Cyber-fraud bank accounts must be unfrozen, while disputed sums remain in fixed deposits pending Magistrate orders.

The petitioner approached the Madhya Pradesh High Court under Article 226 of the Constitution seeking removal of the hold/freeze imposed on his bank account maintained with respondent No. 3 bank, Account No. 924010063535334.

The freeze was allegedly imposed pursuant to information or directions issued by police/cyber-crime authorities in connection with suspected cyber fraud.

The petitioner relied on the High Court’s earlier decision in Malcolm Murayis & Others v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024, concerning the freezing of bank accounts on instructions of cyber-crime agencies.

The amount allegedly linked to the cyber-crime transactions in the petitioner’s account was stated to be Rs. 23.

Whether the petitioner’s bank account, frozen pursuant to directions or information supplied by cyber-crime authorities, should be unfrozen subject to preservation of the disputed amount.

Whether the disputed amount of Rs. 23 should be placed in a fixed deposit pending appropriate orders by the competent Judicial Magistrate under the applicable criminal-procedure law.

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

It applied the principle laid down in Malcolm Murayis & Others v. State Bank of India & Others, W.P. Nos. 1100 and 1185 of 2024, decided on 26 April 2024, that where an account is frozen on the request of cyber-crime investigating agencies, the disputed amount may be segregated and kept in a fixed deposit, while the remaining account may be made operational.

The disputed amount could be liquidated only pursuant to an order of the competent Judicial Magistrate, after the police agency proceeds in accordance with Section 102 of the Code of Criminal Procedure, 1973, or the corresponding applicable provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, or any other relied-upon law.

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

Rather than permitting the continued blanket freezing of the entire account, the Court adopted the safeguard previously formulated: the specific amount allegedly connected with the cyber offence would be preserved separately through a fixed deposit, ensuring that the investigative or victim-restitution interest was protected.

At the same time, the petitioner would regain access to the account.

The fixed deposit could be liquidated only after the competent Judicial Magistrate passed appropriate orders within three months; if the police agency failed to proceed in accordance with law within that period, withdrawal of the amount would become permissible upon intimation to the police agency.

The respondent bank was directed to keep the disputed amount of Rs. 23 in a fixed deposit, to be liquidated only pursuant to an order of the competent Judicial Magistrate within three months.

If the police agency failed to take lawful steps within that period, the amount could also be withdrawn by the petitioner after intimating the police agency.

The petitioner’s bank account was directed to be unfrozen.