Banks must defreeze accounts, preserving only disputed cybercrime amounts in fixed deposits pending Magistrate’s order.

The petitioner filed a petition under Article 226 of the Constitution seeking directions for unfreezing Bank of India account no. 882920110000888 and for consideration of his representation dated 15 June 2026.

The account had been frozen pursuant to information or directions received from crime/cyber-crime agencies, although the order does not set out the underlying allegations in detail.

The petitioner’s case was held to be squarely covered by Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024.

In that precedent, the High Court had directed that the disputed amount be secured in fixed deposits and that the remaining balance be made available to the account holders, subject to proceedings before the competent Magistrate.

Whether the petitioner’s frozen bank account should be unfrozen when the freeze was imposed pursuant to information or directions issued by crime agencies.

Whether the amount allegedly connected with the cyber-crime investigation should remain protected in a fixed deposit pending orders of the competent Judicial Magistrate, while the undisputed balance is released to the petitioner.

Whether the police agency was required to proceed in accordance with the applicable provisions of the BNSS or other governing law within a specified period.

The Court applied Article 226 of the Constitution, under which the High Court may issue appropriate writs and directions to protect legal rights and ensure lawful exercise of public authority.

It relied on the principle stated in Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, that where a bank account is frozen on the request of investigating agencies, the disputed amount may be secured in a fixed deposit pending lawful orders of the competent Judicial Magistrate, while the undisputed balance need not remain frozen.

The Court further required the police agency to proceed under the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), or any other law relied upon, within three months.

The Court found that the petitioner’s case was materially identical to the situation addressed in Malcolm Murayis and therefore applied that decision mutatis mutandis.

Balancing the investigative interest in preserving allegedly tainted funds against the petitioner’s right to operate the bank account, the Court directed the Bank to segregate and place only the disputed amount claimed by the crime agencies in fixed deposits.

Liquidation of that amount was made subject to an order of the competent Judicial Magistrate within three months, thereby preserving the evidentiary or restitutionary interest of the investigation while preventing an indefinite freeze.

Since the remaining funds were not shown to be connected with the alleged offence, the Court held that they were not required to remain frozen.

The Bank was directed to unfreeze the petitioner’s account and to release the undisputed amount, while placing the disputed amount claimed by the crime agencies in fixed deposits.

The fixed deposit could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months.

If the police agency failed to obtain such an order within that period, the disputed amount could also be withdrawn by the petitioner after intimation to the police agency.