Bank accounts shall be unfrozen while disputed cyber-fraud amounts remain in fixed deposits pending Magistrate orders.

The petitioner approached the High Court under Article 226 of the Constitution seeking directions to unfreeze his bank account maintained with Bank of Baroda.

The petitioner’s counsel contended that the case was covered by the High Court’s earlier 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, bank accounts had been frozen pursuant to communications from cyber-crime police authorities alleging that certain amounts credited into the accounts were connected with cyber fraud; the Court directed that the disputed amounts be retained in fixed deposits pending orders of the competent Magistrate, while permitting operation of the accounts.

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 kept 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 of India to issue appropriate directions concerning the freezing of the petitioner’s bank account.

It applied the binding or persuasive principle stated in Malcolm Murayis & Ors. v. State Bank of India & Ors., under which the bank may retain the amount allegedly linked to cyber fraud in a fixed deposit, but the remaining account should not remain wholly frozen.

The Court further required the police agency to proceed in accordance with Section 102 of the Code of Criminal Procedure, 1973, or the corresponding applicable provisions of the Bharatiya Nagarik Suraksha Sanhita, and to obtain appropriate orders from the competent Judicial Magistrate within three months.

The Court found that the principle in Malcolm Murayis applied mutatis mutandis to the petitioner’s case.

Balancing the investigative interest in preserving allegedly tainted funds against the petitioner’s right to operate his bank account, the Court directed that only the disputed amount communicated by the crime agencies be secured in a fixed deposit.

The account itself was to be unfrozen, with liquidation of the fixed deposit contingent upon orders of the competent Judicial Magistrate within three months.

If the police agency failed to take the matter forward in accordance with law within that period, the fixed-deposit amount could also be withdrawn by the petitioner after informing the police agency.

Bank of Baroda was directed to unfreeze the petitioner’s bank account, while retaining the disputed amount identified by the crime agencies in a fixed deposit.

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