Cybercrime-linked bank accounts must be defrozen except for disputed amounts secured in fixed deposits pending Magistrate orders.

The petitioner approached the Madhya Pradesh High Court under Article 226 of the Constitution seeking removal of the freeze/hold imposed on his ICICI Bank account No. 657205602005, allegedly without lawful authority or a judicial order.

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 based on communications from cyber-crime police authorities.

The Court found the present case to be squarely covered by that precedent and proceeded to dispose of the petition on the same principles.

Whether the petitioner’s bank account, frozen pursuant to communications from crime/cyber-crime agencies, could continue to remain completely frozen without compliance with the applicable legal procedure and orders of the competent Judicial Magistrate?

Whether the disputed amount claimed by the crime agencies should be segregated and retained in a fixed deposit while the remaining balance is released to the petitioner?

The Court exercised its jurisdiction under Article 226 of the Constitution of India to examine the continued freezing of the petitioner’s bank account.

It applied the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Others, under which the bank may retain the disputed amount identified by the investigating agency in a fixed deposit, subject to liquidation only pursuant to an order of the competent Judicial Magistrate within the prescribed period; failure of the investigating agency to proceed in accordance with law may justify permitting withdrawal of the amount by the account-holder.

The earlier decision referred to compliance with Section 102 of the Code of Criminal Procedure, 1973, while the present Court directed the police authorities to act under the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, or any other applicable law.

The Court further applied the principle that only the disputed amount need remain secured and that the undisputed balance should not continue to be frozen.

The Court held that the present matter was materially indistinguishable from Malcolm Murayis, which concerned bank accounts frozen on the basis of communications from cyber-crime agencies alleging that certain credits were connected with cyber fraud.

Applying that precedent, the Court balanced the investigative interest in preserving allegedly tainted funds against the petitioner’s right to operate the account.

It directed that only the amount claimed by the crime agencies be placed in a fixed deposit, subject to orders of the competent Judicial Magistrate within three months.

Since no legal justification existed for freezing the entire account, the account was to be unfrozen and the remaining balance released, subject to intimation to the police agency where applicable.

The respondent bank was directed to unfreeze the petitioner’s bank account.

The amount disputed or claimed by the crime agencies was to be kept in a fixed deposit and 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 the applicable law within that period, the fixed-deposit amount could also be permitted to be withdrawn by the petitioner under intimation to the police agency.

Any undisputed amount in the account was not to remain frozen and was to be released.