Cybercrime-related bank accounts must be unfrozen; disputed amounts remain in fixed deposits pending Magistrate’s orders.

The petitioner approached the Madhya Pradesh High Court under Article 226 of the Constitution seeking restoration of access to and unfreezing of his ICICI Bank account bearing No. 094401506928, maintained at the Pandhana Road Branch, Khandwa.

The account had been frozen pursuant to information or directions allegedly issued by cyber-crime authorities in connection with disputed transactions.

The petitioner relied on the High Court’s earlier decision in Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024.

The Court recorded that the disputed amount identified by the investigating or crime agencies was Rs. 1,34,874/-.

Whether the petitioner’s bank account, frozen on the basis of information supplied by cyber-crime authorities, ought to be unfrozen when the disputed amount can be separately secured?

Whether the disputed amount of Rs. 1,34,874/- should be retained in a fixed deposit pending appropriate orders by the competent Judicial Magistrate under the applicable criminal procedure law?

The Court applied Article 226 of the Constitution, under which the High Court may issue appropriate writs and directions to protect legal rights and ensure lawful exercise of investigative powers.

It relied on the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. Nos. 1100 and 1185 of 2024, decided on 26 April 2024, that where a bank account is frozen pursuant to cyber-crime investigations, the disputed amount may be retained in a fixed deposit while the account itself is unfrozen, subject to orders of the competent Judicial Magistrate.

The earlier decision further required investigating agencies to proceed in accordance with Section 102 of the Code of Criminal Procedure, 1973, or the corresponding applicable provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, and to obtain appropriate judicial orders within the stipulated period.

The precedent was applied mutatis mutandis to the present case.

The Court found the present case materially covered by Malcolm Murayis, which addressed the freezing of bank accounts on cyber-crime authorities’ instructions and balanced the investigation’s interest in preserving suspected proceeds with the account holder’s right to operate the account.

Applying that principle, the Court considered it unnecessary to maintain a complete freeze when the specifically disputed sum of Rs. 1,34,874/- could be segregated and secured in a fixed deposit.

The investigating agency was therefore required to pursue the matter in accordance with the applicable provisions of the BNSS or other governing law and obtain orders from the competent Judicial Magistrate within three months.

If such orders were not obtained within that period, the fixed deposit could be liquidated and the amount withdrawn by the petitioner under intimation to the police agency.

The fixed deposit could be liquidated only pursuant to orders of the competent Judicial Magistrate to be obtained within three months.

In the event of failure by the police agency to secure such orders within that period, the petitioner would be permitted to withdraw the fixed-deposit amount under intimation to the police agency.