Bank accounts frozen on cybercrime alerts must be unfrozen, except disputed amounts secured in fixed deposits.

The petitioner, S R Trading, through its proprietor Ravindra Rajput, filed a petition under Article 226 of the Constitution seeking directions to unfreeze its current account bearing No. 030005007219 maintained with ICICI Bank, Ujjain, and to permit its operation.

The petitioner’s case was held to be squarely covered by the High Court’s earlier decision in Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024.

Applying the earlier decision, the Court noted that the disputed amount allegedly connected with the crime agencies was Rs. 1,634.40.

Whether the petitioner’s bank account, frozen pursuant to communications from cyber-crime/police agencies, should be permitted to operate subject to securing the disputed amount?

Whether the amount allegedly linked to cyber fraud should be retained in a fixed deposit pending appropriate orders by the competent Judicial Magistrate under the applicable law?

The Court exercised its jurisdiction under Article 226 of the Constitution to issue appropriate directions concerning the freezing of the petitioner’s bank account.

The Court relied on the principles laid down in Malcolm Murayis & Ors. v. State Bank of India & Ors., where it directed that the disputed amount be kept in a fixed deposit and be liquidated only pursuant to orders of the competent Judicial Magistrate within the prescribed period.

The earlier decision referred to compliance with Section 102 of the Code of Criminal Procedure, 1973, or any other applicable law, requiring the investigating agency to proceed lawfully and place the seizure/freezing before the competent Magistrate.

In the present case, the Court referred to the corresponding applicable provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS).

The Court found that the petitioner’s case was materially identical to the circumstances addressed in Malcolm Murayis and therefore applied that decision mutatis mutandis.

Balancing the investigative interest in preserving the allegedly tainted funds against the petitioner’s right to operate its business account, the Court directed that only Rs. 1,634.40—the amount claimed by the crime agencies—be placed in a fixed deposit.

The fixed deposit could be liquidated only upon an order of the competent Judicial Magistrate within three months, thereby requiring the police agency to proceed in accordance with the BNSS or other applicable law.

Since the alleged disputed amount was separately secured, continued freezing of the entire account was held unwarranted, and the remaining funds were required to be released.

The respondent bank was directed to keep Rs. 1,634.40 in a fixed deposit, subject to liquidation only pursuant to an order of the competent Judicial Magistrate within three months.

The petitioner’s bank account was ordered to be unfrozen, and any remaining amount in the account was directed to be released for the petitioner’s use.

If the police agency failed to obtain the requisite order within three months, the disputed amount could also be withdrawn by the petitioner under intimation to that agency.