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

The petitioner approached the High Court under Article 226 of the Constitution seeking unfreezing of her bank account maintained with the State Bank of India

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

Whether the petitioner’s bank account, frozen pursuant to directions or communications from a police/cyber-crime agency, should be unfrozen subject to preservation of the disputed amount?

Whether the disputed amount should be kept in a fixed deposit pending appropriate orders from the competent Judicial Magistrate under the applicable law, including the relevant provisions of the BNSS?

The Court exercised its jurisdiction under Article 226 of the Constitution to regulate the freezing of the petitioner’s bank account and to grant appropriate consequential relief

It applied the principle laid down in Malcolm Murayis & Others v. State Bank of India & Others, that where an account is frozen on the instructions of investigating cyber-crime authorities, the disputed amount may be secured in a fixed deposit, while the remaining account may be unfrozen and operated.

The Court found that the petitioner’s case was squarely covered by the earlier decision in Malcolm Murayis, which addressed the freezing of bank accounts based on cyber-crime investigations and balanced the interests of the account holder with the need to preserve allegedly tainted funds

Rather than permitting indefinite freezing of the entire account, the Court applied the safeguard adopted in the precedent: the disputed amount was to be segregated and placed in a fixed deposit, while the bank account itself was to be unfrozen

It disposed of the writ petition by directing the respondents/bank to unfreeze the petitioner’s bank account and to place the disputed amount in a fixed deposit