Bank accounts cannot remain wholly frozen; only disputed cyber-fraud amounts may be secured pending Magistrate’s orders.

The petitioner invoked Article 226 of the Constitution seeking removal of the freeze/hold imposed on his Indian Bank account, Account No. 8207171189, on the ground that the account had been frozen without lawful authority or an order of a competent court.

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

In Malcolm Murayis , the Court had dealt with bank-account freezes initiated on communications from cyber-crime police authorities concerning suspected cyber-fraud transactions and had directed that the disputed amounts be preserved in fixed deposits while permitting operation of the remaining account balance.

The Court applied that decision mutatis mutandis to the present petition.

Whether the freeze imposed on the petitioner’s bank account could continue without the investigating agency proceeding in accordance with law and obtaining appropriate orders from the competent Judicial Magistrate

Whether the disputed amount allegedly connected with cyber-crime should be preserved separately while the remaining balance in the petitioner’s account is released from the freeze

The Court exercised its jurisdiction under Article 226 of the Constitution of India to review the continuation of the bank-account freeze.

It relied on the principle stated in Malcolm Murayis & Others v. State Bank of India & Others , that where an account is frozen at the direction of cyber-crime authorities, the disputed amount may be retained in a fixed deposit pending lawful action by the investigating agency and orders of the competent Judicial Magistrate, but the undisputed balance should not remain frozen indefinitely.

The Court referred to the requirement that the police proceed under Section 102 of the Code of Criminal Procedure, 1973, or the corresponding/relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, and obtain judicial orders within the prescribed period.

The Court considered the present matter governed by the factual and legal framework adopted in Malcolm Murayis .

Applying that precedent, it balanced the investigative interest in preserving funds allegedly linked to cyber-crime against the petitioner’s right to access the undisputed portion of his bank account.

Accordingly, only the disputed amount communicated by the crime or police agencies was required to be placed in a fixed deposit, with liquidation subject to an order of the competent Judicial Magistrate within three months.

If the police agency failed to take lawful action within that period, the fixed-deposit amount could be withdrawn by the petitioner under intimation to the agency.

The Court further held that the remaining amount in the account was not required to remain frozen.

Indian Bank was directed to unfreeze the petitioner’s account and to keep only the disputed amount, as identified by the police/crime agencies, in a fixed deposit.

The fixed deposit could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months; failing such lawful action, the petitioner could withdraw the amount after informing the police agency.

Any remaining balance in the account was directed to be released from the freeze.