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

The petitioner invoked Article 226 of the Constitution seeking removal of the freeze/hold imposed on his Bank of Maharashtra account bearing No. 60563099171, contending that it had been frozen without lawful authority or order.

The petitioner relied on Malcolm Murayis & Ors. v. State Bank of India & Others , W.P. No. 1100 of 2024, decided on 26 April 2024.

The Court noted that crime agencies had informed the bank that an amount of ₹2,000 in the petitioner’s account was connected with a suspected crime or cyber-fraud investigation.

Whether the petitioner’s bank account, frozen pursuant to information or instructions from crime agencies, should be directed to be unfrozen in the absence of further lawful proceedings before the competent Magistrate?

Whether the disputed amount of ₹2,000 should remain protected in a fixed deposit pending orders under the applicable provisions of the BNSS or other relevant law?

The Court applied the principles laid down in Malcolm Murayis & Ors. v. State Bank of India & Others , under which a bank may retain the disputed amount identified by cyber-crime agencies in a fixed deposit, but the investigating agency must proceed in accordance with law and obtain appropriate orders from the competent Judicial Magistrate within the prescribed period.

The earlier decision referred to compliance with Section 102 of the Code of Criminal Procedure, 1973, concerning seizure or freezing of property and intimation to the Magistrate; in the present case, the Court referred to the corresponding applicable provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, or any other law relied upon by the police.

The Court further applied the doctrine of mutatis mutandis , holding that the precedent governed the present case with necessary modifications.

The Court found that the facts of the present case were materially similar to those in Malcolm Murayis , where bank accounts had been frozen on the basis of communications from cyber-crime authorities.

Applying that precedent mutatis mutandis , the Court balanced the investigative interest in preserving the suspected proceeds with the petitioner’s right to operate his bank account.

It therefore directed that only the disputed sum of ₹2,000 be placed in a fixed deposit, subject to liquidation only upon an order of the competent Judicial Magistrate within three months.

If the police agency failed to take the requisite legal steps within that period, the amount could thereafter be withdrawn by the petitioner after intimation to the agency.

Since the investigative purpose could be protected by segregating the disputed amount, continued freezing of the entire bank account was held unwarranted.

The respondent bank was directed to unfreeze the petitioner’s bank account and place the disputed amount of ₹2,000 in a fixed deposit.

The fixed deposit could be liquidated only pursuant to an order of the competent Judicial Magistrate passed within three months under the applicable provisions of the BNSS or other relevant law.

If the police agency failed to proceed accordingly within that period, the petitioner could withdraw the amount after informing the agency.