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

The petitioner approached the High Court under Article 226 of the Constitution challenging the freeze/hold placed on his Bandhan Bank account No. 50220026057872, IFSC BDBL0001371, allegedly without lawful authority or judicial order, and sought its removal.

The petitioner contended that his case was covered by Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024.

In Malcolm Murayis, the Court had dealt with bank-account freezes initiated on communications from cyber-crime authorities in connection with alleged cyber fraud, and had directed that the disputed amounts be placed in fixed deposits pending appropriate orders under Section 102 of the CrPC or other applicable law.

1. Whether the freeze placed on the petitioner’s Bandhan Bank account pursuant to communications from crime/cyber-crime agencies could continue without the agency obtaining appropriate orders from the competent Judicial Magistrate under the applicable law.

2. Whether the petitioner’s bank account should be unfrozen subject to preservation of the disputed amount in a fixed deposit pending orders of the competent Judicial Magistrate.

The Court exercised its jurisdiction under Article 226 of the Constitution to grant appropriate relief against the continuation of an allegedly unauthorized bank-account freeze.

It followed Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024, which held that where a bank account is frozen at the instance of investigating authorities in connection with alleged cyber fraud, the disputed amount may be secured in a fixed deposit, but its continued retention must be supported by proceedings before the competent Judicial Magistrate under Section 102 of the CrPC or other applicable law.

In the present case, the Court referred to the relevant provisions of the BNSS or any other law relied upon by the police agency, and required the competent Judicial Magistrate to pass appropriate orders within three months.

The Court found the petitioner’s case to be covered mutatis mutandis by Malcolm Murayis.

Rather than permitting an unrestricted withdrawal of the entire balance, it balanced the petitioner’s right to operate the account with the investigative agency’s interest in preserving suspected proceeds of crime.

Accordingly, the bank was directed to identify and place the disputed amount claimed by the crime agencies in fixed deposits.

The amount could be liquidated only pursuant to orders of the competent Judicial Magistrate within three months, thereby ensuring compliance with the applicable seizure/freezing procedure under the BNSS or other relevant law.

Since the disputed amount would remain secured, the continued freezing of the entire bank account was held unnecessary, and the account was directed to be unfrozen.

The respondents/Bank were directed to unfreeze the petitioner’s bank account, while keeping the disputed amount claimed by the crime agencies in fixed deposits.

The fixed deposits could be liquidated only after orders of the competent Judicial Magistrate passed within three months.

If the police agency failed to obtain such orders within that period, the amount kept in fixed deposit could also be withdrawn by the petitioner, under intimation to the police agency.