Accounts must be unfrozen, while disputed cyber-fraud amounts remain in fixed deposits pending magistrate orders.

The petitioner maintained Bank Account No. 915010025855210 with Axis Bank.

The account was placed on hold/frozen pursuant to communications from cyber-crime/police authorities alleging that the account was linked to cyber fraud.

The petitioner invoked Article 226 of the Constitution seeking removal of the freeze and permitting operation of the account.

The Court found that the case was covered by its earlier decision in Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024.

Whether the petitioner’s bank account, frozen on the instructions of cyber-crime/police authorities, should remain wholly frozen in the absence of further action under the applicable law?

Whether the amount allegedly linked to cyber fraud should be segregated and preserved in a fixed deposit while the undisputed balance is released to the petitioner?

Whether the disputed amount should remain subject to orders of the competent Judicial Magistrate within a specified period?

The Court exercised its constitutional jurisdiction under Article 226 of the Constitution of India to regulate the freezing of the petitioner’s bank account.

It applied the principle in Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, that where an account is frozen pursuant to cyber-crime allegations, the disputed amount may be secured in a fixed deposit and dealt with only pursuant to orders of the competent Judicial Magistrate, while the remainder of the account should not ordinarily remain frozen.

The Court further required the police agency to proceed in accordance with Section 102 of the Cr.P.C. or the corresponding applicable provisions of the BNSS, including obtaining appropriate judicial orders within the prescribed period.

The Court held that the petitioner’s case was materially identical to Malcolm Murayis, and therefore applied that decision mutatis mutandis.

Balancing the investigative interest in preserving suspected proceeds of cyber fraud against the petitioner’s right to operate his bank account, the Court directed that only the identified disputed sum of Rs. 37,000 be placed in a fixed deposit.

That amount could be liquidated only after an order of the competent Judicial Magistrate within three months, thereby preserving the alleged proceeds while requiring the investigating agency to take timely legal steps.

Since no justification existed for continuing to freeze the entire account, the Court directed that the account be unfrozen and that the remaining balance, if any, be released from the freeze.

Axis Bank was directed to unfreeze the petitioner’s account, while retaining Rs. 37,000 in a fixed deposit.

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 law within that period, the amount could also be withdrawn by the petitioner after intimation to the police agency.

Any remaining amount in the account was directed to be defreezed.