Banks must unfreeze accounts while disputed cyber-fraud amounts remain secured in fixed deposits.

The petitioner filed a writ petition under Article 226 of the Constitution seeking de-freezing of his bank account bearing No. 201005051893.

The petitioner relied on the decision in Malcolm Murayis & Ors. v. State Bank of India & Ors. , W.P. No. 1100 of 2024, decided on 26 April 2024, concerning bank-account freezes based on communications from cyber-crime agencies.

The Court found that an amount of ₹3,983 in the petitioner’s account had been identified by crime agencies as disputed.

Whether the petitioner’s bank account should be unfrozen when the disputed amount identified by crime agencies could be separately secured pending lawful investigation and orders of the competent Judicial Magistrate?

Whether the disputed amount of ₹3,983 should be kept in a fixed deposit and be subject to liquidation only upon orders of the competent Judicial Magistrate within three months?

The Court applied Article 226 of the Constitution, under which the High Court may issue appropriate writs and directions to protect legal rights and ensure lawful exercise of investigative powers.

It followed the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Ors. , W.P. No. 1100 of 2024, that an entire bank account need not remain frozen merely because a particular amount is allegedly connected with cybercrime; instead, the disputed amount may be secured in a fixed deposit while the account is unfrozen.

The Court further required the police agency to proceed in accordance with the relevant provisions of the BNSS or any other applicable law and to obtain appropriate orders from the competent Judicial Magistrate within three months.

The Court held that the earlier decision in Malcolm Murayis applied mutatis mutandis to the present case.

Applying that principle, it treated the alleged linkage of ₹3,983 with a crime agency’s investigation as requiring preservation of that specific amount, but not continued freezing of the petitioner’s entire bank account.

Accordingly, the amount was directed to be placed in a fixed deposit, subject to liquidation only upon an order of the competent Judicial Magistrate within three months.

The arrangement balanced the investigative interest in preserving the disputed funds with the petitioner’s right to operate the remainder of his bank account.

The respondent bank was directed to keep the disputed amount of ₹3,983 in a fixed deposit.

The fixed deposit could be liquidated only pursuant to an order of the competent Judicial Magistrate passed within three months.

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

The petitioner’s bank account was directed to be unfrozen.