Banks must unfreeze accounts except disputed cybercrime amounts, which must remain in fixed deposits pending Magistrate’s orders.

The petitioner invoked Article 226 of the Constitution seeking removal of the freeze/hold/lien over his current bank account bearing No. 9755380329.

The account had been frozen pursuant to information or directions allegedly issued by cyber-crime/police agencies in connection with suspected cyber-fraud transactions.

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

In the present case, the amount identified by the crime agencies as disputed was Rs. 5,022.

Whether the petitioner’s bank account, frozen pursuant to cyber-crime agency instructions, should be defreezed subject to preservation of the disputed amount of Rs. 5,022.

Whether the disputed amount should be retained in a fixed deposit pending appropriate orders by the competent Judicial Magistrate under the applicable law.

The Court applied Article 226 of the Constitution, under which the High Court may issue appropriate writs and directions for protection of legal rights.

It relied on the precedent in Malcolm Murayis & Ors. v. State Bank of India & Others , which directed that disputed amounts identified in cyber-fraud investigations be kept in fixed deposits and released only upon orders of the competent Judicial Magistrate within the prescribed period.

The Court further required the police agency 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, concerning seizure/freezing of property connected with an alleged offence and reporting to the competent Magistrate.

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

Balancing the investigative interest in preserving suspected proceeds of cyber-fraud against the petitioner’s right to operate the account, the Court directed that only the specifically disputed amount of Rs. 5,022 be segregated and placed in a fixed deposit.

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

Since the remaining funds were not alleged to be connected with the suspected transactions, continued freezing of the entire account was held unwarranted.

The concerned bank was directed to unfreeze the petitioner’s account and permit operation of the account, while keeping Rs. 5,022 in a fixed deposit.

The amount could be released only after an order of the competent Judicial Magistrate within three months; failing such an order, it could be withdrawn by the petitioner under intimation to the police agency.

All other funds in the account were directed to be defreezed.