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

The petitioner approached the Madhya Pradesh High Court under Article 226 of the Constitution seeking removal of the hold/freeze/lien imposed on his HDFC Bank account and any other appropriate relief.

The petitioner’s counsel submitted that the matter was covered by the High Court’s earlier decision in 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 identified by the crime agencies was ₹4,000.

Whether the petitioner’s bank account, frozen pursuant to information or directions received from cyber-crime agencies, should be unfrozen subject to safeguarding the disputed amount?

Whether the disputed amount of ₹4,000 should be retained in a fixed deposit pending orders of the competent Judicial Magistrate under the applicable provisions of the BNSS or other governing law?

The Court applied Article 226 of the Constitution concerning the High Court’s writ jurisdiction.

The Court followed the binding or persuasive principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. Nos. 1100/2024 and 1185/2024, decided on 26 April 2024, that a bank account should not remain entirely frozen merely because a cyber-crime agency has identified a suspected tainted amount; instead, the disputed amount may be secured in a fixed deposit while the balance account is unfrozen.

The earlier decision relied on the requirement that investigating agencies proceed in accordance with Section 102 of the CrPC or the other applicable law and obtain appropriate orders from the competent Judicial Magistrate.

In the present matter, the Court referred to the corresponding applicable provisions of the BNSS or any other law relied upon by the police agency.

The Court found that the petitioner’s case was squarely covered by Malcolm Murayis and held that its principle applied mutatis mutandis.

Following that approach, the Court treated the alleged cyber-fraud-linked sum of ₹4,000 separately from the petitioner’s bank account.

The bank was directed to place that amount in a fixed deposit, thereby preserving the suspected proceeds while avoiding an unnecessary continuation of the freeze over the entire account.

The fixed deposit could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months, allowing the police agency an opportunity to proceed in accordance with the BNSS or other applicable law.

HDFC Bank was directed to unfreeze the petitioner’s bank account while keeping the disputed amount of ₹4,000 in a fixed deposit.

The fixed deposit could be liquidated only after an order by the competent Judicial Magistrate within three months.

In the absence of such an order within that period, the amount could be withdrawn by the petitioner after informing the police agency.