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

The petitioner filed a writ petition under Article 226 of the Constitution seeking removal of the hold/freeze placed on his bank account No. 926010006925488 and directions to the respondents to permit operation of the account.

The petitioner contended that the account had been frozen without prior notice or complaint and relied upon the Madhya Pradesh High Court’s decision in Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024.

In Malcolm Murayis, the Court had dealt with bank-account freezes initiated on the instructions of cyber-crime police authorities in connection with alleged cyber fraud and directed that the disputed amounts be kept in fixed deposits pending orders of the competent Magistrate.

The Court held that the same principle applied to the petitioner’s case mutatis mutandis.

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

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

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

It relied on the precedent in Malcolm Murayis & Ors. v. State Bank of India & Ors., which held that where bank accounts are frozen on the basis of cyber-crime allegations, the disputed amount may be secured in a fixed deposit and released or dealt with in accordance with the orders of the competent Judicial Magistrate.

The precedent further proceeded on the requirement that investigating authorities act in accordance with Section 102 of the CrPC, or the corresponding applicable provisions of law, and place the seizure/freezing before the competent Magistrate within the prescribed period.

In the present matter, the Court referred to the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) or any other law relied upon by the police agency.

The Court found that the petitioner’s case was squarely covered by the directions issued in Malcolm Murayis and therefore applied that decision mutatis mutandis.

Rather than permitting an unrestricted withdrawal of the allegedly tainted funds, the Court balanced the petitioner’s right to operate the account against the investigating agency’s interest in preserving the disputed amount.

It accordingly directed the bank to place the amount identified by the crime agencies in fixed deposits, to be liquidated only pursuant to an order of the competent Judicial Magistrate within three months.

At the same time, the account itself was directed to be unfrozen, thereby preventing the entire account from remaining inoperative merely because a particular amount was under investigation.

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

The amount identified as disputed by the crime agencies was to be kept in fixed deposit and could be liquidated only after an order of the competent Judicial Magistrate within three months, while the police agency was expected to proceed in accordance with the applicable provisions of the BNSS or other relevant law.

If no such order was obtained within the stipulated period, the fixed-deposit amount could also be permitted to be withdrawn by the petitioner, subject to intimation to the police agency.