Banks must unfreeze cybercrime-linked accounts except disputed sums preserved pending Magistrate’s orders.

The petitioner filed a petition under Article 226 of the Constitution seeking a direction to Union Bank of India to remove the hold/freeze imposed on his bank account.

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

In the present matter, the disputed amount communicated by the crime agencies was Rs. 36,768/-.

1. Whether the petitioner’s bank account, frozen on the basis of information or instructions received from cyber-crime agencies, should be unfrozen subject to protection of the disputed amount.

2. Whether the disputed amount of Rs. 36,768/- should be retained in a fixed deposit pending orders of the competent Judicial Magistrate under the applicable law.

The Court applied Article 226 of the Constitution, which empowers the High Court to issue appropriate writs and directions for enforcement of legal rights.

It relied on the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Others that where a bank account is frozen pursuant to cyber-crime authorities’ instructions, the disputed amount may be secured in a fixed deposit, while the remaining account balance should ordinarily be released, subject to the investigating agency complying with the applicable procedure before the competent Judicial Magistrate.

The Court further directed that the police agency must proceed under the relevant provisions of the BNSS or any other applicable law, and that the fixed deposit could be liquidated only pursuant to the Magistrate’s orders within the stipulated period.

The Court treated the present case as materially indistinguishable from Malcolm Murayis, thereby applying that decision mutatis mutandis.

Since the freeze was connected only with a specific disputed amount of Rs. 36,768/- allegedly identified by cyber-crime agencies, a complete restraint on the petitioner’s account was considered unnecessary.

The Court balanced the investigative interest in preserving the allegedly tainted amount against the petitioner’s right to operate the remainder of the account by directing that the disputed sum be placed in a fixed deposit.

The police agency was required to obtain appropriate orders from the competent Judicial Magistrate within three months under the relevant legal provisions; failing that, the amount could be released to the petitioner after intimation to the police agency.

The balance amount, if any, was not required to remain frozen.

Union Bank of India was directed to unfreeze the petitioner’s bank account, while retaining Rs. 36,768/- in a fixed deposit.

The fixed deposit could be liquidated only pursuant to orders of the competent Judicial Magistrate within three months; in default of such proceedings or orders, the amount could be withdrawn by the petitioner after informing the police agency.

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