Bank accounts must be unfrozen while disputed cyber-fraud amounts remain secured in fixed deposits pending magistrate orders.

The petitioner invoked Article 226 of the Constitution seeking removal of the freeze/hold imposed on its Bandhan Bank Account No. 50220026057872, alleging that the account had been frozen without lawful authority or order.

The petitioner relied on the Madhya Pradesh 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, concerning bank-account freezes based on communications from cyber-crime police authorities.

The Court found that the disputed amount connected with cyber-crime complaints was Rs. 1,09,486.03.

Whether the petitioner’s bank account, frozen pursuant to information or directions from cyber-crime authorities, should be unfrozen in the absence of a final order from a competent Judicial Magistrate.

Whether the disputed amount of Rs. 1,09,486.03 should remain protected by being placed in a fixed deposit pending proceedings by the police agency under the applicable law.

The Court exercised its jurisdiction under Article 226 of the Constitution to regulate an allegedly unlawful or continuing freeze of a bank account.

It applied the principle laid down in Malcolm Murayis & Others v. State Bank of India & Others, under which the disputed amount in a bank account may be segregated and placed in a fixed deposit, while the remainder of the account is unfrozen, subject to the investigating agency obtaining appropriate orders from the competent Judicial Magistrate.

The earlier decision relied on Section 102 of the Code of Criminal Procedure, 1973, requiring seizure of property connected with an offence to be dealt with in accordance with law and reported to the competent Magistrate.

In the present case, the Court referred to compliance with the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, or any other applicable law.

The Court held that the principle in Malcolm Murayis applied mutatis mutandis because the present case similarly involved a bank-account freeze based on information supplied by crime agencies.

Rather than continuing a blanket freeze, the Court balanced the petitioner’s right to operate its account against the need to preserve the amount allegedly connected with cyber-crime.

It therefore directed that only Rs. 1,09,486.03 be placed in a fixed deposit and retained until the competent Judicial Magistrate passed appropriate orders within three months under the applicable law.

Since the disputed amount would remain protected, the entire bank account need not remain frozen.

The respondent bank was directed to unfreeze the petitioner’s bank account while placing Rs. 1,09,486.03, being the disputed amount, in a fixed deposit.

The fixed deposit 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 the applicable law within that period, the amount could also be released to the petitioner, under intimation to the police agency.