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

The petitioner approached the Madhya Pradesh High Court under Article 226 of the Constitution seeking directions to the respondents to unfreeze his bank account.

The petitioner relied on the 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-account freezes allegedly made on the instructions of cyber-crime investigating agencies.

The Court found that the petitioner’s case was covered by the principles laid down in that decision and proceeded to apply them mutatis mutandis.

Whether the petitioner’s bank account, frozen pursuant to information or directions from crime/cyber-crime agencies, should be permitted to operate subject to securing 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, and whether it could be released to the petitioner if the investigating agency failed to obtain such orders within the prescribed period?

The Court exercised its constitutional jurisdiction under Article 226 to regulate the consequences of an account freeze and to grant appropriate protective directions.

It relied on Malcolm Murayis & Others v. State Bank of India & Others, where the Court directed that the disputed amount identified by cyber-crime agencies be kept in fixed deposits and liquidated only upon orders of the competent Judicial Magistrate within three months, while permitting withdrawal if the investigating agency failed to proceed in accordance with law.

The earlier decision referred to compliance with Section 102 of the Code of Criminal Procedure, 1973, concerning seizure of property and reporting to the Magistrate; the present judgment referred to the corresponding applicable provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) or any other law relied upon by the police agency.

The Court held that the petitioner’s case was materially covered by the precedent in Malcolm Murayis and therefore adopted its safeguards mutatis mutandis.

Instead of permitting an unrestricted release of funds allegedly connected with a crime, the Court balanced the petitioner’s right to operate the account with the investigative agency’s claim over the disputed amount.

It directed that the amount claimed by the crime agencies be placed in fixed deposits, subject to liquidation only upon an order of the competent Judicial Magistrate within three months.

At the same time, because the account itself was not required to remain wholly frozen under this arrangement, the account was directed to be unfrozen.

The respondents/bank were directed to unfreeze the petitioner’s bank account, while retaining the disputed amount, as informed by the crime agencies, in fixed deposits.

The fixed deposit 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 the applicable provisions of the BNSS or other relied-upon law within that period, the disputed amount could also be withdrawn by the petitioner, with intimation to the police agency.