A bank account shall be unfrozen while disputed cyber-fraud funds remain secured in fixed deposit pending Magistrate’s orders.

The petitioner’s savings bank account maintained with the State Bank of India, MIG Branch, Indore, was subjected to a debit freeze/lien in connection with an alleged cyber-crime transaction involving ₹50,000.

The petitioner sought removal of the freeze, restoration of banking and digital payment facilities, and, alternatively, placement of the disputed amount in a separate fixed deposit while permitting operation of the remaining balance.

The petitioner relied on Malcolm Murayis & Ors. v. State Bank of India & Others, W.P. Nos. 1100 and 1185 of 2024, decided on 26 April 2024, where similar directions had been issued regarding bank accounts frozen on instructions of cyber-crime authorities.

The Court held that the earlier decision applied to the present case mutatis mutandis.

Whether the petitioner’s bank account, frozen pursuant to information or instructions received from cyber-crime authorities, should be unfrozen subject to safeguarding the alleged disputed amount of ₹50,000.

Whether the disputed amount should be retained in a fixed deposit until orders are passed by the competent Judicial Magistrate in proceedings undertaken under the applicable law.

The Court applied the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Others that where a bank account is frozen on the instructions of investigating or cyber-crime authorities, the bank may be directed to retain only the disputed amount in a fixed deposit, while permitting operation of the remaining account balance; liquidation of the fixed deposit is subject to orders of the competent Judicial Magistrate.

The earlier decision emphasised that investigating agencies are expected to act in accordance with Section 102 of the Code of Criminal Procedure, or the corresponding applicable provisions of the Bharatiya Nagarik Suraksha Sanhita, and to place the seizure/freezing action before the competent Magistrate.

If the investigating agency fails to obtain appropriate judicial orders within the prescribed period, the fixed-deposit amount may be released to the account holder after intimation to the concerned police or cyber-crime agency.

The Court found the present case materially similar to Malcolm Murayis, as the petitioner’s account had been frozen in relation to an alleged cyber-crime claim of ₹50,000 and the petitioner sought limited protection of the disputed amount rather than unrestricted release of that sum.

Applying the earlier precedent, the Court balanced the interests of the investigation and the petitioner by directing that ₹50,000 be secured in a fixed deposit, rather than permitting the entire account to remain frozen.

The Court further required the police agency to proceed in accordance with the applicable criminal-procedure provisions and obtain orders from the competent Judicial Magistrate within three months; otherwise, the amount could be withdrawn by the petitioner after informing the police agency.

The State Bank of India was directed to keep the disputed amount of ₹50,000 in a fixed deposit, which could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months.

In the absence of such an order within that period, the petitioner could withdraw the fixed-deposit amount after intimating the concerned police agency.

The petitioner’s bank account was otherwise directed to be unfrozen, thereby permitting normal operation of the account and associated banking facilities.