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

The petitioner’s State Bank of India account No. 20185743172, maintained at the Siyaganj Branch, Indore, was subjected to holds/freezes pursuant to communications from the cyber-crime authorities of Police Station Zirkapur, SAS Nagar, Punjab, in connection with alleged cyber-fraud transactions.

The petitioner sought release of the entire account while securing the disputed amounts identified by the investigating agencies.

He relied on the High Court’s earlier decision in Malcolm Murayis & Ors. v. State Bank of India & Ors. , W.P. No. 1100 of 2024, decided on 26 April 2024, where similar directions had been issued concerning frozen bank accounts.

The petitioner consequently sought removal of the freeze/hold, subject to preservation of the disputed amounts, and reopening of the account for operation.

Whether the petitioner’s bank account could be unfrozen and permitted to operate while the amounts allegedly linked to cyber-crime were secured separately?

Whether the disputed amounts should be retained in fixed deposits pending orders of the competent Judicial Magistrate under the applicable criminal-procedure law?

The Court applied the principle that a bank account should not remain wholly frozen merely because a cyber-crime agency has identified particular disputed credits; instead, the disputed amount may be preserved separately while the remaining account is made operational.

The Court relied on Malcolm Murayis & Ors. v. State Bank of India & Ors. , where it directed that the disputed amount be placed in fixed deposits and liquidated only pursuant to orders of the competent Judicial Magistrate within three months, with the investigating agency expected to proceed in accordance with Section 102 of the Code of Criminal Procedure, 1973, or other applicable law.

In the present case, the Court adapted that principle to the Bharatiya Nagarik Suraksha Sanhita, 2023 (“BNSS”), directing the police agency to proceed under the relevant provisions of the BNSS or any other applicable law.

The Court found that the petitioner’s case was covered mutatis mutandis by the earlier decision in Malcolm Murayis .

Applying that precedent, it balanced the investigating agency’s interest in preserving allegedly tainted funds against the petitioner’s right to operate his otherwise unrestricted bank account.

The Court therefore treated the amounts claimed by the crime agencies as the property requiring protection, rather than continuing a blanket freeze over the entire account.

Those amounts were to be placed in fixed deposits pending appropriate judicial orders, while the bank account itself was to be unfrozen.

The respondent bank was directed to keep the disputed amounts identified by the crime agencies in fixed deposits.

The fixed deposits could be liquidated only after orders were passed by the competent Judicial Magistrate within three months, during which period the police agency was expected to proceed in accordance with the BNSS or other applicable law.

If the requisite proceedings or orders were not obtained within that period, the petitioner could seek withdrawal of the fixed-deposit amount under intimation to the police agency.

The petitioner’s bank account was directed to be unfrozen and permitted to operate.