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

The petitioner invoked Article 226 of the Constitution seeking removal of the hold/freeze imposed on his State Bank of India account bearing Account No. 33499204977 and consequential permission to operate the account.

The petitioner relied upon the Madhya Pradesh High Court’s earlier decision in Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. Nos. 1100/2024 and 1185/2024, decided on 26 April 2024, concerning bank-account freezes pursuant to communications from cyber-crime investigating agencies.

The Court found that the earlier decision applied to the present case mutatis mutandis.

The amount identified by the police/cyber-crime agencies as disputed was Rs. 74,274.36.

Whether the petitioner’s bank account, frozen pursuant to information or directions received from police/cyber-crime agencies, should be permitted to operate subject to safeguarding the disputed amount?

Whether the disputed amount of Rs. 74,274.36 should be retained in a fixed deposit pending orders of the competent Judicial Magistrate under the applicable law?

The Court exercised its jurisdiction under Article 226 of the Constitution of India to issue appropriate directions concerning the freezing of the petitioner’s bank account.

It applied the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Ors., under which the bank may preserve the amount allegedly connected with cyber fraud in a fixed deposit while permitting the remainder of the account to operate; the fixed deposit may be liquidated only pursuant to an order of the competent Judicial Magistrate within the prescribed period.

The Court further directed the police agency to proceed in accordance with Section 102 of the Code of Criminal Procedure or the corresponding applicable provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, or any other legally applicable provision.

The Court considered the earlier decision in Malcolm Murayis to be directly applicable to the petitioner’s grievance concerning the freezing of his bank account.

Following that precedent, it balanced the investigative interest in preserving allegedly tainted funds against the petitioner’s right to operate his account.

Accordingly, instead of continuing the complete freeze, the Court required the bank to place only the disputed amount of Rs. 74,274.36 in a fixed deposit.

The arrangement was made subject to the police agency obtaining appropriate orders from the competent Judicial Magistrate within three months under the applicable criminal-procedure law; otherwise, the amount could be released to the petitioner upon intimation to the police agency.

The petitioner’s bank account was directed to be unfrozen, while the disputed amount of Rs. 74,274.36 was to be kept in a fixed deposit by the bank.

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 obtain such an order within that period, the amount could also be withdrawn by the petitioner after informing the police agency.