Bank accounts frozen on cybercrime allegations must be unfrozen, while disputed sums remain in fixed deposits pending Magistrate’s orders.

The petitioner approached the High Court under Article 226 of the Constitution seeking removal of the freeze/lien imposed on his State Bank of India account bearing No. 44263622129.

The account had been frozen pursuant to information or directions received from crime/cyber-crime agencies concerning a disputed amount of Rs. 50,500 allegedly connected with a cyber offence.

The petitioner relied on the decision in Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024, where the Court had directed that the disputed amount be placed in fixed deposits while permitting operation of the remaining account.

The Court considered the earlier decision applicable to the petitioner’s case mutatis mutandis.

Whether the petitioner’s bank account, frozen pursuant to information supplied by crime/cyber-crime agencies, should be unfrozen when the disputed amount can be separately secured pending lawful action by the investigating agency?

Whether the disputed amount of Rs. 50,500 should be retained in a fixed deposit subject to orders of the competent Judicial Magistrate under the applicable law?

The Court exercised its jurisdiction under Article 226 of the Constitution of India to grant appropriate relief against the continued freezing of the bank account.

It relied on the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Ors., under which a bank account should not remain wholly frozen merely on the basis of a cyber-crime agency’s intimation where the allegedly tainted amount can be secured separately; the disputed amount may be placed in a fixed deposit and dealt with pursuant to orders of the competent Judicial Magistrate.

The Court also referred to the requirement that the police proceed in accordance with Section 102 of the Code of Criminal Procedure, 1973, or the corresponding provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, governing seizure/freezing of property during investigation and the requisite judicial oversight.

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

Balancing the investigative interest in preserving the allegedly linked funds against the petitioner’s right to operate his bank account, the Court directed the Bank to segregate the disputed amount of Rs. 50,500 by placing it in a fixed deposit rather than continuing a blanket freeze.

The fixed deposit was to be liquidated only pursuant to an order of the competent Judicial Magistrate within three months, thereby preserving the agency’s claim while requiring it to take lawful steps under the BNSS or other applicable law.

If the agency failed to obtain the requisite order within that period, the amount could also be withdrawn by the petitioner after intimation to the police agency.

The Court ordered that the petitioner’s bank account be unfrozen, while the disputed amount of Rs. 50,500 be kept in a fixed deposit.

The fixed deposit could be liquidated only upon an order of the competent Judicial Magistrate within three months, following lawful proceedings under the BNSS or other applicable law.

In the event of failure by the police agency to obtain such an order within the stipulated period, the petitioner could withdraw the amount after informing the police agency.