A bank account must be unfrozen while the disputed amount is secured in fixed deposit.

The petitioner’s savings bank account maintained with IDFC First Bank was frozen pursuant to information or directions received from cyber-crime authorities concerning an alleged disputed transaction of ₹1,200, stated to have been received from the petitioner’s friend, Ashish Memghiya.

The petitioner asserted that the account should be de-frozen, with a lien or restriction retained only over the disputed amount. He relied upon Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024, where the High Court directed that the disputed amount be placed in a fixed deposit while permitting operation of the bank account. The petitioner accordingly invoked Article 226 of the Constitution seeking de-freezing of his account.

Whether the petitioner’s entire bank account should remain frozen merely because a disputed cyber-crime-related transaction of ₹1,200 had been reported by the police or cyber-crime authorities.

Whether the disputed amount could instead be secured by placing it in a fixed deposit, while permitting the petitioner to operate the remaining account balance, subject to orders of the competent Judicial Magistrate.

The Court applied Article 226 of the Constitution, under which the High Court may issue appropriate writs and directions to prevent unjustified interference with a person’s property and banking operations.

It relied upon the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024, that where a bank account is frozen on the instructions of cyber-crime authorities, the disputed amount may be segregated and kept in a fixed deposit, while the account is otherwise permitted to operate.

The Court also referred to the requirement that investigating authorities proceed in accordance with Section 102 of the Code of Criminal Procedure, or the corresponding relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, and obtain appropriate orders from the competent Judicial Magistrate within the prescribed period.

The Court found that the petitioner’s case was covered mutatis mutandis by Malcolm Murayis.

Applying that precedent, it considered that freezing the entire account was unnecessary when the alleged disputed amount was specifically identifiable as ₹1,200. The Court therefore balanced the petitioner’s right to operate his account with the investigative authorities’ interest in preserving the disputed funds by directing the bank to place ₹1,200 in a fixed deposit.

Liquidation of that fixed deposit was made subject to an order of the competent Judicial Magistrate within three months, thereby preserving the amount for investigation while avoiding a blanket freeze of the petitioner’s account.

The fixed deposit could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months. If the police agency failed to proceed in accordance with the applicable law within that period, the amount could thereafter be permitted to be withdrawn by the petitioner under intimation to the concerned police agency.