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

The petitioner approached the Madhya Pradesh High Court under Article 226 of the Constitution seeking unfreezing and restoration of access to his Yes Bank account bearing No. 068261900000385, Shujalpur Branch, District Shajapur.

The account had been frozen pursuant to information or directions allegedly issued by cyber-crime authorities in connection with suspected cyber fraud.

The amount claimed to be connected with the alleged transactions was Rs. 46,806.

The petitioner relied upon the High Court’s earlier decision in Malcolm Murayis & Ors. v. State Bank of India & Others , W.P. No. 1100 of 2024, decided on 26 April 2024, which dealt with freezing of bank accounts on the instructions of cyber-crime agencies.

Whether the petitioner’s bank account, frozen pursuant to cyber-crime agency communications, ought to be completely unfrozen in the absence of further lawful proceedings before the competent Magistrate?

Whether the disputed amount of Rs. 46,806 should be retained separately in a fixed deposit pending orders of the competent Judicial Magistrate, while permitting the petitioner to operate the remainder of the account?

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

It applied the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Others , under which an amount allegedly connected with cyber fraud may be secured in a fixed deposit, but the entire bank account should not remain frozen indefinitely; the investigating agency must proceed in accordance with Section 102 of the Code of Criminal Procedure or the corresponding applicable provisions of the Bharatiya Nagarik Suraksha Sanhita, and obtain appropriate orders from the competent Judicial Magistrate.

The Court held that the disputed amount could be liquidated only pursuant to such Magistrate’s orders within three months, failing which it could be released to the petitioner upon intimation to the police agency.

The Court found that the petitioner’s case was squarely covered by the ratio of Malcolm Murayis and applied that decision mutatis mutandis .

Balancing the investigative interest in preserving the allegedly tainted amount against the petitioner’s right to operate his bank account, the Court directed that only Rs. 46,806 be placed in a fixed deposit.

The police agency was expected to initiate proceedings under the applicable law and obtain orders from the competent Judicial Magistrate within three months.

Since there was no justification for freezing the remaining balance, the Court directed that the rest of the account be defreezed.

The Yes Bank account specified in the petition was directed to be unfrozen.

The bank was directed to keep Rs. 46,806 in a fixed deposit, which could be liquidated only upon orders of the competent Judicial Magistrate within three months.

If the police agency failed to obtain such orders within that period, the fixed-deposit amount could also be withdrawn by the petitioner after informing the police agency.

Any remaining amount in the account was directed to be released from the freeze.