Cybercrime-related bank accounts must be unfrozen while disputed amounts remain in fixed deposits pending magistrate orders.

The petitioner approached the Madhya Pradesh High Court under Article 226 of the Constitution seeking unfreezing of his State Bank of India account bearing No. 34596038975 and other appropriate reliefs.

The account had been frozen pursuant to information or directions received from crime/cyber agencies in relation to alleged cyber fraud.

The amount identified as disputed was Rs. 1,000.

The petitioner contended that his case was covered by Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024.

In Malcolm Murayis, the Court had directed that the disputed amount be kept in fixed deposits and that the remaining account be permitted to operate, subject to proceedings before the competent Judicial Magistrate.

Whether the petitioner’s bank account, frozen pursuant to information or directions issued by cyber-crime authorities, should be unfrozen subject to safeguarding the disputed amount.

Whether the disputed amount of Rs. 1,000 should be retained in a fixed deposit pending appropriate orders by the competent Judicial Magistrate under the applicable law.

The Court applied Article 226 of the Constitution concerning the High Court’s power to issue appropriate writs and directions.

It relied on the principle embodied in the decision in Malcolm Murayis & Ors. v. State Bank of India & Ors., under which a bank account frozen in connection with alleged cyber fraud may be unfrozen while the specifically disputed amount is secured in a fixed deposit, subject to lawful proceedings before the competent Judicial Magistrate.

The Court further referred to the requirement that the police or cyber-crime agency proceed in accordance with Section 102 of the CrPC or the corresponding applicable provisions of the BNSS, with the disputed amount remaining subject to orders of the competent Magistrate.

The Court found that the petitioner’s case was materially identical to the circumstances considered in Malcolm Murayis, and therefore held that the earlier decision would apply mutatis mutandis.

Balancing the petitioner’s right to operate his bank account against the investigative agencies’ interest in preserving the allegedly tainted amount, the Court adopted the safeguard used in the precedent: only Rs. 1,000, the amount reported by the crime agencies as disputed, was to be segregated and placed in a fixed deposit.

The account itself was directed to be unfrozen, while liquidation of the fixed deposit was made subject to orders of the competent Judicial Magistrate and the police agency’s compliance with the applicable statutory procedure.

The respondent bank was directed to keep the disputed amount of Rs. 1,000 in a fixed deposit, which could be liquidated only pursuant to orders 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 relevant law within that period, the petitioner could seek withdrawal of the fixed-deposit amount under intimation to the police agency.

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