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 a direction to Kotak Mahindra Bank to defreeze bank account No. 1046718744 and also sought costs and other appropriate reliefs.

The petitioner’s counsel relied on the Madhya Pradesh High Court’s decision in Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024, concerning bank-account freezes based on communications from cyber-crime police authorities.

Applying that precedent, the Court noted that an amount of Rs. 3,000 had been identified by the crime agencies as disputed and that the petitioner’s account had been frozen.

1. Whether the petitioner’s bank account, frozen pursuant to information or directions from cyber-crime authorities, should be permitted to operate subject to safeguarding the disputed amount.

2. Whether the disputed amount of Rs. 3,000 should be retained in a fixed deposit pending appropriate orders from the competent Judicial Magistrate under the applicable legal provisions.

The Court applied the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Ors., under which a bank should preserve the amount allegedly connected with cyber fraud in a fixed deposit, while permitting operation of the remaining account, and the fixed deposit should be liquidated only upon orders of the competent Judicial Magistrate within the prescribed period.

The underlying precedent relied on Section 102 of the Code of Criminal Procedure, or the corresponding applicable legal framework, requiring the investigating agency to proceed according to law when seizing or restricting property connected with an alleged offence.

In the present case, the Court referred to the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 (“BNSS”), or any other applicable law.

The precedent was applied mutatis mutandis to the petitioner’s case.

The Court found the petitioner’s case covered by the earlier decision in Malcolm Murayis.

Balancing the investigating agency’s interest in preserving allegedly tainted funds against the petitioner’s right to operate the account, the Court directed that only the disputed sum of Rs. 3,000 be placed in a fixed deposit.

This amount could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months, thereby requiring the police agency to take appropriate legal steps within that period.

Since the disputed amount was separately secured, the remaining bank account was directed to be unfrozen.

Kotak Mahindra Bank was directed to unfreeze the petitioner’s bank account while keeping Rs. 3,000 in a fixed deposit.

The fixed deposit could be liquidated only after an order of the competent Judicial Magistrate within three months under the applicable provisions of the BNSS or other law.

If no such order was passed within that period, the amount in the fixed deposit could also be permitted to be withdrawn by the petitioner, subject to intimation to the police agency.