Cyber-fraud-linked bank accounts must be unfrozen while disputed amounts remain in fixed deposits pending Magistrate’s orders.

The petitioner approached the High Court under Article 226 of the Constitution seeking removal of the hold/freeze imposed on her savings bank account No. 16314700001120 maintained with DCB Bank.

The petitioner relied on the Madhya Pradesh High Court’s decision in Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024, concerning bank-account freezes initiated on the instructions of cyber-crime investigating agencies.

The Court found that the principles laid down in Malcolm Murayis applied mutatis mutandis to the present case.

Whether the petitioner’s bank account, frozen pursuant to information or directions from crime-investigating agencies, should be unfrozen in the absence of demonstrated compliance with the applicable procedure governing seizure or freezing of bank accounts.

Whether the amount allegedly connected with a cyber offence should remain protected through a fixed deposit pending orders of the competent Judicial Magistrate.

Article 226 of the Constitution empowers the High Court to issue appropriate writs and directions for protection against arbitrary administrative or investigative action.

The Court applied the precedent in Malcolm Murayis & Ors. v. State Bank of India & Ors., which directed that the disputed amount identified by cyber-crime agencies be retained in fixed deposits, while permitting operation of the remaining bank account, and required the investigating agency to proceed before the competent Judicial Magistrate in accordance with Section 102 of the CrPC or other applicable law.

In the present case, the Court referred to compliance with the relevant provisions of the BNSS or any other applicable law and preserved the disputed amount until appropriate judicial orders were obtained.

The Court considered the present case materially similar to Malcolm Murayis, where bank accounts had been frozen on communications from cyber-crime authorities and the Court balanced the petitioner’s right to operate the account against the need to preserve allegedly tainted funds.

Applying that approach, the Court held that the disputed amount could be segregated and protected in a fixed deposit rather than allowing the entire account to remain frozen.

The investigating agency was required to proceed in accordance with the applicable BNSS provisions or other governing law and obtain orders from the competent Judicial Magistrate within three months.

The amount reported by the crime agencies as disputed was to be placed in a fixed deposit and could be liquidated only pursuant to orders of the competent Judicial Magistrate obtained within three months.

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