Bank accounts may be unfrozen while disputed cyber-fraud amounts remain in fixed deposits pending Magistrate’s orders.

The petitioner approached the Madhya Pradesh High Court under Article 226 of the Constitution seeking removal of the freeze/hold imposed on his State Bank of India account bearing No. 35817097494, allegedly without lawful authority or a judicial order.

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 Court had issued directions concerning bank-account freezes based on communications from cyber-crime agencies.

Applying that precedent, the Court recorded that an amount of Rs.31,000/- had been identified by crime agencies as disputed and directed that the amount be secured separately while the account itself was unfrozen.

Whether the freeze imposed on the petitioner’s bank account pursuant to communications from cyber-crime/police agencies should continue in its entirety, or whether the account should be unfrozen subject to securing the disputed amount of Rs.31,000/-.

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

The Court applied Article 226 of the Constitution in relation to the legality of the restraint imposed on the petitioner’s bank account.

It relied on the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Ors., that where a bank account is frozen on the request of cyber-crime investigating agencies, the disputed amount may be kept in a fixed deposit, while the account may otherwise be permitted to operate, subject to lawful proceedings before the competent Judicial Magistrate.

The earlier decision referred to compliance with Section 102 of the Code of Criminal Procedure, 1973, concerning seizure/freezing of property and reporting to the competent Magistrate; the present Court directed the police agency to proceed under the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, or any other applicable law.

The Court found that the present case was covered mutatis mutandis by Malcolm Murayis.

Balancing the investigating agency’s interest in preserving the allegedly tainted amount against the petitioner’s right to operate his bank account, the Court treated Rs.31,000/- as the disputed amount requiring protection, rather than continuing a blanket freeze over the entire account.

Accordingly, the bank was directed to place only that amount in a fixed deposit, subject to liquidation upon orders of the competent Judicial Magistrate within three months.

The direction was intended to ensure that the police agency pursued the required legal procedure within a defined period; otherwise, the petitioner could seek withdrawal of the fixed-deposit amount after intimating the police agency.

The bank was directed to keep Rs.31,000/-—the amount reported by the crime agencies—in a fixed deposit, which could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months.

If the police agency failed to proceed in accordance with the applicable law within that period, the amount could also be released to the petitioner upon intimation to the agency.

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