Bank accounts must be unfrozen except disputed sums preserved in fixed deposits pending Magistrate’s orders.

The petitioner filed a writ petition under Article 226 of the Constitution seeking removal of the hold/freeze imposed on his Bank of Maharashtra account maintained at the Kanadia Road Branch, Account No. 60537653146.

The account had been frozen pursuant to information or directions received from crime/cyber-crime agencies in relation to an alleged cyber transaction. The amount identified as disputed was Rs. 2,100.

The petitioner relied on the decision in Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. Nos. 1100 and 1185 of 2024, decided on 26 April 2024, where the Court had directed that the disputed amount be placed in fixed deposits while permitting operation of the remaining account.

Whether the petitioner’s bank account could continue to remain wholly frozen on the basis of a cyber-crime agency’s communication when only Rs. 2,100 was identified as the disputed amount?

Whether the disputed amount should be segregated in a fixed deposit pending orders of the competent Judicial Magistrate, while the remaining balance and normal operation of the account are restored?

The Court applied Article 226 of the Constitution, recognising its power to issue appropriate directions where an arbitrary or legally unsustainable bank-account freeze is alleged.

It relied on the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024, that where a bank account is frozen at the instance of investigating agencies in connection with alleged cyber fraud, the identified disputed amount may be retained in a fixed deposit and liquidated only pursuant to an order of the competent Judicial Magistrate, while the remainder of the account should not remain frozen.

The Court further expected the police agency to proceed in accordance with the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 (“BNSS”), or any other applicable law, concerning seizure or restraint of the amount.

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

Since only Rs. 2,100 had been identified by the crime agencies as disputed, a complete freeze of the petitioner’s bank account was considered unnecessary.

Following the earlier precedent, the Court balanced the interests of the investigation and the petitioner by directing that Rs. 2,100 be kept in a fixed deposit, subject to liquidation only after an order of the competent Judicial Magistrate within three months.

At the same time, the account was to be unfrozen and all other funds were not required to remain blocked.

Bank of Maharashtra was directed to keep the disputed amount of Rs. 2,100 in a fixed deposit, which could be liquidated only after an order of the competent Judicial Magistrate within three months.

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

The petitioner’s bank account was directed to be unfrozen, and the remaining amount, if any, was ordered to be released from the freeze.