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

The petitioner maintained Savings Bank Account No. 38474587359 with the State Bank of India, Indore Laxmi Bai Nagar Branch. An amount of ₹4,656 was placed on hold in the account pursuant to information or instructions apparently received from cyber-crime/police authorities.

The petitioner approached the High Court under Article 226 of the Constitution seeking removal of the hold, a declaration that the freezing of her account without compliance with Section 106(3) of the Bharatiya Nagarik Suraksha Sanhita, 2023 (“BNSS”) was unconstitutional, and consequential reliefs.

The petitioner relied upon the decision in Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024, in which the Court had directed that the disputed amount be kept in fixed deposits and that the remaining bank accounts be unfrozen, subject to proceedings before the competent Magistrate.

The Court considered the present case to be covered by that precedent.

Whether the petitioner’s bank account, which had been frozen or subjected to a hold pursuant to cyber-crime-related instructions, should be unfrozen while safeguarding the disputed amount?

Whether the disputed amount should remain secured in a fixed deposit pending orders of the competent Judicial Magistrate under the applicable provisions of the BNSS or other law?

The Court applied the principles governing seizure or freezing of bank accounts in connection with alleged cyber offences, as reflected in the earlier decision in Malcolm Murayis & Ors. v. State Bank of India & Ors.

In that case, the Court relied upon the requirement that investigating authorities proceed in accordance with Section 102 of the Code of Criminal Procedure, 1973, or the corresponding applicable provisions of law, and place the seizure before the competent Magistrate.

In the present case, the Court directed the police authorities to proceed under the relevant provisions of the BNSS or any other applicable law, and required the disputed amount to be preserved in a fixed deposit until orders were passed by the competent Judicial Magistrate within three months.

The Court found that the petitioner’s case was squarely covered by the directions issued in Malcolm Murayis.

Applying that precedent, it distinguished between the disputed amount and the remainder of the account balance: the disputed amount was required to be secured in a fixed deposit so that it would remain available for appropriate orders in the criminal or investigative proceedings, while a complete and continuing freeze of the petitioner’s account was not considered necessary.

The Court therefore directed that the account be unfrozen, while permitting liquidation of the fixed deposit only upon orders of the competent Judicial Magistrate.

If the police agency failed to obtain such orders within three months, the petitioner could withdraw the fixed-deposit amount after intimating the agency.

The respondent bank was directed to keep the disputed amount of ₹4,656, or the amount reported by the relevant crime agency, in a fixed deposit.

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

If the police agency failed to proceed in accordance with law within that period, the petitioner could withdraw the amount after giving intimation to the agency.

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