Cyber-fraud-linked bank accounts must be unfrozen while disputed sums remain secured in fixed deposits.

The petitioner invoked Article 226 of the Constitution seeking defreezing of bank account No. 0227104000240147 maintained with IDBI Bank.

The account had been frozen pursuant to information received from cyber-crime authorities, which identified ₹15,000 in the account as a disputed amount allegedly connected with cyber crime.

The petitioner relied on Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024, where the Court directed that disputed amounts be placed in fixed deposits while permitting operation of the remaining account.

The respondents’ position, as reflected in the relied-upon precedent, was that the bank had acted on instructions of investigating authorities and had not independently frozen the account.

Whether the petitioner’s bank account, frozen on the basis of information received from cyber-crime authorities, should be directed to be unfrozen.

Whether the disputed amount of ₹15,000 should be segregated and retained in a fixed deposit pending orders of the competent Judicial Magistrate under the applicable law.

The Court exercised its jurisdiction under Article 226 of the Constitution to issue appropriate directions concerning the operation of the petitioner’s bank account.

It applied the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Ors., namely that where a bank account is frozen pursuant to cyber-crime investigation, the undisputed portion of the account may be made operational while the disputed amount is secured in a fixed deposit, subject to orders of the competent Judicial Magistrate.

The Court further relied on the requirement that investigating authorities proceed in accordance with Section 102 of the Code of Criminal Procedure, or the corresponding applicable provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, and obtain appropriate judicial orders within a reasonable period.

The Court found that the facts of the petitioner’s case were materially covered by the directions issued in Malcolm Murayis and held that those directions would apply mutatis mutandis.

Balancing the investigative interest in preserving allegedly tainted funds against the petitioner’s right to operate the account, the Court directed that only the disputed amount of ₹15,000 be placed in a fixed deposit.

Liquidation of that fixed deposit was made subject to an order of the competent Judicial Magistrate within three months, thereby requiring the police authorities to take lawful steps under the applicable statutory provisions.

Since the disputed amount was separately secured, continued freezing of the entire account was not considered necessary.

IDBI Bank was directed to unfreeze the petitioner’s bank account while keeping ₹15,000 in a fixed deposit.

The fixed deposit could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months.

If no such order was passed within that period, the amount could be permitted to be withdrawn by the petitioner under intimation to the concerned police agency.