Bank accounts frozen on cybercrime complaints must be unfrozen, with disputed sums secured in fixed deposits pending Magistrate’s orders.

The petitioner challenged the freezing of his HDFC Bank account maintained at the Manasa Branch, District Neemuch, and sought release of the undisputed balance and permission to operate the account.

He also sought disclosure of the complaint, FIR, or investigation allegedly forming the basis of the freeze.

The petitioner relied on Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024, in which the Madhya Pradesh High Court had directed that the disputed amount be kept in fixed deposits and that the bank account otherwise be unfrozen.

In the present case, the crime agencies had identified a disputed amount of Rs. 487.62 in the petitioner’s account.

1. Whether the petitioner’s bank account, frozen pursuant to information or directions from crime agencies, should be permitted to operate subject to safeguarding the disputed amount.

2. Whether the disputed amount of Rs. 487.62 should be retained in a fixed deposit pending orders of the competent Judicial Magistrate under the applicable law.

3. Whether the principles laid down in Malcolm Murayis were applicable mutatis mutandis to the petitioner’s case.

The Court applied the principle formulated in Malcolm Murayis & Ors. v. State Bank of India & Ors. that, where a bank account is frozen on the basis of alleged cyber-crime-linked transactions, the disputed amount may be segregated and kept in a fixed deposit, while the remaining account is unfrozen; liquidation of the fixed deposit is subject to orders of the competent Judicial Magistrate within the prescribed period.

The investigating agency is expected to proceed in accordance with Section 102 of the Code of Criminal Procedure or the corresponding applicable provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 (“BNSS”).

If the police agency fails to obtain appropriate judicial orders within three months, the amount kept in fixed deposit may be released to the petitioner under intimation to that agency.

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

Balancing the alleged cyber-crime claim against the petitioner’s right to operate the undisputed portion of his account, the Court directed the bank to segregate Rs. 487.62 and place it in a fixed deposit rather than continue freezing the entire account.

The fixed deposit was to remain subject to orders of the competent Judicial Magistrate, thereby preserving the investigative agency’s claim while preventing an excessive restraint on the petitioner’s banking operations.

HDFC Bank was directed to keep the disputed amount of Rs. 487.62 in a fixed deposit, to be liquidated only pursuant to an order of the competent Judicial Magistrate passed within three months.

If the police agency failed to proceed in accordance with the applicable provisions of the BNSS or other relevant law within that period, the amount could also be released to the petitioner under intimation to the police agency.

The petitioner’s bank account was directed to be unfrozen.