Cybercrime-linked bank accounts must be unfrozen, while disputed sums remain in fixed deposits pending Magistrate’s orders.

The petitioner approached the Madhya Pradesh High Court under Article 226 of the Constitution seeking directions to the respondents to unlock and release his SBI bank account bearing No. 35072021289, maintained at the Regional Office, City Centre, Gwalior, and to permit normal transactions, including deposits and withdrawals.

The petitioner’s counsel submitted that the matter was covered by 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.

In Malcolm Murayis, the Court had dealt with bank accounts frozen pursuant to communications from cyber-crime authorities concerning suspected fraudulent transactions and had directed that the disputed amounts be kept in fixed deposits pending action by the competent Magistrate.

The Court held that the said decision applied to the petitioner’s case mutatis mutandis.

Whether the petitioner’s bank account, allegedly frozen pursuant to information or directions from police/cyber-crime authorities, should be unfrozen and permitted to operate subject to protection of the disputed amount?

Whether the disputed amount should be placed in a fixed deposit pending appropriate orders by the competent Judicial Magistrate under the applicable criminal procedure law?

The Court applied the principle under Section 102 of the Code of Criminal Procedure, 1973, as recognised in Malcolm Murayis & Ors. v. State Bank of India & Others, that seizure or freezing of property connected with an alleged offence must be followed by appropriate compliance with the statutory procedure, including placing the matter before the competent Magistrate.

The Court relied on Malcolm Murayis, which permitted the disputed amount to be retained in fixed deposits while allowing the remaining account operations, subject to orders of the competent Judicial Magistrate within the prescribed period.

In the present case, the Court referred to the corresponding or otherwise applicable provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) or any other law relied upon by the police agency.

The Court found that the petitioner’s case was materially covered by the directions issued in Malcolm Murayis and therefore applied that precedent mutatis mutandis.

Balancing the investigative interest in preserving allegedly tainted funds against the petitioner’s right to operate his bank account, the Court directed that only the disputed amount communicated by the crime agencies be secured in fixed deposits, rather than maintaining a complete freeze over the account.

The fixed deposit 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 provisions of the BNSS or other law within that period, the petitioner could seek withdrawal of the fixed-deposit amount after informing the concerned police agency.

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

The amount identified by the crime agencies as disputed was to be kept in a fixed deposit and could be released only pursuant to orders of the competent Judicial Magistrate within three months.

In the event of failure by the police agency to take lawful proceedings within that period, the fixed-deposit amount could be withdrawn by the petitioner after intimation to the concerned police agency.