Cyber-fraud freezes must be confined to disputed amounts; remaining funds must be released.

The petitioner’s savings bank account No. 1014016360 maintained with Kotak Mahindra Bank, Greater Kailash Road Branch, Indore, was frozen pursuant to communications from cyber-crime/police authorities concerning suspected cyber-fraud transactions.

The petitioner sought complete defreezing of the account or, alternatively, requested that only the disputed amount of ₹9,500—comprising two credits of ₹4,750 each received on 6 August 2025 and 8 December 2025—be retained under lien while permitting operation of the remaining balance and future transactions.

The Court found that the petitioner’s case 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, frozen pursuant to communications from cyber-crime/police authorities, should be directed to be defrozen under Article 226 of the Constitution?

Whether the disputed amount of ₹9,500 should be segregated and retained in fixed deposits, while the petitioner is permitted to operate the remainder of the account?

Whether the disputed amount could remain frozen without the investigating agency obtaining appropriate orders from the competent Judicial Magistrate within the prescribed period?

The Court exercised its jurisdiction under Article 226 of the Constitution of India to regulate the consequences of a bank-account freeze arising from an alleged cyber-fraud investigation.

It relied on the principle in Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, that where a bank account is frozen on the instructions of cyber-crime authorities, the bank may retain only the disputed amount in a fixed deposit, while the undisputed balance should be made available to the account holder.

The investigating agency must proceed in accordance with Section 102 of the Code of Criminal Procedure, 1973, or the corresponding applicable provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, and obtain orders from the competent Judicial Magistrate within three months; failing that, the retained amount may be released to the petitioner.

The Court held that the facts of the present case were materially identical to those in Malcolm Murayis, where bank accounts had been frozen following cyber-crime communications and the investigating agencies had not taken timely steps before the competent Magistrate.

Applying that precedent mutatis mutandis, the Court balanced the need to preserve the allegedly tainted funds against the petitioner’s right to operate the account.

It therefore directed that the two disputed credits of ₹4,750 each be placed in fixed deposits and made subject to liquidation only upon orders of the competent Judicial Magistrate within three months.

Since the remaining funds were not shown to be connected with the alleged cyber-fraud, continued freezing of the entire account was held unwarranted.

Kotak Mahindra Bank was directed to unfreeze the petitioner’s account and permit operation of the undisputed balance.

The disputed amounts of ₹4,750 each, totalling ₹9,500, were to be kept in fixed deposits and could be liquidated only pursuant to orders of the competent Judicial Magistrate obtained within three months.

If the police/investigating agency failed to proceed in accordance with the applicable law within that period, the fixed-deposit amount could also be released to the petitioner under intimation to the police agency.