Banks must place disputed cyber-fraud amounts in fixed deposits while defreezing the remaining account funds.

The petitioner, Fastestspeed Fintech Pvt. Ltd., sought relief under Article 226 of the Constitution against the debit freeze and restrictions imposed on its corporate current account maintained with State Bank of India, Khatiwala Tank Branch, Indore.

The petitioner requested restoration of normal banking facilities and sought segregation of only the disputed amount of ₹1,45,578.87, which had been marked as lien, with the balance being released for business operations.

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

In Malcolm Murayis, the Court had directed that amounts identified by cybercrime agencies as linked to alleged cyber fraud be placed in fixed deposits, while permitting operation of the remaining account balance.

Whether the debit freeze on the petitioner’s bank account could continue in respect of the entire account when only ₹1,45,578.87 had been identified as disputed by cybercrime authorities.

Whether the disputed amount could be segregated and kept in a fixed deposit, while the remaining account balance and banking facilities were restored to the petitioner.

Whether the disputed amount should remain subject to orders of the competent Judicial Magistrate after the investigating agency proceeds in accordance with the applicable law.

The Court exercised its jurisdiction under Article 226 of the Constitution to regulate the effect of a bank-account freeze arising from communications issued by cybercrime authorities.

It applied the principle laid down in Malcolm Murayis & Others v. State Bank of India & Others, W.P. No. 1100 of 2024, that only the amount specifically identified as connected with alleged cyber fraud should be preserved in a fixed deposit, while the undisputed balance should not remain frozen.

The disputed amount was to remain subject to orders of the competent Judicial Magistrate, and the police agency was expected to act in accordance with Section 102 of the CrPC or the corresponding applicable provisions of the BNSS.

The Court found the present case materially identical to Malcolm Murayis and therefore applied that decision mutatis mutandis.

Since the cybercrime authorities had identified ₹1,45,578.87 as the disputed amount, the Court held that there was no justification for continuing a freeze over the petitioner’s entire account.

It balanced the interests of the investigation and the petitioner by directing that only the identified amount be placed in a fixed deposit, subject to the competent Magistrate’s orders, while the remaining funds and banking facilities were released.

The Court also imposed a three-month period for the police agency to take appropriate legal steps; failing such action, the petitioner could seek withdrawal of the fixed-deposit amount after informing the police agency.

State Bank of India was directed to keep ₹1,45,578.87 in a fixed deposit, which could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months.

If the police agency failed to proceed in accordance with law within that period, the petitioner could withdraw the fixed-deposit amount after intimating the agency.

The petitioner’s bank account was ordered to be unfrozen, and the remaining amount, if any, was directed to be released from the freeze and made available for normal banking operations.