Bank accounts frozen over alleged cyber fraud must be unfrozen, while disputed sums remain secured in fixed deposits.

The petitioner invoked Article 226 of the Constitution seeking removal of the hold/freeze placed on his bank account and consequential relief.

His counsel contended that the matter was covered by Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024.

In Malcolm Murayis, the Court had dealt with bank-account freezes imposed on the communications of cyber-crime police authorities and directed that the disputed amounts be retained in fixed deposits pending orders of the competent Magistrate.

The Court found the petitioner’s case to be materially similar and considered the earlier decision applicable mutatis mutandis.

The Court exercised its jurisdiction under Article 226 of the Constitution to regulate the continuance of a bank-account freeze arising from a cyber-crime investigation.

It relied on the precedent in Malcolm Murayis, under which the bank was directed to segregate the amount identified by cyber-crime agencies by placing it in a fixed deposit, with liquidation subject to an order of the competent Judicial Magistrate within three months.

The investigative agency was 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, and other governing law.

In the absence of timely lawful action by the investigating agency, the secured amount could be released to the petitioner under intimation to that agency.

The Court determined that the petitioner’s case was squarely covered by Malcolm Murayis and therefore applied its safeguards without undertaking a separate adjudication of the alleged cyber-crime transactions.

Balancing the investigative interest in preserving allegedly tainted funds against the petitioner’s right to operate his account, the Court directed that only the disputed amount communicated by the crime agencies be retained in a fixed deposit, rather than allowing an unrestricted freeze of the account.

The continuation of the restraint was made conditional upon the police obtaining appropriate orders from the competent Judicial Magistrate within three months under the applicable BNSS provisions or other law; failing such action, the amount could be withdrawn by the petitioner after intimation to the police agency.

The respondents/bank were directed to place the disputed amount identified by the crime agencies in a fixed deposit, to be liquidated only pursuant to orders of the competent Judicial Magistrate within three months.

If the police agency failed to proceed lawfully within that period, the fixed-deposit amount could be released to the petitioner under intimation to the agency.

The petitioner’s Axis Bank account was directed to be unfrozen.