Banks must unfreeze accounts except disputed amounts secured in fixed deposits pending Magistrate’s orders.

The petitioner approached the Madhya Pradesh High Court under Article 226 of the Constitution seeking removal of debit-freeze restrictions on his Savings Bank Account No. 33953177695 and Individual Current Account No. 44939322991 maintained with State Bank of India, Khatiwala Tank Branch, Indore.

The accounts had been restricted pursuant to communications from cybercrime authorities, and liens of Rs.18,228.34 in the savings account and Rs.46,009.81 in the current account were reflected as allegedly disputed amounts. The petitioner sought permission to operate the accounts normally, while keeping only the disputed amounts under lien or in fixed deposits. The Court noted that the case was squarely covered by its earlier decision in Malcolm Murayis & Ors. v. State Bank of India & Others, W.P. No.1100 of 2024, decided on 26 April 2024.

1. Whether the petitioner’s bank accounts, restricted pursuant to cybercrime authorities’ communications, should continue to remain wholly frozen under the circumstances.

2. Whether only the amounts specifically identified as disputed should be preserved in fixed deposits pending orders of the competent Judicial Magistrate, while permitting operation of the remaining balances.

3. Whether the disputed amounts could be released to the petitioner if the police authorities failed to obtain appropriate orders from the competent Judicial Magistrate within the prescribed period.

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

It relied on the precedent of Malcolm Murayis & Ors. v. State Bank of India & Others, which held that, where bank accounts are frozen on the instructions of cybercrime authorities, the specifically disputed amount may be kept in fixed deposits and may be liquidated only pursuant to an order of the competent Judicial Magistrate within the prescribed period.

The Court further required the investigating agency to proceed in accordance with Section 102 of the Code of Criminal Procedure or the corresponding relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, concerning seizure or attachment of property during investigation.

The remaining undisputed balance is not required to remain frozen.

The Court found the petitioner’s case to be materially identical to Malcolm Murayis, where a complete freeze of bank accounts based merely on cybercrime communications was treated as disproportionate once the disputed amount could be separately secured.

Applying that principle, the Court directed preservation of only the amounts specifically communicated by the cybercrime authorities—Rs.18,228.34 and Rs.46,009.81—in fixed deposits. This protected the investigation while avoiding an unnecessary restraint on the petitioner’s use of the rest of his funds. The Court also required the police authorities to obtain appropriate orders from the competent Judicial Magistrate within three months in accordance with the applicable criminal procedure.

The bank accounts were directed to be unfrozen, and the remaining balance, if any, was ordered to be released from the freeze and made available for normal operation. If the police authorities failed to obtain the requisite Magistrate’s order within three months, the fixed-deposit amounts could also be withdrawn by the petitioner under intimation to the concerned police agency.