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

The petitioner approached the Madhya Pradesh High Court under Article 226 of the Constitution seeking removal of the freeze/hold imposed on its AU Small Finance Bank account No. 2121231431539867, contending that the account had been frozen without lawful authority or an order of a competent court

The petitioner relied upon the High Court’s earlier decision in Malcolm Murayis & Ors. v. State Bank of India & Others, W.P. Nos. 1100 and 1185 of 2024, decided on 26 April 2024, concerning bank-account freezes initiated on the instructions of cyber-crime police authorities

In Malcolm Murayis, the Court had directed that the disputed amounts be placed in fixed deposits pending orders of the competent Judicial Magistrate and had permitted limited withdrawals during the interim period

The present Court held that the earlier decision applied mutatis mutandis to the petitioner’s case

Whether the petitioner’s bank account, frozen pursuant to information or directions from crime-investigating agencies, should be unfrozen in the absence of timely judicial proceedings concerning the disputed amount

Whether the amount allegedly connected with the cyber-crime investigation should remain protected by being placed in a fixed deposit rather than continuing to block the petitioner’s entire bank account

Whether the investigating agency was required to proceed in accordance with Section 102 of the CrPC or the corresponding applicable provisions of the BNSS and obtain orders from the competent Judicial Magistrate

The Court exercised its writ jurisdiction under Article 226 of the Constitution of India to examine the continued freezing of the petitioner’s bank account

It relied on the principle in Malcolm Murayis & Ors. 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 segregated and placed in a fixed deposit, while the account itself may be unfrozen, subject to orders of the competent Judicial Magistrate

The Court further applied the requirement that investigating authorities act in accordance with Section 102 of the CrPC, or the corresponding applicable provisions of the BNSS, and place the seizure or attachment before the competent Magistrate within the prescribed period

The controlling principle was that an investigative freeze should not indefinitely immobilise the entire account where the allegedly tainted amount can be separately secured.

The Court found the present case materially covered by Malcolm Murayis and therefore applied that decision mutatis mutandis

Following the earlier approach, it balanced the investigation’s interest in preserving the allegedly disputed funds against the petitioner’s right to operate its bank account.

Accordingly, instead of sustaining a blanket freeze, the Bank was directed to identify and place only the disputed amount claimed by the crime agencies in fixed deposits

Those fixed deposits could be liquidated only upon orders of the competent Judicial Magistrate, thereby preserving the evidentiary and restitutionary interests of the investigation.

At the same time, the account was directed to be unfrozen, subject to the investigating agency proceeding under the relevant provisions of the BNSS or other applicable law within three months

The Court directed the respondents/Bank to keep the disputed amount, as claimed and communicated by the crime agencies, in fixed deposits.

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

If the police agency failed to proceed in accordance with law within that period, the amount held in fixed deposit could be withdrawn by the petitioner under intimation to the police agency.

The petitioner’s bank account was directed to be unfrozen