Cyber-fraud allegations require disputed funds in fixed deposits, not continued freezing of bank accounts.

The petitioner invoked Article 226 of the Constitution seeking removal of the freeze/hold imposed on her Canara Bank account No. 110013259084, allegedly without lawful authority or an order of a competent court.

The petitioner relied upon Malcolm Murayis & Others v. State Bank of India & Others , W.P. No. 1100 of 2024, decided on 26 April 2024, in which the High Court had directed that disputed cyber-fraud amounts be kept in fixed deposits while permitting operation of the bank accounts.

The police/cybercrime agencies had identified or communicated a disputed amount of ₹23,000 in the petitioner’s account.

Whether the freeze imposed on the petitioner’s Canara Bank account in connection with a disputed cybercrime-related amount could continue without further action under the applicable criminal-procedure law.

Whether the disputed amount of ₹23,000 should be secured in a fixed deposit while the remainder of the bank account was unfrozen and made available to the petitioner.

Whether the directions issued in Malcolm Murayis & Others v. State Bank of India & Others were applicable mutatis mutandis to the present case.

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

It relied on the principle recognised in Malcolm Murayis & Others v. State Bank of India & Others that where a bank account is frozen on the basis of cybercrime-agency communications, the disputed amount may be segregated and placed in a fixed deposit, while the account may otherwise be operated by the account holder.

The Court further applied the requirement that 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 place the seizure/freezing before the competent Judicial Magistrate.

The disputed amount was therefore to remain secured until appropriate orders were passed by the Magistrate within three months.

The Court found that the petitioner’s case was materially covered by the decision in Malcolm Murayis and held that its directions applied mutatis mutandis .

Rather than permitting an indefinite freeze of the entire account, the Court adopted a proportional safeguard: the amount allegedly linked to the cybercrime—₹23,000—was to be retained in a fixed deposit, ensuring its preservation pending investigation and judicial determination.

At the same time, the investigating agency was required to pursue the matter before the competent Judicial Magistrate under the applicable criminal-procedure provisions within three months.

If that was not done, the fixed deposit could be liquidated and the amount withdrawn by the petitioner, subject to intimation to the police agency.

Since the disputed amount was separately protected, continuation of the freeze over the entire account was found unwarranted, and the account was directed to be unfrozen.

The respondents/Canara Bank were directed to unfreeze the petitioner’s bank account, while placing the disputed amount of ₹23,000 in a fixed deposit.

The fixed deposit could be liquidated only after an order of the competent Judicial Magistrate, which the police agency was expected to obtain within three months under the applicable provisions of the BNSS or other relevant law.

In default of such action within that period, the amount could be withdrawn by the petitioner after informing the police agency.