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

The petitioner filed a petition under Article 226 of the Constitution seeking directions to unfreeze his bank account.

He relied on the Madhya Pradesh High Court’s earlier decision in Malcolm Murayis & Others v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024, concerning bank accounts frozen pursuant to communications from cyber-crime authorities.

The Court found the petitioner’s case to be covered mutatis mutandis by that precedent.

A sum of ₹826 was reported by crime agencies as disputed and connected with the alleged cyber-crime transactions.

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

2. Whether the disputed sum of ₹826 should be retained in a fixed deposit pending appropriate orders by the competent Judicial Magistrate.

The Court applied Article 226 of the Constitution, under which the High Court may issue appropriate writs and directions for protection of legal rights.

It followed the principle laid down in Malcolm Murayis & Others v. State Bank of India & Others, that where a bank account is frozen pursuant to investigative directions concerning alleged cyber fraud, the bank may retain the disputed amount in a fixed deposit, while the remaining account is permitted to operate; liquidation of the fixed deposit should depend on orders of the competent Judicial Magistrate within the prescribed period.

The earlier decision referred to compliance with Section 102 of the CrPC concerning seizure of property by police and intimation to the Magistrate.

In the present matter, the Court directed the police agency to proceed under the relevant provisions of the BNSS or any other applicable law.

The Court held that the earlier decision in Malcolm Murayis governed the present case mutatis mutandis.

Applying that framework, it balanced the petitioner’s right to operate his bank account against the investigative claim over the identified disputed amount.

Accordingly, only ₹826 was required to be segregated and placed in a fixed deposit, rather than continuing the freeze over the entire account.

The amount could be liquidated only upon orders of the competent Judicial Magistrate within three months, thereby preserving the evidentiary or restitutionary interests of the investigation while preventing an indefinite restraint on the petitioner’s banking operations.

The bank was directed to unfreeze the petitioner’s account, while keeping the disputed amount of ₹826 in a fixed deposit.

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

If the police agency failed to proceed in accordance with the relevant provisions of the BNSS or other applicable law within that period, the petitioner could withdraw the fixed-deposit amount after intimating the police agency.