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

The petitioner approached the Madhya Pradesh High Court under Article 226 of the Constitution challenging the freezing of his Bank of Baroda account bearing No. 08260100016476.

He sought removal of the freeze or, alternatively, restriction of the freeze to the disputed amounts of ₹1,11,600 and ₹3,50,000, together with disclosure of the complaints/FIRs and directions for expeditious investigation.

The petitioner relied on Malcolm Murayis & Ors. v. State Bank of India & Others, W.P. Nos. 1100/2024 and 1185/2024, decided on 26 April 2024, where the High Court had directed that disputed amounts be placed in fixed deposits while permitting operation of the remaining bank account.

1. Whether the petitioner’s bank account, frozen pursuant to information or directions from cyber-crime/police authorities, should remain wholly frozen or be unfrozen subject only to securing the disputed amount.

2. Whether the disputed amount should be retained in a fixed deposit pending orders of the competent Judicial Magistrate and action by the investigating agency under the applicable law.

The Court applied Article 226 of the Constitution, under which the High Court may issue appropriate writs and directions to protect legal rights and prevent arbitrary State action.

It relied on Malcolm Murayis & Ors. v. State Bank of India & Others, which established that where bank accounts are frozen on the request of cyber-crime authorities, the disputed amount may be secured in a fixed deposit while the account is otherwise permitted to operate.

The Court further proceeded on the principle that the investigating agency must act in accordance with the applicable statutory procedure concerning seizure or freezing of property, including the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 (“BNSS”), and obtain appropriate orders from the competent Judicial Magistrate.

Under the precedent, failure of the investigating agency to proceed within the stipulated period may justify release of the amount kept in the fixed deposit.

The Court found the present case materially covered by Malcolm Murayis and therefore applied its directions mutatis mutandis.

Instead of allowing a complete freeze of the petitioner’s account, the Court balanced the interests of the investigation and the petitioner by directing the Bank to secure the disputed amount of ₹1,11,600 in a fixed deposit.

The amount could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months, thereby preserving the alleged proceeds for the investigation while preventing disproportionate restraint on the petitioner’s account.

Since the account need not remain wholly immobilised once the disputed amount was separately secured, the Court directed that it be unfrozen.

Bank of Baroda was directed to place ₹1,11,600, identified as the disputed amount, in a fixed deposit.

The fixed deposit could be liquidated only after an order of the competent Judicial Magistrate within three months, during which the police agency was expected to proceed in accordance with the applicable provisions of the BNSS or other relevant law.

If the investigating agency failed to obtain the necessary order within that period, the amount could be released to the petitioner under intimation to the police agency.

The petitioner’s bank account was ordered to be unfrozen.