Cybercrime allegations cannot justify blanket account freezing; disputed funds must remain secured pending Magistrate orders.

The petitioner approached the High Court under Article 226 of the Constitution seeking removal of the hold/freeze imposed on Bank Account No. 1764018871796041 maintained with the respondent bank.

The petitioner relied on the High Court’s earlier decision in Malcolm Murayis & Ors. v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024, concerning bank-account freezes allegedly initiated on the basis of cyber-crime complaints.

Applying that precedent, the Court recorded that an amount of Rs. 891.70 had been claimed by the crime agencies as the disputed amount.

Whether the petitioner’s bank account, frozen pursuant to communications from crime/police agencies concerning an alleged cyber-related transaction, should be unfrozen?

Whether the disputed amount of Rs. 891.70 should be retained in a fixed deposit pending orders of the competent Judicial Magistrate under the applicable law?

The Court applied Article 226 of the Constitution, permitting judicial review and appropriate directions in cases involving unlawful or disproportionate restraint on the operation of a bank account.

It followed the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Others, namely that where an account is frozen on the basis of cyber-crime allegations, the bank may be directed to segregate the disputed amount in a fixed deposit while permitting operation of the remaining account; liquidation of the fixed deposit should depend upon orders of the competent Judicial Magistrate within the prescribed period.

The earlier decision referred to compliance with Section 102 of the Code of Criminal Procedure, while the present Court directed the police agency to proceed under the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, or any other applicable law.

The Court found that the petitioner’s case was squarely covered by Malcolm Murayis and applied that decision mutatis mutandis.

Rather than continuing a complete freeze of the petitioner’s account, the Court adopted the balancing mechanism used in the precedent: the amount allegedly linked to the crime would remain protected in a fixed deposit, while the account itself would be unfrozen.

The fixed deposit could be liquidated only upon an order of the competent Judicial Magistrate within three months, thereby preserving the interests of the investigation while avoiding an excessive restraint on the petitioner’s banking operations.

The respondent bank was directed to keep Rs. 891.70 in a fixed deposit, to 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 the applicable law within that period, the amount in the fixed deposit 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.