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

The petitioner approached the High Court under Article 226 of the Constitution seeking removal of the hold/lien or freeze imposed on his State Bank of India account bearing No. 32422731659.

The petitioner relied on Malcolm Murayis & Others v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024, in which the Court had directed that disputed amounts linked to alleged cyber fraud be kept in fixed deposits while permitting operation of the bank accounts.

The Court found the present case to be covered by that decision and applied it mutatis mutandis.

Whether the petitioner’s bank account, frozen pursuant to information or instructions from crime/cybercrime agencies, should be unfrozen.

Whether the amount allegedly connected with the cybercrime could instead be retained in a fixed deposit pending orders of the competent Judicial Magistrate under the applicable law.

The Court applied the principle laid down in Malcolm Murayis & Others v. State Bank of India & Others, under which a bank account should not remain wholly frozen merely on the basis of cybercrime-agency instructions where the disputed amount can be segregated and secured; the disputed amount may be placed in a fixed deposit, to be liquidated only pursuant to an order of the competent Judicial Magistrate within the stipulated period.

The earlier decision also relied on the requirement that investigating agencies proceed in accordance with Section 102 of the Code of Criminal Procedure, or the corresponding applicable provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, concerning seizure or attachment of property connected with an offence.

Since the petitioner’s case was held to be materially covered by Malcolm Murayis, the Court adopted the same balancing approach: the petitioner’s account was to be unfrozen, but any amount identified by the crime agencies as connected with the alleged offence was to remain secured in a fixed deposit.

Such amount could be liquidated only upon an order of the competent Judicial Magistrate within three months, thereby protecting the investigation while avoiding an indefinite and complete restraint on the petitioner’s banking operations.

If the police agency failed to proceed in accordance with law within that period, the fixed-deposit amount could be released to the petitioner after due intimation to the agency.

Any disputed amount reported by the crime agencies was to be kept in a fixed deposit and could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months.

In the event of failure by the police agency to take lawful steps within that period, the amount could be withdrawn by the petitioner after informing the agency.