precedent established in Malcolm Murayis & Ors. v. State Bank of India and Others, which holds that while banks are bound by police instructions to freeze accounts, such freezes cannot impede the entire account if only a specific portion is disputed, especially where investigating agencies show a lack of diligence in responding to court proceedings

The Court observed that the cyber crime cells often demonstrate a "poor functioning and irresponsible approach" by instructing banks to freeze accounts but failing to respond to legal inquiries or follow-ups

It determined that the petitioner’s case was identical to the Malcolm Murayis precedent and applied the same logic mutatis mutandis

The Court reasoned that the interests of justice are served by balancing the investigative needs of the police with the petitioner’s right to access his funds. Instead of a total freeze, the court mandated that only the specific "disputed amount" be secured in a fixed deposit, allowing the petitioner access to the remainder of the account funds, contingent upon the police agency proceeding within the legal framework of the BNSS within a three-month window

The bank was directed to place the disputed amount (₹86,949.42) into a fixed deposit (FD), which may only be liquidated upon orders from a competent Judicial Magistrate within three months. If the police agency fails to proceed in accordance with the law (BNSS) within that period, the petitioner is permitted to withdraw the FD amount under intimation to the agency