Bank accounts must be unfrozen after disputed cyber-fraud funds are secured in fixed deposits.

The petitioner filed a writ petition under Article 226 of the Constitution seeking revocation of the freeze imposed on Bank Account No. 24550100009458 maintained with Bank of Baroda, Ravishankar Shukla Nagar Branch, Indore.

The petitioner relied upon the Madhya Pradesh High Court’s decision in Malcolm Murayis & Ors. v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024, concerning freezing of bank accounts pursuant to communications from cyber-crime agencies.

The Court found that a disputed amount of ₹18,303 had been identified by the crime agencies in relation to the petitioner’s account.

1. Whether the petitioner’s bank account, frozen pursuant to information or directions from crime-investigation agencies, should be unfrozen subject to safeguarding the disputed amount of ₹18,303.

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

The Court applied Article 226 of the Constitution, under which the High Court may issue appropriate writs and directions to prevent illegality and secure justice.

It followed the precedent in Malcolm Murayis & Ors. v. State Bank of India & Others, which held that where bank accounts are frozen on the request of cyber-crime agencies, the disputed amount may be segregated and placed in a fixed deposit, while the remaining account is unfrozen, subject to proceedings before the competent Judicial Magistrate under Section 102 of the Code of Criminal Procedure or the corresponding applicable provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023.

The Court further adopted the requirement that the competent Judicial Magistrate should pass appropriate orders within three months, failing which the fixed-deposit amount may be released to the account holder under intimation to the investigating agency.

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

Instead of permitting the continued freezing of the entire account, the Court balanced the petitioner’s right to operate the account against the investigating agency’s interest in preserving the allegedly tainted amount.

Accordingly, it directed that ₹18,303 be placed in a fixed deposit and retained until orders were passed by the competent Judicial Magistrate under the relevant provisions of the BNSS or other applicable law.

Since the disputed amount was thereby secured, there was no justification for continuing the freeze over the entire bank account.

The Bank was directed to unfreeze the petitioner’s bank account, while retaining ₹18,303 in a fixed deposit.

The fixed deposit could be liquidated only pursuant to orders of the competent Judicial Magistrate, to be passed within three months.

If the police agency failed to proceed in accordance with law within that period, the amount in the fixed deposit could be withdrawn by the petitioner under intimation to the concerned police agency.