Cyber-fraud account freezes cannot continue indefinitely; disputed sums require Magistrate orders within three months.

The petitioner challenged the alleged illegal and arbitrary hold/freeze placed on his bank account bearing No. 301140300004200, maintained with SVC Cooperative Bank Ltd.

The freeze was connected with an amount of ₹17,053 allegedly identified by crime/cyber-crime agencies as disputed or linked to cyber fraud.

The petitioner sought removal of the freeze and permission to operate the account.

The Court noted that the matter was squarely covered by 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, which had been frozen pursuant to communication from crime/cyber-crime agencies, should be unfrozen subject to safeguarding the disputed amount.

Whether the disputed amount of ₹17,053 should be retained in a fixed deposit pending appropriate orders by the competent Judicial Magistrate under the applicable law.

The Court applied the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Ors., under which a bank account frozen at the direction of investigating agencies may be unfrozen, while the disputed amount is kept in a fixed deposit pending orders of the competent Judicial Magistrate.

The Court relied on the investigative and seizure framework under Section 102 of the Code of Criminal Procedure, as referred to in Malcolm Murayis, and directed the police agency to proceed under the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, or any other applicable law.

The governing principle was that only the disputed amount should remain secured; the remaining balance ought not to remain frozen indefinitely.

The Court found the petitioner’s case to be mutatis mutandis covered by Malcolm Murayis.

Applying that precedent, it held that the bank need not maintain a blanket freeze over the entire account merely because a particular amount had been flagged by crime agencies.

The amount of ₹17,053 was therefore required to be placed in a fixed deposit, which could be liquidated only upon an order of the competent Judicial Magistrate within three months.

If the police agency failed to obtain such an order within that period, the fixed-deposit amount could also be released to the petitioner after intimation to the agency.

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

SVC Cooperative Bank Ltd. was directed to unfreeze the petitioner’s bank account, while placing ₹17,053 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 an order, the amount could be released to the petitioner after informing the police agency.

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