Restrict bank account freezes to disputed amounts held in fixed deposits; release balance funds to account holders.

The petitioner, a proprietary firm, filed a writ petition under Article 226 of the Constitution of India seeking directions against DCB Bank to remove a freeze/hold placed on its bank account (No. 16321900000374) following a cybercrime complaint.

The petitioner argued that the matter was squarely covered by the precedent in Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), wherein accounts were frozen by banks solely based on intimations from cyber police cells without the authorities following statutory procedures or informing the Magistrate.

Whether the petitioner’s bank account should be unfrozen in light of the guidelines established in Malcolm Murayis & Ors. v. State Bank of India.

Whether the investigating agencies and banks followed the mandatory procedural requirements under the law before freezing the account.

The Court applied the principles established in Malcolm Murayis & Ors. v. State Bank of India and Others.

It relied on the procedural mandates of Section 102 of the Cr.P.C. (and the corresponding provisions of the Bhartiya Nagarik Suraksha Sanhita/BNSS), which require investigating agencies to report seizures of property/accounts to the concerned Magistrate.

The Court also emphasized the principle of proportionality, balancing the needs of a criminal investigation with the account holder's right to operate their bank account.

The Court observed that the petitioner’s case was identical to the Malcolm Murayis case, where accounts were frozen based on cyber cell instructions without subsequent legal follow-up or compliance with Section 102 Cr.P.C.

The Court found that the "poor functioning and irresponsible approach" of cyber crime cells—failing to respond to court notices or proceed legally after freezing accounts—necessitated judicial intervention.

By applying the precedent mutatis mutandis, the Court reasoned that the petitioner should not be entirely restricted from their funds; instead, only the specific "disputed amount" should be secured in a fixed deposit (FD) while the rest of the account is unfrozen.

This ensures that the investigation is not prejudiced while allowing the petitioner to continue business operations.

The bank was ordered to keep only the disputed amount in a fixed deposit, which shall be liquidated only upon orders from a competent Judicial Magistrate within three months.

The Court further held that if the police agency fails to proceed in accordance with the law (BNSS or other relevant statutes) within said three months, the petitioner shall be permitted to withdraw the amount kept in the FD under intimation to the agency.