Bank accounts must be unfrozen except disputed funds retained in fixed deposit pending Magistrate’s orders.

The petitioner’s savings bank account maintained with Punjab National Bank, Manorama Ganj Branch, Indore, was frozen pursuant to information or instructions received from cyber-crime authorities in relation to an alleged disputed transaction of Rs. 1,244/-.

The petitioner invoked Article 226 of the Constitution seeking unfreezing of the account, restoration of banking and digital-payment facilities, and retention of only the disputed amount in a fixed deposit or lien account pending orders of the competent Judicial Magistrate.

The petitioner relied upon the High Court’s earlier decision in Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024, concerning freezing of bank accounts on the request of cyber-crime authorities.

1. Whether the petitioner’s entire bank account could remain frozen when the cyber-crime authorities had identified only Rs. 1,244/- as the disputed amount?

2. Whether the disputed amount should be segregated and retained in a fixed deposit pending proceedings before the competent Judicial Magistrate, while permitting operation of the remaining account balance?

3. Whether the petitioner was entitled to restoration of the account and associated banking facilities, including digital-payment services, subject only to restraint over the disputed amount?

The Court applied Article 226 of the Constitution, under which the High Court may issue appropriate writs and directions to protect legal rights and prevent arbitrary administrative action.

It relied upon Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024, which held that where a bank account is frozen on the instructions of cyber-crime authorities, only the amount linked to the alleged cyber fraud should be retained in a fixed deposit and should be liquidated only pursuant to an order of the competent Judicial Magistrate within the prescribed period.

The Court further proceeded on the principle that investigating authorities must act in accordance with the applicable law concerning seizure or freezing of property, earlier referred to under Section 102 of the CrPC and, in the present case, the relevant provisions of the BNSS.

The Court found that the petitioner’s case was squarely covered by Malcolm Murayis and applied that decision mutatis mutandis.

Since the alleged disputed amount was limited to Rs. 1,244/-, continuation of a complete freeze over the petitioner’s account was held to be unwarranted.

Consistent with the earlier precedent, the Court directed that only Rs. 1,244/- be retained in a fixed deposit, subject to liquidation upon orders of the competent Judicial Magistrate.

The investigating agency was expected to initiate or complete the requisite proceedings within three months; failing that, the petitioner could seek withdrawal of the fixed-deposit amount under intimation to the police agency.

The balance amount in the account was not required to remain frozen and was therefore directed to be released for the petitioner’s use.

Punjab National Bank was directed to unfreeze the petitioner’s bank account and permit its normal operation.

Only the alleged disputed amount of Rs. 1,244/- was to be kept in a fixed deposit, with liquidation subject to orders of the competent Judicial Magistrate within three months.

If the police agency failed to proceed in accordance with law within that period, the petitioner could withdraw the retained amount under intimation to the agency.

The remaining balance, and consequently the ordinary banking facilities associated with the account, were directed to be restored.