Bank accounts must be unfrozen, with disputed cyber-fraud amounts retained in fixed deposits pending Magistrate’s orders.

The petitioner approached the Madhya Pradesh High Court under Article 226 of the Constitution challenging the freeze imposed on his Bank of India account maintained with the Bhojpuriya Pachore Branch, Account No. 996310110004532.

The petitioner sought removal of the freeze, while consenting to the disputed amount of Rs. 12,800/-, comprising Rs. 1,999.82, Rs. 10,319/- and Rs. 481/-, being retained or subjected to lien.

The Court found that the matter was covered by its earlier decision in Malcolm Murayis & Others v. State Bank of India and Others, W.P. No. 1100 of 2024, decided on 26 April 2024.

In that decision, the Court had dealt with bank-account freezes requested by cyber-crime police agencies and directed that the disputed amounts be kept in fixed deposits pending orders of the competent Judicial Magistrate.

1. Whether the freeze imposed on the petitioner’s entire bank account could continue when only Rs. 12,800/- was identified as the disputed amount?

2. Whether the disputed amount should be segregated and maintained in a fixed deposit pending proceedings before the competent Judicial Magistrate under the relevant criminal-procedure law?

3. Whether the precedent in Malcolm Murayis applied mutatis mutandis to the petitioner’s case?

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

It applied the principle that where a bank account is frozen at the request of cyber-crime or investigating agencies, the disputed amount may be secured separately, but the entire account need not remain frozen indefinitely.

The Court relied on Malcolm Murayis & Others v. State Bank of India and Others, W.P. No. 1100 of 2024, decided on 26 April 2024, which directed banks to keep the disputed amount in fixed deposits pending orders of the competent Judicial Magistrate and contemplated action by the investigating agency under Section 102 of the CrPC or other applicable law.

In the present case, the Court referred to compliance with the relevant provisions of the BNSS or any other applicable law.

The Court held that the petitioner’s case was materially identical to Malcolm Murayis and that the earlier decision applied mutatis mutandis.

Balancing the need to preserve allegedly fraud-linked funds with the petitioner’s right to operate his bank account, the Court directed that only the identified disputed amount of Rs. 12,800/- be placed in a fixed deposit.

The amount could be liquidated only upon orders of the competent Judicial Magistrate within three months, allowing the police agency an opportunity to proceed in accordance with the relevant law.

Since the disputed amount could be separately secured, continued freezing of the entire account was considered unnecessary; accordingly, the account was directed to be unfrozen and any remaining amount was also directed to be released from the freeze.

The Bank of India was directed to unfreeze the petitioner’s bank account, while placing the disputed amount of Rs. 12,800/- in a fixed deposit.

The fixed deposit could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months; failing such an order, the amount could be released to the petitioner under intimation to the police agency.

All other funds in the account were directed to be defreezed.