Bank accounts must be unfrozen while disputed cyber-fraud amounts remain 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, or lien imposed on his Indian Bank account bearing Account No. 50408485286 pursuant to a complaint made to the concerned police authorities.

The petitioner contended that his case was covered by Malcolm Murayis & Others v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024. In Malcolm Murayis, the Court had directed that the disputed amount identified by cyber-crime agencies be kept in fixed deposits, subject to orders of the competent Judicial Magistrate, while permitting operation of the remainder of the bank account. The Court considered that precedent applicable mutatis mutandis to the present case.

Whether the petitioner’s bank account, which had been frozen on the basis of information or a complaint from police/cyber-crime authorities, should be permitted to operate subject to safeguarding the disputed amount.

Whether the disputed amount should be retained in a fixed deposit pending appropriate orders by the competent Judicial Magistrate under the applicable provisions of the BNSS or other law.

The Court applied Article 226 of the Constitution, permitting judicial review and issuance of appropriate directions where a bank account has been frozen pursuant to police action.

It relied on the principle laid down in Malcolm Murayis & Others v. State Bank of India & Others that the disputed amount identified by cyber-crime or investigating agencies may be segregated and placed in a fixed deposit, while the bank account is otherwise unfrozen; such fixed deposit may be liquidated only upon orders of the competent Judicial Magistrate within the prescribed period.

The Court further directed the police agency to proceed in accordance with the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, or any other applicable law, concerning seizure or freezing of the amount.

The earlier precedent referred to compliance with Section 102 of the Code of Criminal Procedure, 1973, regarding seizure of property and intimation to the Magistrate.

The Court found that the petitioner’s case was materially covered by the directions issued in Malcolm Murayis and therefore applied that decision mutatis mutandis.

Balancing the petitioner’s right to operate his bank account against the need to preserve any amount potentially connected with cybercrime, the Court adopted the same protective mechanism: the disputed amount communicated by the police or crime agencies would remain secured in a fixed deposit, whereas the account itself would be unfrozen.

The investigating agency was required to obtain appropriate orders from the competent Judicial Magistrate within three months under the applicable statutory framework; otherwise, the fixed-deposit amount could be released to the petitioner after intimation to the police agency.

The respondent Bank was directed to unfreeze the petitioner’s bank account, while keeping the disputed amount identified by the crime agencies in a fixed deposit.

The fixed deposit could be liquidated only pursuant to orders of the competent Judicial Magistrate obtained within three months. In default of such orders, the amount could be withdrawn by the petitioner after informing the police agency.