Banks must place disputed cyber-fraud amounts in fixed deposits and unfreeze the remaining funds.

The petitioner filed a writ petition under Article 226 of the Constitution seeking directions to freeze only the suspicious amount of ₹4,800 in her bank accounts and to remove the hold or freeze on the remaining balance.

The petitioner relied on the 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 initiated on the basis of communications from cyber-crime authorities.

The Court found the petitioner’s case to be squarely covered by that precedent.

Whether the petitioner’s bank account(s), frozen pursuant to information or instructions from cyber-crime authorities, should be unfrozen except to the extent of the disputed amount of ₹4,800.

Whether the disputed amount of ₹4,800 should be secured in a fixed deposit pending appropriate orders by the competent Judicial Magistrate under the applicable legal provisions.

The Court exercised its jurisdiction under Article 226 of the Constitution to issue appropriate directions concerning the freezing of the petitioner’s bank account.

It applied the principle laid down in Malcolm Murayis & Others v. State Bank of India & Others, under which the disputed amount identified by cyber-crime agencies is to be kept in a fixed deposit and may be liquidated only upon orders of the competent Judicial Magistrate within the prescribed period; the investigating agency is expected to proceed in accordance with Section 102 of the Code of Criminal Procedure or the corresponding applicable provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023.

The precedent further establishes that, absent timely lawful action by the investigating agency, the disputed amount may be permitted to be withdrawn by the account holder under intimation to the concerned cyber-crime agency, while the undisputed balance should not remain frozen.

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

Balancing the need to preserve the allegedly tainted amount with the petitioner’s right to operate her account, the Court directed that only ₹4,800 be segregated and placed in a fixed deposit.

The amount could be released only pursuant to an order of the competent Judicial Magistrate within three months, thereby requiring the police or cyber-crime agency to take timely action under the applicable statutory provisions.

Since the remaining balance was not alleged to be connected with the suspicious transaction, the Court found no justification for continuing the freeze over that amount.

The respondent bank(s) were directed to keep ₹4,800 in a fixed deposit, which could be liquidated only after orders of the competent Judicial Magistrate within three months.

If the police agency failed to proceed in accordance with law within that period, the amount could be released to the petitioner under intimation to the concerned agency.

The petitioner’s bank account(s) were otherwise directed to be unfrozen, and the remaining balance was ordered to be defreezed.