Banks must unfreeze accounts, securing only disputed cyber-fraud amounts in fixed deposits pending Magistrate’s orders.

The petitioner approached the High Court under Article 226 of the Constitution seeking removal of the hold placed on his State Bank of India account No. 31583275710, permission to operate the account, protection against further unlawful interference, and compensation for alleged harassment and deficiency in service.

The account had been frozen pursuant to information or directions received from cyber-crime authorities in connection with an alleged cyber fraud.

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

In the present case, the disputed amount was identified as ₹6,000.

Whether the petitioner’s bank account, frozen on the basis of information received from cyber-crime authorities, could continue to remain wholly frozen without appropriate proceedings before the competent Judicial Magistrate.

Whether the disputed amount of ₹6,000 could be segregated in a fixed deposit while the remaining balance and operations of the bank account were restored.

The Court applied Article 226 of the Constitution concerning judicial review and issuance of directions to public authorities.

The principle recognized in Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, that where a bank account is frozen pursuant to cyber-crime investigations, the disputed amount may be retained in a fixed deposit subject to orders of the competent Judicial Magistrate, while the undisputed balance should not remain frozen.

The Court further directed the police authorities to proceed in accordance with the relevant provisions of the BNSS or any other applicable law, including the statutory procedure governing seizure or attachment of property connected with an offence.

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

Rather than permitting the entire account to remain blocked, the Court balanced the investigative interest of the cyber-crime authorities with the petitioner’s right to operate his bank account by directing that only the identified disputed amount of ₹6,000 be placed in a fixed deposit.

The fixed deposit was to remain subject to orders of the competent Judicial Magistrate within three months, thereby ensuring that retention of the amount would be judicially regularised.

Since the remaining amount was not shown to be connected with the alleged cyber fraud, the Court held that it was not required to remain frozen.

The respondent bank was directed to keep ₹6,000 in a fixed deposit, which could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months.

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

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