Banks must unfreeze accounts while disputed amounts remain in fixed deposits pending Magistrate’s orders.

The petitioner maintained bank account No. 1321104000075147 with IDBI Bank, Gyal Nagar, Indore Branch.

The account had been frozen or subjected to a lien pursuant to information or directions received from crime/cyber-crime agencies concerning an amount allegedly connected with cyber fraud.

The petitioner sought a direction under Article 226 of the Constitution to defreeze the account and remove the hold.

He relied on the Madhya Pradesh High Court’s decision in Malcolm Murayis & Others v. State Bank of India & Others, W.P. Nos. 1100/2024 and 1185/2024, decided on 26 April 2024, where the Court had directed that the disputed amount be kept in fixed deposits while permitting operation of the remaining account.

The Court found that the disputed amount in the petitioner’s account was Rs. 5,000 and considered the earlier decision applicable mutatis mutandis.

Whether the petitioner’s bank account, frozen pursuant to information or directions from crime agencies, should be unfrozen subject to preservation of the allegedly disputed amount of Rs. 5,000.

Whether the disputed amount should be retained in a fixed deposit pending appropriate orders from the competent Judicial Magistrate under the applicable provisions of law, including the BNSS.

The Court applied Article 226 of the Constitution concerning the High Court’s power to issue appropriate writs and directions.

It relied principally on Malcolm Murayis & Others v. State Bank of India & Others, in which it held that, where a bank account is frozen on the instructions of cyber-crime or investigating agencies, the disputed amount may be segregated and retained in a fixed deposit, while the account may otherwise be operated; the fixed deposit may be liquidated only pursuant to an order of the competent Judicial Magistrate within the prescribed period.

The earlier decision referred to compliance with Section 102 of the CrPC or other applicable law concerning seizure of property during investigation.

In the present case, the Court applied the corresponding requirement under the relevant provisions of the BNSS or other applicable law.

The Court considered the petitioner’s case to be materially covered by Malcolm Murayis, which had addressed the freezing of bank accounts on cyber-crime agencies’ directions.

Applying that precedent mutatis mutandis, the Court balanced the petitioner’s right to operate his bank account against the need to preserve the amount allegedly linked to cyber crime.

It therefore directed that only the disputed sum of Rs. 5,000 be placed in a fixed deposit, subject to liquidation upon an order of the competent Judicial Magistrate within three months.

Since the investigating agency was expected to take appropriate steps under the BNSS or other applicable law within that period, failure to do so would justify release of the fixed-deposit amount to the petitioner, with intimation to the police agency.

The disputed amount of Rs. 5,000 was to be retained in a fixed deposit and could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months.

If the police or crime agency failed to proceed in accordance with law within that period, the amount retained in the fixed deposit could be released to the petitioner after intimating the concerned police agency.