Banks must unfreeze accounts while retaining disputed cybercrime amounts in fixed deposits pending Magistrate’s orders.

The petitioner maintained bank account No. 60554345415 with the Bank of Maharashtra, Kanchan Sagar Branch, Indore. An amount of ₹10,000 was placed on hold and the account was allegedly frozen pursuant to information or instructions received from crime/cyber-crime agencies concerning a disputed transaction.

The petitioner invoked Article 226 of the Constitution seeking removal of the hold, release of the disputed amount, issuance of an NOC, and a declaration that the freezing action was illegal for non-compliance with Sections 106(3) and 107 of the Bharatiya Nagarik Suraksha Sanhita, 2023, and Articles 14, 19(1)(g), and 21 of the Constitution.

The petitioner relied upon Malcolm Murayis & Others v. State Bank of India and Others, W.P. No. 1100 of 2024, decided on 26 April 2024.

1. Whether the petitioner’s bank account could remain completely frozen on the basis of instructions or information furnished by crime/cyber-crime agencies, without the disputed amount being separately secured and without proceedings before the competent Judicial Magistrate under the applicable law.

2. Whether the relief granted in Malcolm Murayis—unfreezing the account while retaining the disputed amount in a fixed deposit pending orders of the competent Judicial Magistrate—should apply mutatis mutandis to the petitioner’s case.

The Court applied the provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 governing seizure/freezing of property and the requirement that the investigating agency proceed in accordance with law before the disputed amount is finally dealt with.

The Court relied principally on Malcolm Murayis & Others v. State Bank of India and Others, W.P. No. 1100 of 2024, decided on 26 April 2024, where it was held that the disputed amount communicated by cyber-crime agencies should be kept in a fixed deposit and could be liquidated only upon orders of the competent Judicial Magistrate, expected within three months; failing such proceedings, the amount could be released to the account-holder under intimation to the concerned agency.

The earlier decision was itself concerned with the investigating agency’s obligation to proceed under Section 102 of the Code of Criminal Procedure, or the corresponding applicable law.

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

Instead of permitting a continuing complete freeze of the account, the Court adopted the less restrictive arrangement of securing only the disputed amount in a fixed deposit. This protected the interests of the investigation while allowing the petitioner to operate the remaining balance in the account.

The fixed deposit was to remain subject to orders of the competent Judicial Magistrate, and the police agency was expected to initiate appropriate proceedings under the BNSS or any other applicable law within three months.

If the police agency failed to proceed in accordance with law within that period, the amount in the fixed deposit could also be withdrawn by the petitioner under intimation to the police agency. The petitioner’s bank account was directed to be unfrozen.