Bank accounts subject to cyber-fraud holds 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 freeze/hold imposed on his bank account, alleging that the account had been frozen without lawful authority or order.

The Court noted that the petitioner’s case was covered by Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024.

In the present matter, the amount identified by the police/cyber-crime agencies as disputed was Rs. 1,500.

Whether the petitioner’s bank account, frozen pursuant to communications from police/cyber-crime authorities, should be unfrozen in the absence of further lawful action under the applicable criminal-procedure provisions?

Whether the disputed amount of Rs. 1,500 should be segregated and kept in a fixed deposit pending orders of the competent Judicial Magistrate?

The Court applied Article 226 of the Constitution, under which the High Court may issue appropriate writs and directions to address unlawful or arbitrary State action.

It relied on the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Ors., namely that where a bank account is frozen on the instructions of cyber-crime investigating agencies, the disputed amount may be secured in a fixed deposit, but the remaining account should not remain wholly frozen indefinitely.

The Court further required the investigating agency to proceed in accordance with Section 102 of the Cr.P.C. or the relevant provisions of the BNSS, including obtaining appropriate orders from the competent Judicial Magistrate within the stipulated period.

The Court found the present case to be mutatis mutandis covered by Malcolm Murayis.

Applying that precedent, it balanced the petitioner’s right to operate his bank account against the need to preserve the allegedly tainted amount. Accordingly, rather than permitting an unrestricted withdrawal of the disputed funds, the Court directed the bank to place Rs. 1,500 in a fixed deposit.

The fixed deposit could be liquidated only upon orders of the competent Judicial Magistrate within three months, thereby preserving the investigating agency’s claim while preventing an indefinite and disproportionate freeze of the petitioner’s entire account.

If the police agency failed to proceed in accordance with law within that period, the amount could also be withdrawn by the petitioner after intimation to the police agency. The petitioner’s bank account(s) referred to in the relief clause were directed to be unfrozen.