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

The petitioner approached the High Court under Article 226 of the Constitution seeking removal of the hold/freeze placed on his bank account by the respondent authorities.

The account had been frozen pursuant to information or instructions apparently received from cyber-crime/police agencies in connection with an alleged cyber fraud.

The Court noted that the petitioner’s 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.

In the present case, the disputed amount was identified as Rs. 5,917/-.

Whether the petitioner’s bank account, frozen pursuant to communications from cyber-crime/police authorities, should be unfrozen when only a specific amount is alleged to be connected with cyber fraud?

Whether the disputed amount of Rs. 5,917/- should be retained separately in a fixed deposit pending orders of the competent Judicial Magistrate, while permitting the petitioner to operate the remainder of the account?

The Court exercised its jurisdiction under Article 226 of the Constitution of India to issue 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 an account is frozen on the basis of alleged cyber-crime transactions, the specifically disputed amount may be secured in a fixed deposit, but the entire account need not remain frozen.

The Court further relied on the requirement that the investigating agency proceed in accordance with Section 102 of the Code of Criminal Procedure, 1973, or the corresponding provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, including obtaining appropriate orders from the competent Judicial Magistrate regarding the seized or disputed amount.

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

The alleged connection with cyber fraud related only to Rs. 5,917/-. Applying the principle that the disputed amount could be secured without continuing a blanket freeze over the entire account, the Court directed the bank to place Rs. 5,917/- in a fixed deposit.

Liquidation of that fixed deposit would depend on orders of the competent Judicial Magistrate to be passed within three months.

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

The respondent bank was directed to keep the disputed amount of Rs. 5,917/- in a fixed deposit, subject to orders of the competent Judicial Magistrate within three months.

In the absence of such lawful proceedings or orders within that period, the amount could be withdrawn by the petitioner under intimation to the police agency.

The petitioner’s bank account was directed to be unfrozen, and the remaining amount, if any, was also directed to be released from the freeze.