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

The petitioner maintained Savings Bank Account No. 881010110013705 with Bank of India, Vijay Nagar Branch, Indore.

The account had been subjected to a debit freeze pursuant to information or directions issued by crime/cyber agencies in connection with an alleged cyber fraud.

The petitioner approached the High Court under Article 226 of the Constitution seeking removal of the freeze and permission to operate the account without restriction.

The petitioner relied upon Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024, in which a similar account-freezing dispute had been addressed.

The amount allegedly linked to the cyber-crime transactions in the petitioner’s account was stated to be ₹27,760.

Whether the petitioner’s bank account should be unfrozen when the account had been frozen pursuant to information supplied by crime or cyber agencies in relation to an alleged cyber fraud?

Whether the disputed amount of ₹27,760 should instead be segregated and kept in a fixed deposit, subject to orders of the competent Judicial Magistrate and further action by the investigating agency?

Whether the investigating agency was required to proceed in accordance with the applicable provisions of the BNSS or other governing law, including the procedure relating to seizure or freezing of property?

The Court exercised its jurisdiction under Article 226 of the Constitution of India to examine the legality and continuing necessity of the debit freeze.

It applied the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Ors., that where a bank account is frozen pursuant to directions from cyber-crime or police authorities, the disputed amount may be preserved in a fixed deposit while the account holder is permitted to operate the remaining account, subject to orders of the competent Judicial Magistrate.

The Court further relied on the requirement that the police agency must proceed in accordance with the applicable statutory procedure under the BNSS or other law relied upon, and that failure to do so within the prescribed period may justify release of the preserved amount to the account holder.

The earlier decision also referred to the corresponding obligation under Section 102 of the CrPC to report seizure to the competent Magistrate.

The Court found that the petitioner’s case was materially covered by the ratio of Malcolm Murayis and held that the same directions could be applied mutatis mutandis.

Rather than permitting the entire account to remain frozen, the Court balanced the investigative interest in preserving the allegedly tainted funds against the petitioner’s right to use the undisputed balance.

It therefore directed that ₹27,760, the amount claimed to be connected with the alleged cyber fraud, be placed in a fixed deposit.

The fixed deposit would remain subject to liquidation only upon an order of the competent Judicial Magistrate within three months, allowing the investigating agency time to take legally prescribed steps under the BNSS or other applicable law.

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

The respondent bank was directed to unfreeze the petitioner’s bank account while keeping the disputed amount of ₹27,760 in a fixed deposit.

The amount could be liquidated only pursuant to an order 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 withdrawn by the petitioner under intimation to the police agency.

No further substantive relief was granted, and the matter was disposed of with these directions.