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

The petitioner filed a petition under Article 226 of the Constitution seeking removal of the hold/freeze/lien on his bank account maintained with Punjab National Bank.

The Court found that the petitioner’s case was covered by Malcolm Murayis & Others v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024.

A disputed amount of ₹5,431 had been identified by the cyber-crime authorities as connected with alleged cyber transactions.

The petitioner’s bank account had nevertheless remained frozen, and the Court considered the appropriate manner of protecting the disputed amount while permitting operation of the account.

Whether the petitioner’s bank account, frozen on the basis of information received from cyber-crime authorities, should be unfrozen subject to safeguarding the disputed amount of ₹5,431.

Whether the disputed amount should be retained in a fixed deposit pending orders of the competent Judicial Magistrate under the applicable criminal procedure law.

The Court exercised its jurisdiction under Article 226 of the Constitution to issue appropriate directions concerning the freezing of the petitioner’s bank account.

It relied on the principle laid down in Malcolm Murayis & Others v. State Bank of India & Others, under which the bank may be directed to place the disputed amount in a fixed deposit, to be liquidated only upon orders of the competent Judicial Magistrate within the prescribed period, while the remaining account is allowed to operate.

The Court also directed the police agency to proceed in accordance with Section 102 of the Cr.P.C., or the corresponding applicable provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 (“BNSS”), concerning seizure or restraint of property connected with an alleged offence.

Applying Malcolm Murayis mutatis mutandis, the Court balanced the petitioner’s right to operate his bank account against the need to preserve the allegedly tainted amount.

Since only ₹5,431 was identified as disputed, the Court directed that this amount be segregated and placed in a fixed deposit rather than permitting the entire account to remain frozen.

The fixed deposit would remain subject to orders of the competent Judicial Magistrate, thereby preserving the interests of the investigation while ensuring that the police agency proceeds under the applicable statutory procedure within three months.

In the absence of such orders within that period, the petitioner could seek withdrawal of the fixed-deposit amount after intimating the police agency.

The respondents/bank were directed to keep ₹5,431 in a fixed deposit, which could be liquidated only pursuant to orders of the competent Judicial Magistrate within three months.

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

If the police agency failed to obtain appropriate orders within the stipulated period, the fixed-deposit amount could be withdrawn by the petitioner after giving intimation to the police agency.