Banks must unfreeze accounts, retaining only disputed amounts in fixed deposits pending Magistrate orders.

The petitioner approached the Madhya Pradesh High Court under Article 226 of the Constitution seeking removal of the hold/freeze imposed on her IndusInd Bank account bearing No. 100225811242, IFSC INDB0001806, and consequential reliefs.

On examining the record, the Court found the matter to be 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.

In the present case, the crime agencies had identified disputed credits amounting to ₹30,000 in the petitioner’s account, allegedly connected with cyber-crime investigations.

The petitioner’s account had consequently been frozen, although the judgment does not record any finding that the petitioner herself was accused of an offence.

Whether the petitioner’s bank account, frozen pursuant to information or directions from crime agencies in connection with a cyber-crime investigation, could continue to remain wholly frozen without proceedings being taken before the competent Judicial Magistrate under the applicable law.

Whether the disputed amount of ₹30,000 could be segregated and retained in a fixed deposit while permitting the petitioner to operate the remainder of the account.

Whether the bank was required to unfreeze the petitioner’s account, subject to protection of the disputed amount and further orders of the competent Judicial Magistrate.

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

It applied the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024, that where a bank account is frozen on the instructions of cyber-crime or investigating agencies, the disputed amount may be kept in a fixed deposit and may be liquidated only pursuant to an order of the competent Judicial Magistrate within the prescribed period.

The earlier decision relied upon Section 102 of the Code of Criminal Procedure, 1973, concerning seizure/freezing of property during investigation and the requirement of reporting such seizure to the Magistrate.

In the present matter, the Court directed the police agency to proceed under the corresponding relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 (“BNSS”), or any other applicable law.

The Court held that the earlier decision in Malcolm Murayis applied mutatis mutandis because the present dispute similarly concerned the freezing of a bank account based on information supplied by crime agencies in relation to cyber-crime.

Balancing the investigative interest in preserving allegedly tainted funds against the petitioner’s right to operate her account, the Court directed that only the disputed sum of ₹30,000 be placed in a fixed deposit.

That amount could be liquidated only after an order of the competent Judicial Magistrate within three months, thereby requiring the investigating agency to take timely action under the BNSS or other applicable law.

Since no justification was found for freezing the remaining funds, the Court held that the balance amount was not required to remain blocked and had to be released for the petitioner’s use.

IndusInd Bank was directed to unfreeze the petitioner’s bank account, while retaining ₹30,000 in a fixed deposit.

The fixed deposit could be liquidated only pursuant to an order of the competent Judicial Magistrate passed within three months; failing such action, the amount could also be released to the petitioner under intimation to the police agency.

Any remaining amount in the account was directed to be defreezed forthwith.