Banks must unfreeze accounts while keeping disputed cyber-fraud amounts in fixed deposits pending lawful orders.

The petitioner filed a petition under Article 226 of the Constitution seeking the unfreezing of her savings account and permission to operate it normally.

Her counsel submitted that the case was covered by Malcolm Murayis & Ors. v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024.

Whether the petitioner’s case was governed by the directions issued in Malcolm Murayis concerning bank accounts frozen following communications from crime agencies.

Whether the account should be unfrozen while the disputed amount, if any, remained secured pending orders from the competent Judicial Magistrate.

Under Article 226 of the Constitution, the High Court may grant appropriate relief concerning the operation of a bank account frozen following action by a crime agency.

The Court applied Malcolm Murayis & Ors. v. State Bank of India & Others, which directed that the disputed amount identified by crime agencies be kept in fixed deposits and be liquidated only upon orders of the competent Judicial Magistrate within three months; if the agency failed to proceed in accordance with law within that period, the amount could be withdrawn after intimation to the agency.

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

The Court considered the petitioner’s submission that Malcolm Murayis governed the matter and concluded that its directions applied mutatis mutandis.

Accordingly, it balanced the petitioner’s ability to operate the account against the need to preserve any amount identified by the crime agencies: the account was to be unfrozen, while the disputed amount was to remain in fixed deposits pending the requisite order of the competent Judicial Magistrate within three months.

The petition was disposed of. The respondents were directed to unfreeze the petitioner’s bank account and to keep the disputed amount, as informed by the crime agencies, in fixed deposits. The deposits could be liquidated only after orders of the competent Judicial Magistrate within three months; failing that, the petitioner could withdraw the amount after informing the police agency.