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

The petitioner, Sonu Traders, maintained Account No. 10124658705 with IDFC First Bank, Ujjain Branch.

The account was subjected to a freeze/hold/lien pursuant to information or directions received from crime-investigation agencies, allegedly in connection with a cyber-related transaction.

The petitioner approached the High Court under Article 226 of the Constitution seeking removal of the freeze and disclosure of the complaint or direction forming its basis.

The petitioner relied on Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024, where similar bank-account freezes had been addressed by directing preservation of the disputed amount in fixed deposits and permitting operation of the remaining account.

Whether the petitioner’s bank account, frozen pursuant to information or directions from crime agencies, should be permitted to operate subject to preservation of the disputed amount.

Whether the disputed amount of Rs. 4,000 should be retained in a fixed deposit pending lawful orders by the competent Judicial Magistrate under the applicable criminal-procedure law.

The Court applied Article 226 of the Constitution of India, which empowers the High Court to issue appropriate writs and directions to protect legal rights and prevent arbitrary action.

It relied on Malcolm Murayis & Ors. v. State Bank of India & Ors., where, in the context of bank accounts frozen on the basis of cyber-crime communications, the Court directed that the disputed amount be kept in fixed deposits and be liquidated only pursuant to orders of the competent Judicial Magistrate within the prescribed period.

The underlying principle was that investigative agencies must proceed in accordance with the applicable law concerning seizure or attachment of property, earlier referred to in Malcolm Murayis as Section 102 of the CrPC, and presently expressed by the Court as the relevant provisions of the BNSS or any other applicable law.

The Court found the present case materially analogous to Malcolm Murayis, since the petitioner’s account had been frozen on the basis of information received from crime agencies and a specific amount of Rs. 4,000 was identified as disputed.

Applying the precedent mutatis mutandis, the Court balanced the investigative interest in preserving allegedly tainted funds against the petitioner’s right to operate its bank account.

It therefore directed that only the disputed amount be secured in a fixed deposit, subject to orders of the competent Judicial Magistrate, while the account itself was to be unfrozen.

If the police agency failed to obtain appropriate judicial orders within three months, the fixed-deposit amount could also be withdrawn by the petitioner after informing the agency.

IDFC First Bank was directed to unfreeze the petitioner’s bank account while placing the disputed amount of Rs. 4,000 in a fixed deposit.

The fixed deposit could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months, during which the police agency was expected to proceed in accordance with the applicable provisions of the BNSS or other relevant law.

In default of such judicial action within that period, the petitioner could withdraw the fixed-deposit amount after informing the police agency.