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

The petitioner, Veer and Biotech, through its proprietor, challenged the freezing of three bank accounts maintained with the Central Bank of India, Union Bank of India, and IDBI Bank.

It sought directions under Article 226 of the Constitution for the accounts to be unfrozen and for permission to operate them.

The petitioner relied on the Madhya Pradesh High Court’s decision in Malcolm Murayis & Ors. v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024, concerning bank-account freezes based on communications from cyber-crime authorities.

The amounts allegedly connected with cyber-crime transactions were stated to be ₹5,000, ₹5,000, and ₹14,959 in the respective accounts.

Whether the petitioner’s bank accounts, frozen pursuant to communications from cyber-crime authorities, should be unfrozen subject to safeguarding the amounts allegedly linked to cyber-crime transactions?

Whether the disputed amounts should be retained in fixed deposits pending orders by the competent Judicial Magistrate under the applicable legal provisions?

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

It applied the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024, that where accounts are frozen on the basis of alleged cyber-crime transactions, the disputed amount may be secured in fixed deposits while the account is unfrozen for ordinary operation.

The precedent further required the investigating 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, 2023, and obtain appropriate orders from the competent Judicial Magistrate within the prescribed period.

The Court found that the petitioner’s case was squarely covered by Malcolm Murayis and held that the earlier decision would apply mutatis mutandis.

Following that framework, the Court balanced the petitioner’s right to operate its bank accounts against the need to preserve the sums allegedly connected with cyber-crime.

It therefore directed that ₹5,000, ₹5,000, and ₹14,959 be placed in fixed deposits, with liquidation to depend on orders of the competent Judicial Magistrate.

The direction was intended to enable the police authorities to take lawful action under the relevant provisions of the BNSS or other applicable law while preventing an indefinite freeze of the petitioner’s entire accounts.

The respondent banks were directed to keep the disputed amounts of ₹5,000, ₹5,000, and ₹14,959 in fixed deposits.

Those fixed deposits could be liquidated only pursuant to orders passed by the competent Judicial Magistrate within three months.

If the police agency failed to proceed in accordance with law within that period, the petitioner could seek withdrawal of the fixed-deposit amounts after informing the police agency.

Subject to this protection of the disputed sums, the petitioner’s three bank accounts were directed to be unfrozen.