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

The petitioner invoked Article 226 of the Constitution seeking removal of the hold/freeze imposed on State Bank of India Account No. 33499204977, maintained with IFSC Code SBIN0030085.

The petitioner’s counsel submitted that the case was covered by Malcolm Murayis & Ors. v. State Bank of India & Others, W.P. Nos. 1100 and 1185 of 2024, decided on 26 April 2024.

In Malcolm Murayis, the Court had dealt with bank-account freezes based on communications from cyber-crime police authorities concerning alleged cyber fraud and directed that the disputed amounts be kept in fixed deposits pending orders of the competent Judicial Magistrate.

On the basis of that precedent, the Court noted that an amount of Rs. 40,200 had been identified by the crime agencies in the petitioner’s account.

1. Whether the freeze imposed on the petitioner’s bank account pursuant to communications from crime/cyber-crime agencies should be removed, subject to safeguarding the disputed amount.

2. Whether the disputed amount of Rs. 40,200 should be retained in a fixed deposit pending orders of the competent Judicial Magistrate under the applicable legal provisions.

3. Whether the principles laid down in Malcolm Murayis were applicable mutatis mutandis to the present case.

The Court exercised its jurisdiction under Article 226 of the Constitution to regulate the freezing of the petitioner’s bank account.

It applied the principle in Malcolm Murayis & Ors. v. State Bank of India & Others that where a bank account is frozen on the instructions of investigating or cyber-crime authorities, the bank may be directed to segregate the amount allegedly linked to cyber fraud by placing it in a fixed deposit, while permitting operation of the remaining account.

The disputed amount may be liquidated only pursuant to an order of the competent Judicial Magistrate within the stipulated period; otherwise, it may be released to the account-holder upon intimation to the concerned police agency.

The Court further directed the police agency to proceed in accordance with the relevant provisions of the BNSS or any other applicable law.

The Court found that the present case was squarely covered by the earlier decision in Malcolm Murayis and held that its directions would apply mutatis mutandis.

Balancing the investigative interest in preserving the allegedly tainted amount against the petitioner’s right to operate the bank account, the Court directed that only Rs. 40,200—the amount reported by the crime agencies—be secured in a fixed deposit.

Since the investigating agency was expected to obtain appropriate orders from the competent Judicial Magistrate under the applicable law within three months, a complete continuation of the account freeze was considered unnecessary.

The account was therefore ordered to be unfrozen, while the disputed amount remained protected pending judicial orders.

State Bank of India was directed to unfreeze the petitioner’s bank account, while keeping Rs. 40,200 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 law within that period, the amount could also be withdrawn by the petitioner after intimation to the concerned police agency.