Bank accounts must be unfrozen while disputed amounts remain secured 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 hold/freeze placed on his bank account bearing No. 115422010003500 and consequential reliefs.

The petitioner relied upon the High Court’s earlier decision in Malcolm Murayis & Others v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024.

In that decision, the Court had dealt with bank-account freezes imposed pursuant to communications from cyber-crime authorities alleging that certain amounts credited to the accounts were connected with cyber fraud.

Applying the principle of Malcolm Murayis, the Court considered the petitioner’s case to be covered mutatis mutandis and addressed the disputed amount by directing that it be kept in a fixed deposit pending orders of the competent Judicial Magistrate.

The Court exercised its writ jurisdiction under Article 226 of the Constitution of India to issue appropriate directions concerning the freezing of the petitioner’s bank account.

It applied the precedent in Malcolm Murayis & Others v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024, under which the bank was directed to preserve the disputed amount in a fixed deposit and permit its liquidation only upon orders of the competent Judicial Magistrate within three months.

The earlier decision referred to compliance with Section 102 of the Code of Criminal Procedure, 1973, or other applicable law, in relation to seizure/freezing of property during investigation.

In the present case, the Court applied the corresponding requirement under the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) or any other applicable law relied upon by the police agency.

The Court found that the petitioner’s case was materially analogous to Malcolm Murayis, where accounts had been frozen on the basis of communications from cyber-crime authorities without the disputed amount being finally adjudicated.

Rather than allowing the entire account to remain frozen, the Court adopted the balancing approach followed in that precedent: the amount identified by the crime agencies as disputed was to be segregated and preserved in a fixed deposit, while the account itself was to be unfrozen.

The fixed deposit could be liquidated only upon an order of the competent Judicial Magistrate within three months, thereby protecting the investigative interest while preventing an indefinite restraint on the petitioner’s banking operations.

If the police agency failed to obtain appropriate judicial orders within that period, the preserved amount could also be withdrawn by the petitioner after informing the agency.

The concerned bank was directed to keep the amount identified by the crime agencies as disputed in a fixed deposit, to be liquidated only pursuant to orders of the competent Judicial Magistrate within three months under the applicable law.

In the absence of such orders within that period, the fixed-deposit amount could be withdrawn by the petitioner after intimation to the police agency.

The petitioner’s Union Bank of India account bearing No. 115422010003500 was directed to be unfrozen.