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

The petitioner approached the Madhya Pradesh High Court under Article 226 of the Constitution seeking removal of the freeze/hold imposed on his bank account, alleging that the account had been frozen without lawful authority or a judicial order.

The petitioner relied on the High Court’s earlier decision in Malcolm Murayis & Others v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024, concerning bank-account freezes based on communications from cyber-crime authorities.

The respondents had identified a disputed amount of ₹1,500 as allegedly connected with cyber-crime transactions.

The Court found the earlier decision applicable mutatis mutandis to the petitioner’s case.

Whether the freeze imposed on the petitioner’s bank account could continue when the disputed amount was only ₹1,500 and the investigating agency had not obtained appropriate orders from the competent Judicial Magistrate under the applicable law?

Whether the petitioner’s bank account should be unfrozen while safeguarding the disputed amount through a fixed deposit pending lawful proceedings?

The Court applied Article 226 of the Constitution, empowering the High Court to issue appropriate writs and directions where executive or investigative action affecting legal rights is alleged to be arbitrary or contrary to law.

It relied on the principle laid down in Malcolm Murayis & Others v. State Bank of India & Others that, where a bank account is frozen at the instance of cyber-crime authorities, the disputed amount may be retained in a fixed deposit, subject to orders of the competent Judicial Magistrate, while the remaining account is permitted to operate.

The earlier decision referred to compliance with Section 102 of the Code of Criminal Procedure, 1973, concerning seizure and reporting to the Magistrate; in the present case, the Court directed the police agency to proceed under the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, or any other applicable law.

The Court held that the petitioner’s case was materially covered by Malcolm Murayis, which required the disputed amount to be secured rather than continuing an unrestricted freeze over the entire bank account.

Applying that principle, the Court directed that ₹1,500—the amount communicated by the crime agencies as disputed—be placed in a fixed deposit.

The fixed deposit could be liquidated only upon an order of the competent Judicial Magistrate within three months, thereby preserving the evidentiary and recovery interests of the investigating agency while avoiding disproportionate hardship to the petitioner.

Since the police agency was expected to take appropriate proceedings under the BNSS or other applicable law within that period, failure to do so would justify release of the amount to the petitioner after due intimation to the police agency.

The bank was directed to unfreeze the petitioner’s bank account, while retaining the disputed amount of ₹1,500 in a fixed deposit.

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

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