Banks must unfreeze accounts while securing disputed cybercrime amounts in fixed deposits pending magistrate orders.

The petitioner invoked Article 226 of the Constitution seeking removal of the hold/freeze imposed on his current bank account maintained with SBM Bank.

The Court found that the matter was covered by its earlier decision in Malcolm Murayis & Others v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024.

In Malcolm Murayis, the Court had dealt with bank-account freezes initiated on the instructions of cyber-crime police authorities in connection with alleged cyber fraud and had directed that disputed amounts be placed in fixed deposits pending orders of the competent Judicial Magistrate.

Applying that decision mutatis mutandis, the Court considered the petitioner’s account and the disputed amount, if any, reported by the investigating agencies.

Whether the petitioner’s bank account could continue to remain wholly frozen pursuant to instructions issued by cyber-crime/police authorities in relation to an alleged cyber offence.

Whether any amount allegedly connected with the cyber offence should be preserved by placing it in a fixed deposit, while permitting the petitioner to operate the remaining balance.

Whether the disputed amount could remain in fixed deposit without orders from the competent Judicial Magistrate within the stipulated period.

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

It applied the principle in Malcolm Murayis & Others v. State Bank of India & Others, W.P. No. 1100 of 2024, that where an account is frozen on the instructions of cyber-crime authorities, the disputed amount may be segregated and kept in a fixed deposit, subject to orders of the competent Judicial Magistrate.

The Court further relied on the requirement that the police proceed in accordance with Section 102 of the CrPC, or the corresponding/relevant provisions of the BNSS or other applicable law, including placing the seizure or restraint before the competent Magistrate.

The balance of the account, which is not shown to be connected with the alleged offence, should not remain frozen.

The Court held that the petitioner’s case was squarely covered by Malcolm Murayis and therefore applied the same safeguards.

A blanket freeze was considered unnecessary where only a particular amount was allegedly linked to a cyber offence.

Accordingly, the bank was directed to preserve only the disputed amount, if any, in a fixed deposit until the competent Judicial Magistrate passed appropriate orders within three months under the applicable criminal-procedure provisions.

Since the investigating authorities could identify and secure the allegedly tainted amount through the fixed-deposit mechanism, the remaining balance was not required to be frozen and had to be released for the petitioner’s use.

The petitioner’s bank account was directed to be unfrozen, except that any amount identified by the crime/police agencies as disputed was to be kept in a fixed deposit.

The fixed deposit could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months; failing such action, the amount could also be released to the petitioner under intimation to the police agency.

All other amounts in the account were directed to be defreezed.