Bank accounts frozen over cybercrime allegations must be unfrozen except for disputed amounts secured in fixed deposits.

The petitioner invoked Article 226 of the Constitution seeking removal of the hold/freeze placed on his bank account maintained with Fino Payments Bank.

The High Court found that the matter was covered by its earlier decision in Malcolm Murayis & Ors. v. State Bank of India & Ors. , W.P. No. 1100 of 2024, decided on 26 April 2024.

Applying that precedent, the Court noted that an amount of ₹1,300 had been identified by the investigating/cyber-crime agencies as the disputed amount connected with the petitioner’s account.

The petition was therefore considered in the context of balancing the investigation with the petitioner’s right to operate the undisputed portion of the account.

Whether the petitioner’s bank account, which had been frozen pursuant to information or directions from cyber-crime/police authorities, should be unfrozen subject to securing the disputed amount of ₹1,300.

Whether the disputed amount should be retained in a fixed deposit pending appropriate orders by the competent Judicial Magistrate under the applicable law.

Whether the undisputed balance in the petitioner’s account was required to remain frozen.

The Court exercised its jurisdiction under Article 226 of the Constitution to regulate the freezing of the petitioner’s bank account.

It applied the principle stated in Malcolm Murayis & Ors. v. State Bank of India & Ors. , namely that the disputed amount identified by cyber-crime authorities may be secured in a fixed deposit, while the remaining amount may be made available to the account holder, subject to proceedings before the competent Judicial Magistrate.

The Court further directed that the fixed deposit could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months, in accordance with the relevant provisions of the BNSS or any other applicable law.

The underlying statutory principle, reflected in the earlier precedent, is that seizure or freezing of property connected with an alleged offence must be followed by the investigating agency in accordance with the procedure prescribed by law, including the applicable provisions governing seized property.

The Court treated the present case as materially identical to Malcolm Murayis and therefore applied that decision mutatis mutandis .

Instead of continuing an undifferentiated freeze over the entire account, it protected the investigative interest by directing that the specifically disputed sum of ₹1,300 be placed in a fixed deposit.

The fixed deposit was to remain subject to orders of the competent Judicial Magistrate, thereby preserving the possibility of recovery or other lawful action if required.

At the same time, because no basis was found for freezing the balance beyond the disputed amount, the Court directed that the rest of the funds be released from the freeze.

Fino Payments Bank was directed to unfreeze the petitioner’s account, while retaining ₹1,300 in a fixed deposit.

The fixed deposit could be liquidated only after an order of the competent Judicial Magistrate within three months; failing such action, the amount could also be permitted to be withdrawn by the petitioner after intimation to the police agency.

The undisputed balance, if any, was directed not to remain frozen and was to be defreezed.