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

The petitioner invoked Article 226 of the Constitution seeking removal of the freeze/hold placed on his ICICI Bank account, Account No. 657001700960, contending that it had been frozen without lawful authority or judicial order.

The petitioner relied upon Malcolm Murayis & Ors. v. State Bank of India & Others , W.P. No. 1100 of 2024, decided on 26 April 2024, where the High Court had directed that disputed amounts identified by cyber-crime agencies be kept in fixed deposits and that the bank accounts otherwise be permitted to operate.

The Court found the earlier decision applicable mutatis mutandis to the present case.

The amount allegedly linked to the cyber-crime investigation in the petitioner’s account was Rs. 4,500.

Whether the petitioner’s bank account, frozen pursuant to information or instructions from crime-investigating agencies, should remain wholly frozen in the absence of further lawful proceedings before the competent Magistrate.

Whether the disputed amount of Rs. 4,500 should be segregated and retained in a fixed deposit, while the remaining bank account is unfrozen, subject to proceedings under the applicable criminal procedure law.

The Court exercised its jurisdiction under Article 226 of the Constitution to examine the legality of the freeze imposed on the petitioner’s bank account.

It applied the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Others , W.P. No. 1100 of 2024, decided on 26 April 2024, that where a bank account is frozen on the instructions of cyber-crime or investigating agencies, the disputed amount may be kept in a fixed deposit, but the account should not remain wholly frozen indefinitely.

The disputed amount may be liquidated only pursuant to an order of the competent Judicial Magistrate, and the investigating agency is expected to proceed in accordance with Section 102 of the CrPC or the corresponding applicable provisions of the BNSS or other law.

The Court considered the petitioner’s case to be covered by the principles in Malcolm Murayis and therefore applied that decision mutatis mutandis .

Balancing the investigative interest in preserving the allegedly tainted amount against the petitioner’s right to operate his bank account, the Court directed that only Rs. 4,500 be secured in a fixed deposit.

That amount could be released only after an order by the competent Judicial Magistrate within three months, thereby requiring the police agency to initiate or pursue the legally prescribed procedure.

Since the disputed amount was separately protected, there was no justification for continuing the complete freeze of the petitioner’s account.

ICICI Bank was directed to keep Rs. 4,500, being the amount identified by the crime agencies, in a fixed deposit.

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

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