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

The petitioner filed a writ petition under Article 226 of the Constitution challenging the lien placed on his Union Bank of India savings account.

He sought removal of the lien over ₹3,95,531, permission to operate the account freely, and a direction that only the disputed amount be retained in a fixed deposit.

The petitioner relied upon the Madhya Pradesh High Court’s earlier decision in Malcolm Murayis & Others v. State Bank of India & Others , W.P. No. 1100 of 2024, decided on 26 April 2024.

Applying that precedent, the Court noted that the amount reported by the crime agencies as disputed was ₹49,000, and directed that the bank account be unfrozen while the disputed amount was kept separately in a fixed deposit.

Whether the lien or freeze placed on the petitioner’s bank account could continue over the entire account when only a specific amount was allegedly connected with a crime investigation?

Whether the disputed amount of ₹49,000 should be retained in a fixed deposit pending appropriate orders by the competent Judicial Magistrate under the applicable provisions of the BNSS or other law?

Whether the petitioner should be permitted to operate the bank account after segregating the disputed amount?

The Court exercised its jurisdiction under Article 226 of the Constitution to regulate the freezing or withholding of funds in a bank account where the investigating agency had identified only a particular disputed amount.

It relied on Malcolm Murayis & Others v. State Bank of India & Others , which held that the disputed amount communicated by cyber-crime agencies should be placed in a fixed deposit and liquidated only pursuant to an order of the competent Judicial Magistrate within the prescribed period; otherwise, the amount could be released to the account-holder upon intimation to the investigating agency.

The Court further directed the police agency to proceed in accordance with the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, or any other applicable law.

The Court found that the petitioner’s case was materially covered by the principle laid down in Malcolm Murayis and applied that decision mutatis mutandis .

Instead of permitting the entire account to remain frozen, the Court adopted a proportional approach by segregating the amount identified by the crime agencies as disputed—₹49,000—and directing that it be retained in a fixed deposit.

This protected the investigative interest in the disputed funds while preventing an unduly broad restraint on the petitioner’s remaining account balance.

The fixed deposit could be liquidated only upon an order of the competent Judicial Magistrate within three months, failing which it could be withdrawn by the petitioner after informing the police agency.

The Court directed the respondent bank to keep ₹49,000, being the amount reported as disputed by the crime agencies, in a fixed deposit.

The amount could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months; failing such an order, the petitioner could withdraw it after intimating the police agency.

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