Cybercrime-related bank accounts must be unfrozen, while disputed amounts remain in fixed deposits pending judicial authorization.

The petitioner approached the Madhya Pradesh High Court under Article 226 of the Constitution seeking removal of the freeze/hold imposed on his Axis Bank account bearing No. 924030050687969.

He contended that the account had been frozen without lawful authority or a judicial order.

The petitioner relied upon 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 initiated on the basis of communications from cyber-crime police authorities.

The Court held that the earlier decision applied to the present case mutatis mutandis.

1. Whether the petitioner’s bank account, frozen pursuant to information or directions from crime/cyber-crime agencies, should remain completely frozen in the absence of further lawful proceedings before the competent Judicial Magistrate

2. Whether the disputed amount identified by the crime agencies should be segregated and retained in a fixed deposit while permitting operation of the remaining bank account

3. Whether the police agency must take steps in accordance with the applicable law, including the relevant provisions of the BNSS, within a specified period

The Court applied Article 226 of the Constitution, which empowers the High Court to issue appropriate writs and directions for enforcement of legal rights and to prevent arbitrary State action.

It relied on the precedent in Malcolm Murayis & Ors. v. State Bank of India & Others, where the Court held that, instead of maintaining a blanket freeze, the bank should place the disputed amount identified by the investigating agencies in fixed deposits, subject to liquidation only upon orders of the competent Judicial Magistrate within three months; if the investigating agency failed to proceed in accordance with law, the amount could thereafter be made available to the account holder under intimation to that agency.

The present Court directed the police agency to proceed under the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) or any other applicable law.

The Court found the present case materially similar to Malcolm Murayis, which dealt with bank accounts frozen on the basis of communications from cyber-crime authorities without effective follow-up proceedings before the competent Magistrate.

Applying that precedent mutatis mutandis, the Court considered that a complete and indefinite freeze of the petitioner’s account was unwarranted.

At the same time, preservation of the amount allegedly connected with the suspected crime was necessary.

The Court therefore adopted a balanced approach: the disputed amount was to be secured in a fixed deposit, while the account itself was to be unfrozen, subject to the investigating agency obtaining appropriate judicial orders within three months.

Axis Bank was directed to place the disputed amount communicated by the crime agencies in a fixed deposit.

The fixed deposit could be liquidated only after orders were passed by the competent Judicial Magistrate within three months.

The police agency was expected to proceed in accordance with the relevant provisions of the BNSS or other applicable law.

If it failed to do so within the stipulated period, the amount kept in fixed deposit could also be withdrawn by the petitioner under intimation to the police agency.

The petitioner’s bank account was directed to be unfrozen.