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

The petitioner filed a writ petition under Article 226 of the Constitution seeking removal of the hold/lien and defreezing of his current bank account bearing No. 746902010006786.

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

The Court found that an amount of ₹22,756 in the petitioner’s account had been identified by crime agencies as disputed or connected with alleged cyber-crime transactions.

The petitioner sought defreezing of the account, while preserving the disputed amount in accordance with law.

Whether the petitioner’s bank account should be unfrozen where the account had been placed on hold pursuant to communications from crime or cyber-crime agencies, but the disputed amount could be separately secured?

Whether the disputed amount of ₹22,756 should be retained in a fixed deposit pending appropriate orders from the competent Judicial Magistrate under the applicable criminal-procedure law?

The Court applied Article 226 of the Constitution, empowering the High Court to issue appropriate writs and directions for enforcement of legal rights.

It followed the precedent in Malcolm Murayis & Ors. v. State Bank of India & Ors. , which directed that the disputed amount identified by investigating agencies be kept in a fixed deposit and permitted liquidation only upon orders of the competent Judicial Magistrate within the prescribed period.

The Court also relied on the statutory scheme governing seizure or attachment of property connected with an offence, referring to Section 102 of the Code of Criminal Procedure in the precedent and to the corresponding applicable provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), in the present case.

The governing principle was that the entire bank account need not remain frozen when the allegedly tainted amount can be separately secured, subject to investigation and judicial supervision.

The Court held that the petitioner’s case was covered mutatis mutandis by Malcolm Murayis .

Applying that precedent, it balanced the investigating agency’s interest in preserving the alleged proceeds of cyber-crime against the petitioner’s right to operate his bank account.

The disputed sum of ₹22,756 was directed to be placed in a fixed deposit, ensuring that it remained protected pending orders of the competent Judicial Magistrate.

At the same time, the remaining operation of the petitioner’s bank account was not required to remain restricted, particularly since the investigating agency was expected to proceed in accordance with the applicable provisions of the BNSS or other governing law.

The concerned bank was directed to unfreeze the petitioner’s bank account, while keeping the disputed amount of ₹22,756 in a fixed deposit.

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

If the police agency failed to take appropriate steps in accordance with law within that period, the amount could thereafter be permitted to be withdrawn by the petitioner, under intimation to the police agency.