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

The petitioner approached the High Court under Article 226 of the Constitution seeking removal of the hold/freeze/lien imposed on its bank account bearing No. 925020047677939 with the respondent bank.

The petitioner relied on Malcolm Murayis & Ors. v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024, concerning the freezing of bank accounts on the instructions of cyber-crime investigating agencies.

In Malcolm Murayis, the Court had directed that disputed amounts identified by cyber-crime agencies be kept in fixed deposits and permitted operation of the remaining account, subject to further orders of the competent Judicial Magistrate.

Applying that precedent, the Court found that disputed amounts totalling ₹1,61,086 had been reported by crime agencies in the petitioner’s account.

Whether the petitioner’s bank account, frozen pursuant to communications from cyber-crime agencies, should be unfrozen subject to preservation of the disputed amount.

Whether the disputed amount of ₹1,61,086 should be retained in fixed deposit pending proceedings before the competent Judicial Magistrate under the applicable provisions of the BNSS or other law.

The Court applied Article 226 of the Constitution, under which the High Court may issue appropriate writs and directions to protect legal rights and ensure lawful exercise of investigative powers.

It relied on Malcolm Murayis & Ors. v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024, which held that where bank accounts are frozen on the instructions of cyber-crime agencies, the disputed amount may be secured in fixed deposits while the account is otherwise permitted to operate.

The Court further required the police agency to proceed in accordance with Section 102 of the CrPC, or the corresponding applicable provisions of the BNSS or other law, and to obtain appropriate orders from the competent Judicial Magistrate within the prescribed period.

The Court held that the precedent in Malcolm Murayis applied mutatis mutandis to the present case.

Accordingly, instead of continuing a complete freeze of the petitioner’s account, the Court balanced the investigative interest in preserving allegedly tainted funds with the petitioner’s right to operate its account.

The identified disputed sum of ₹1,61,086 was directed to be secured in fixed deposits, thereby preserving it for adjudication by the competent Judicial Magistrate.

The remaining operation of the account was not required to remain blocked, particularly since the police agency was expected to take lawful steps under the BNSS or other applicable law within three months.

The respondent bank was directed to keep the disputed amount of ₹1,61,086 in fixed deposits, which could be liquidated only pursuant to orders of the competent Judicial Magistrate within three months.

If the police 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.

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