Bank accounts must be unfrozen, while disputed cybercrime amounts remain in FDs pending Magistrate orders.

The petitioner, R K Motors, through its sole proprietor, challenged the freezing of bank account No. 50200103403830 maintained with HDFC Bank and sought its defreezing under Article 226 of the Constitution.

The High Court noted that the petitioner’s case was squarely covered by its earlier decision in Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024.

In that precedent, the Court had dealt with bank-account freezes initiated on the instructions of cyber-crime agencies in connection with alleged cyber fraud and had directed preservation of the disputed amount while permitting operation of the remaining account balance.

Whether the petitioner’s bank account, frozen pursuant to information or directions issued by police or cyber-crime agencies, should be completely frozen or whether the undisputed balance should be released for operation

Whether any amount allegedly connected with cyber crime should be retained separately in a fixed deposit pending orders of the competent Judicial Magistrate under the applicable law

The Court applied Article 226 of the Constitution, permitting judicial review and issuance of appropriate directions to prevent arbitrary continuation of a bank-account freeze.

It relied on the binding or persuasive principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Ors., namely that where a bank account is frozen on the request of cyber-crime or investigating agencies, the disputed amount may be segregated and placed in a fixed deposit, while the remaining balance should not ordinarily remain frozen.

The Court further required the police agency to proceed in accordance with the relevant provisions of the BNSS or any other applicable law and contemplated orders of the competent Judicial Magistrate within three months regarding liquidation of the fixed deposit.

The earlier decision had referred to the corresponding requirement under Section 102 of the CrPC concerning seizure of property and reporting to the Magistrate.

The Court found that the present matter was materially identical to Malcolm Murayis, and therefore applied that decision mutatis mutandis.

Balancing the investigating agency’s interest in preserving allegedly tainted funds against the petitioner’s right to operate its business account, the Court directed that only the amount identified by the crime agencies, if any, be placed in a fixed deposit.

Such amount could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months, thereby preserving the evidentiary or restitutionary interests associated with the alleged cyber crime.

Since no justification was shown for continuing to block the remainder of the account, the Court directed that the petitioner’s account be unfrozen and expressly clarified that any other amount lying therein was not required to remain frozen.

HDFC Bank was directed to unfreeze the petitioner’s bank account.

Any amount identified by the police or crime agencies as allegedly connected with cyber crime was to be placed in a fixed deposit and could be liquidated only after 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 fixed-deposit amount could also be permitted to be withdrawn by the petitioner under intimation to the police agency.

The remaining balance, if any, was directed to be released from the freeze.