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

The petitioner, a sole proprietorship firm, maintained current account No. 956630150000005 with Bank of India.

The account was frozen pursuant to communications from crime/cyber-crime agencies, and a lien of ₹2,50,716 was marked against it.

The petitioner sought quashing of the freezing action, release of the lien, and permission to operate the account.

The petitioner relied on Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024, where similar directions had been issued concerning bank accounts frozen on the basis of cyber-crime communications.

Whether the petitioner’s bank account, frozen pursuant to communications from crime/cyber-crime agencies, should be unfrozen subject to safeguards concerning the disputed amount.

Whether the disputed amount of ₹2,50,716 should be retained in a fixed deposit pending appropriate orders by the competent Judicial Magistrate under the applicable law.

The High Court exercised its jurisdiction under Article 226 of the Constitution to regulate the freezing of the petitioner’s bank account and to grant appropriate consequential relief.

It relied on Malcolm Murayis & Ors. v. State Bank of India & Ors., which held that the disputed amount linked to alleged cyber fraud may be placed in a fixed deposit, while the remaining account may be permitted to operate, and that liquidation of the fixed deposit should await orders of the competent Judicial Magistrate.

The Court further relied on the requirement that investigating agencies proceed in accordance with Section 102 of the Cr.P.C., or the corresponding applicable provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 (“BNSS”), concerning seizure/freezing of property during investigation.

The Court treated the case as materially identical to Malcolm Murayis, where accounts had been frozen merely on the basis of communications from cyber-crime authorities and the disputed amounts had not been subjected to timely judicial oversight.

Applying that precedent, the Court balanced the investigative interest in preserving the allegedly tainted amount against the petitioner’s right to operate its business account.

It therefore directed that ₹2,50,716 be segregated and placed in a fixed deposit, to be liquidated only upon an order of the competent Judicial Magistrate within three months.

The account itself was directed to be unfrozen, while failure of the police agency to proceed in accordance with the applicable statutory procedure would permit withdrawal of the fixed-deposit amount, subject to intimation to that agency.

Bank of India was directed to unfreeze the petitioner’s bank account and place the disputed amount of ₹2,50,716 in a fixed deposit.

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

If the police agency failed to take appropriate proceedings under the BNSS or other applicable law within that period, the petitioner could withdraw the amount, after informing the police agency.