Banks must unfreeze accounts while disputed cyber-fraud amounts remain secured 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 or freeze imposed on his IDBI Bank account No. 2040104000072195 and permission to operate the account without restriction.

The petitioner contended that the account had been frozen without any prior complaint or notice. His counsel relied upon Malcolm Murayis & Others v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024, in which similar bank-account freezing issues had been addressed.

The Court considered the earlier decision applicable to the present case mutatis mutandis.

Whether the petitioner’s bank account, frozen pursuant to information or instructions from crime-investigating agencies, should be permitted to operate subject to safeguards concerning the disputed amount?

Whether the disputed amount should remain frozen in the bank account or be segregated in a fixed deposit pending compliance by the investigating agency with the applicable law and orders of the competent Judicial Magistrate?

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

It relied on the principle laid down in Malcolm Murayis & Others v. State Bank of India & Others, whereby the bank may segregate the amount identified by cyber-crime agencies and place it in a fixed deposit, while permitting operation of the remaining account; liquidation of the fixed deposit is to depend on orders of the competent Judicial Magistrate.

The Court further required the police agency to proceed in accordance with Section 102 of the Code of Criminal Procedure or the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, as applicable, or any other law relied upon by the agency.

The Court found that the present case was materially covered by the approach adopted in Malcolm Murayis and applied that decision mutatis mutandis.

Balancing the petitioner’s right to operate his bank account against the need to preserve any amount allegedly connected with a cyber offence, the Court directed that only the disputed amount communicated by the crime agencies be placed in a fixed deposit.

The investigating agency was expected to obtain appropriate orders from the competent Judicial Magistrate within three months in accordance with the applicable legal procedure.

If it failed to do so, the amount maintained in the fixed deposit could be released to the petitioner, with intimation to the police agency.

The fixed deposit could be liquidated only upon orders of the competent Judicial Magistrate within three months.

In the event of failure by the police agency to proceed in accordance with law within that period, the petitioner could withdraw the amount under intimation to the police agency.