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 his IDBI Bank account maintained for carrying on his lawful retailer/business correspondent services.

He sought permission to operate the account without restriction and relied upon the decision in Malcolm Murayis & Others v. State Bank of India & Others, W.P. Nos. 1100 and 1185 of 2024, decided on 26 April 2024.

In that precedent, the Court had directed that disputed amounts allegedly linked to cybercrime be kept in fixed deposits, subject to orders of the competent Judicial Magistrate, while permitting operation of the remaining account.

The Court held that the principle in Malcolm Murayis applied mutatis mutandis to the petitioner’s case.

1. Whether the petitioner’s bank account, frozen pursuant to information or directions received from crime/cybercrime agencies, should be unfrozen subject to safeguarding the disputed amount?

2. Whether the disputed amount of Rs. 500 should be retained in a fixed deposit pending an order of the competent Judicial Magistrate under the applicable legal provisions?

The Court exercised its jurisdiction under Article 226 of the Constitution of India to grant appropriate directions concerning the operation of a bank account frozen in connection with alleged cybercrime.

It applied the principle laid down in Malcolm Murayis & Others v. State Bank of India & Others, under which the disputed amount communicated by the investigating or cybercrime authorities may be segregated and placed in a fixed deposit, while the bank account itself is otherwise unfrozen.

The earlier decision directed the police authorities to proceed in accordance with Section 102 of the Code of Criminal Procedure, 1973, or other applicable law, and to obtain appropriate orders from the competent Judicial Magistrate.

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

The Court found the petitioner’s case to be materially covered by Malcolm Murayis, which adopted a balanced approach between protecting the interests of a cybercrime investigation and preventing an indefinite freeze of the entire bank account.

Applying that principle, the Court directed that only the disputed amount of Rs. 500 be secured in a fixed deposit, rather than continuing the freeze over the petitioner’s entire account.

The fixed deposit could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months, thereby requiring the police agency to proceed in accordance with the BNSS or other applicable law.

If no such order were passed within that period, the petitioner could withdraw the amount after informing the police agency.

The respondents/bank were directed to keep the disputed amount of Rs. 500 in a fixed deposit, which could be liquidated only upon an order of the competent Judicial Magistrate within three months.

In the absence of such an order, the petitioner was permitted to withdraw the amount after informing the police agency.

The petitioner’s bank account was directed to be unfrozen.