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

The petitioner, Silkiara Style Pvt. Ltd., filed a petition under Article 226 of the Constitution seeking directions to IndusInd Bank to unfreeze Current Account No. 201036356918, or alternatively to restrict the lien to the specific amount allegedly connected with a disputed cyber-fraud complaint and permit operation of the remaining balance.

The Court noted that the account had been placed under restriction pursuant to communications from crime-investigation agencies concerning disputed transactions, including an identified amount of ₹1,999, while other disputed amounts had not been disclosed.

The petitioner’s case was held to be covered by the Madhya Pradesh 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.

Whether the petitioner’s bank account, frozen pursuant to cyber-crime-related communications, could continue to remain wholly restricted when only specific transaction amounts were allegedly disputed?

Whether the disputed amount should be segregated and retained in a fixed deposit pending lawful orders of the competent Judicial Magistrate, while the bank account is otherwise unfrozen?

The Court exercised its jurisdiction under Article 226 of the Constitution to regulate the continued freezing of the petitioner’s bank account.

It applied the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Ors., under which a bank account should not remain wholly frozen merely on the basis of cyber-crime communications where the disputed amount can be separately secured; the identified disputed amount is to be placed in a fixed deposit and may be liquidated only pursuant to an order of the competent Judicial Magistrate within the prescribed period.

The investigating agency was expected to proceed in accordance with Section 102 of the CrPC, or the corresponding relevant provisions of the BNSS, concerning seizure and reporting before the Magistrate.

The Court treated the earlier decision as applicable mutatis mutandis to the present case.

The Court found that the present matter was materially identical to Malcolm Murayis, where accounts had been frozen on the instructions of cyber-crime authorities but the disputed amounts were identifiable.

Applying that precedent, the Court held that a complete freeze was disproportionate when the alleged disputed transactions could be secured separately.

Accordingly, the bank was directed to place the disputed amounts, including ₹1,999 and any other amounts communicated by the crime agencies, in fixed deposits.

This protected the investigative and restitutionary interests associated with the alleged cyber-fraud while allowing the petitioner to operate the account otherwise.

The arrangement was made subject to orders of the competent Judicial Magistrate and to the investigating agency taking appropriate proceedings under the BNSS or other applicable law within three months.

IndusInd Bank was directed to unfreeze the petitioner’s bank account(s) referred to in the relief clause, while retaining the disputed amounts—including ₹1,999 and other amounts identified by the crime agencies—in fixed deposits.

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

If the investigating agency failed to obtain such orders within that period, the petitioner would be permitted to withdraw the fixed-deposit amount under intimation to the police agency.