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

The petitioner, Kredit Point, through its proprietor Mohit Vishal, filed a petition under Article 226 of the Constitution seeking removal of the freeze/hold imposed on its Axis Bank account No. 923020043381377.

The petitioner alleged that the account had been frozen without lawful authority or an order of a competent court.

The Court found that the matter was squarely covered by its earlier decision in Malcolm Murayis & Others v. State Bank of India & Others, W.P. Nos. 1100/2024 and 1185/2024, decided on 26 April 2024, concerning bank-account freezes based on communications from cyber-crime investigating agencies.

In the present case, the disputed amounts communicated by the crime agencies were Rs. 52,000 and Rs. 98,000, totalling Rs. 1,50,000.

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

Whether the disputed amount of Rs. 1,50,000 should be retained in fixed deposits pending orders of the competent Judicial Magistrate under the applicable legal provisions.

The Court applied Article 226 of the Constitution governing the High Court’s writ jurisdiction.

The Court relied on the precedent in Malcolm Murayis & Others v. State Bank of India & Others, which held that where a bank account is frozen on the instructions of cyber-crime agencies, the bank may retain the disputed amount in fixed deposit while permitting operation of the remaining account.

The disputed amount may be released or the fixed deposit liquidated only upon orders of the competent Judicial Magistrate within the prescribed period.

The investigating agency is required to proceed in accordance with Section 102 of the Code of Criminal Procedure, or the corresponding provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, or any other applicable law.

The Court considered the petitioner’s case to be materially identical to that decided in Malcolm Murayis and therefore applied that decision mutatis mutandis.

Following the earlier precedent, it balanced the petitioner’s right to operate its bank account against the need to preserve amounts allegedly connected with cyber offences.

Accordingly, rather than continuing a complete freeze, the Court directed that only the amounts identified by the crime agencies be secured in fixed deposits.

Their liquidation was made subject to an order of the competent Judicial Magistrate within three months, thereby ensuring compliance with the statutory procedure while preventing an indefinite restraint on the petitioner’s account.

The respondents/bank were directed to retain Rs. 52,000 and Rs. 98,000, totalling Rs. 1,50,000, in fixed deposits.

The fixed deposits could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months; failing such an order, the amount could be withdrawn by the petitioner under intimation to the police agency.

The petitioner’s bank account was directed to be unfrozen, subject to the aforesaid protection of the disputed amount.