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

The petitioner maintained bank account No. 89993188886 with respondent IDFC First Bank.

The account was placed on hold/frozen pursuant to communications from cyber-crime/police agencies, allegedly in connection with suspected cyber-crime transactions.

The petitioner sought removal of the freeze and relied on Malcolm Murayis & Ors. v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024, where the High Court directed that disputed amounts be secured separately while permitting operation of the bank accounts.

In the present case, the amount identified by the crime agencies as disputed was Rs. 2,632.15.

Whether the petitioner’s bank account, frozen pursuant to communications from cyber-crime agencies, should remain completely inoperative or be unfrozen subject to safeguarding the disputed amount.

Whether the disputed amount of Rs. 2,632.15 should be retained in a fixed deposit pending orders of the competent Judicial Magistrate under the applicable law.

The Court applied the principle that a bank account frozen at the request of an investigating agency may be unfrozen subject to securing the amount allegedly connected with the crime, particularly where the investigating agency is required to proceed in accordance with the applicable seizure and reporting provisions.

The Court relied on Malcolm Murayis & Ors. v. State Bank of India & Others, which referred to Section 102 of the Code of Criminal Procedure, 1973, concerning seizure of property suspected to be connected with an offence and the obligation to report such seizure to the competent Magistrate.

For the present case, the Court directed the police agency to proceed under the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, or any other applicable law.

The Court found that the factual and legal circumstances of the present case were materially covered by the decision in Malcolm Murayis and held that the earlier directions would apply mutatis mutandis.

Balancing the petitioner’s right to operate its bank account against the investigative interest in preserving allegedly tainted funds, the Court ordered that only the disputed sum of Rs. 2,632.15 be placed in a fixed deposit.

The amount could be liquidated only upon an order of the competent Judicial Magistrate within three months, thereby requiring the police agency to take lawful steps under the BNSS or other applicable law.

Since the disputed amount was separately secured, there was no justification for continuing the complete freeze on the petitioner’s account.

The respondent bank was directed to unfreeze the petitioner’s bank account, while placing Rs. 2,632.15—the amount reported by the crime agencies as disputed—in a fixed deposit.

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 proceed in accordance with law within that period, the petitioner could withdraw the amount kept in the fixed deposit after intimating the police agency.