Cyber-fraud account freezes require Magistrate authorization within three months; disputed sums may remain in fixed deposits.

The petitioner approached the Madhya Pradesh High Court under Article 226 of the Constitution seeking removal of the debit freeze/lien imposed on Savings Bank Account No. 919010090816091 maintained with Axis Bank, Anand Bazar Branch, Indore.

The petitioner relied upon the 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, concerning freezing of bank accounts on instructions of cyber-crime investigating agencies.

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

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

Whether the amount allegedly connected with the cyber-crime investigation should be retained in a fixed deposit pending orders of the competent Judicial Magistrate under the applicable provisions of the BNSS or other law?

The Court exercised its jurisdiction under Article 226 of the Constitution of India to grant appropriate directions concerning the operation of the petitioner’s bank account.

It relied on the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Ors., that where a bank account is frozen at the instance of cyber-crime authorities, the bank may preserve the disputed amount in a fixed deposit while permitting operation of the remaining account, subject to the investigating agency obtaining appropriate orders from the competent Judicial Magistrate under Section 102 of the CrPC or the corresponding applicable provisions of the BNSS.

The disputed amount is to remain protected and may be liquidated only pursuant to the Magistrate’s order; if the investigating agency fails to proceed in accordance with law within the stipulated period, the amount may be released to the account-holder after due intimation to the police agency.

The Court considered the present case to be materially governed by Malcolm Murayis, which addressed the legality and consequences of bank-account freezes initiated by cyber-crime agencies.

Applying that precedent, the Court balanced the petitioner’s right to operate the account against the need to preserve any amount identified by the investigating agency as linked to a crime.

It therefore directed that only the disputed amount communicated by the crime agencies be placed in a fixed deposit, while the bank account itself be unfrozen.

The fixed deposit would remain subject to orders of the competent Judicial Magistrate, and the police agency was expected to take appropriate proceedings under the BNSS or other applicable law within three months.

Axis Bank was directed to unfreeze the petitioner’s bank account, while retaining the disputed amount identified by the crime agencies in a fixed deposit.

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

In default of such lawful proceedings, the amount could also be released to the petitioner upon intimation to the police agency.