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

The petitioner filed a petition under Article 226 of the Constitution seeking directions to Federal Bank to unfreeze his bank account.

The account maintained with Federal Bank, Account No. 77770131604221, IFSC FDRL0007777, Fintech Partner (Jupiter), Indore, had been frozen pursuant to information received from crime/cyber-crime agencies concerning a disputed amount of ₹10,000.

The petitioner 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, where similarly frozen accounts were directed to be unfrozen while the disputed amounts were retained in fixed deposits pending orders of the competent Magistrate.

Whether the petitioner’s frozen bank account should be unfrozen subject to retention of the disputed amount of ₹10,000 in a fixed deposit.

Whether the disputed amount should remain in fixed deposit until orders are passed by the competent Judicial Magistrate within three months, failing which it may be released to the petitioner.

The Court applied Article 226 of the Constitution, under which the High Court may issue appropriate writs and directions to protect legal rights and ensure lawful exercise of public or investigative power.

It relied on the principle embodied in Section 102 of the Code of Criminal Procedure, 1973, as applied in Malcolm Murayis & Ors. v. State Bank of India & Ors. , that when a bank account or amount is treated as seized or frozen in connection with a criminal investigation, the investigating agency must proceed in accordance with law and place the seizure before the competent Magistrate.

The Court also referred to the corresponding applicable provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, or any other law relied upon by the police agency.

Under the precedent, the disputed amount may be segregated and retained in a fixed deposit, while the remaining account operations may continue; if the investigating agency fails to obtain appropriate Magistrate’s orders within the stipulated period, the disputed amount may also be released subject to intimation to the agency.

The Court found the present case to be squarely covered by Malcolm Murayis and held that its directions would apply mutatis mutandis .

Applying that precedent, the Court balanced the investigative interest in preserving the allegedly tainted amount against the petitioner’s right to operate his bank account.

It therefore directed Federal Bank to retain only the disputed sum of ₹10,000 in a fixed deposit, subject to liquidation upon orders of the competent Judicial Magistrate within three months.

At the same time, the account was directed to be unfrozen, thereby preventing a blanket freeze from continuing without compliance with the applicable criminal-procedure requirements.

Federal Bank was directed to unfreeze the petitioner’s bank account while keeping ₹10,000—the amount reported by the crime agencies—in a fixed deposit.

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

If the police agency failed to proceed in accordance with the applicable provisions of the BNSS or other law within that period, the amount could also be released to the petitioner, with intimation to the police agency.