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

The petitioner approached the High Court under Article 226 of the Constitution seeking removal of the hold/freeze on her bank account maintained with the State Bank of India.

Her counsel contended that the case was covered by Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024.

In Malcolm Murayis, the Court had dealt with bank accounts frozen at the request of cyber-crime agencies on allegations that certain amounts were linked to cyber fraud, and had directed that the disputed amounts be kept in fixed deposits pending appropriate orders by the competent Magistrate.

Applying that precedent, the Court noted that an amount of Rs. 14,692/- had been identified as disputed in the petitioner’s account.

Whether the petitioner’s bank account, frozen pursuant to information or directions from cyber-crime/police agencies, should be unfrozen in the circumstances of the case.

Whether the disputed amount of Rs. 14,692/- should remain protected in a fixed deposit pending orders of the competent Judicial Magistrate under the applicable law.

Whether the principles laid down in Malcolm Murayis & Ors. v. State Bank of India & Ors. applied mutatis mutandis to the petitioner’s case.

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 unlawful or arbitrary interference with a person’s property or banking operations.

It relied principally on Malcolm Murayis & Ors. v. State Bank of India & Ors., which directed that the amount allegedly connected with cyber fraud be segregated and kept in a fixed deposit, to be liquidated only upon orders of the competent Judicial Magistrate within the prescribed period.

The Court also proceeded on the principle that investigative agencies must act in accordance with the applicable statutory procedure governing seizure or attachment of property linked with an offence, referred to in the precedent as Section 102 of the Cr.P.C. and, in the present case, the relevant provisions of the BNSS or other applicable law.

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

Accordingly, instead of continuing a complete freeze over the account, the Court protected only the amount specifically identified by the police/cyber-crime agencies as disputed—Rs. 14,692/-—by directing the bank to place it in a fixed deposit.

The fixed deposit could be liquidated only after an order from the competent Judicial Magistrate within three months, thereby preserving the evidentiary or restitutionary interests of the investigation while avoiding an indefinite restraint on the petitioner’s entire bank account.

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

The respondent bank was directed to unfreeze the petitioner’s bank account, while keeping the disputed amount of Rs. 14,692/- in a fixed deposit.

The fixed deposit could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months.

In the event of failure by the police agency to proceed in accordance with the applicable law within that period, the petitioner would be permitted to withdraw the amount after informing the police agency.

No separate substantive relief beyond these directions was granted.