Cybercrime-related bank accounts must be unfrozen, with disputed sums secured in fixed deposits pending Magistrate orders.

The petitioner invoked Article 226 of the Constitution seeking a direction to the concerned respondents to defreeze its current bank account and permit its operation.

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

The petitioner’s account was allegedly connected with a disputed amount of Rs. 27,000, which had been identified by the crime agencies.

Whether the petitioner’s bank account, allegedly frozen pursuant to instructions issued by crime/cyber-crime authorities, should be permitted to operate subject to safeguarding the disputed amount.

Whether the disputed amount of Rs. 27,000 should be segregated in a fixed deposit pending orders of the competent Judicial Magistrate under the applicable criminal-procedure law.

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

It applied the principle laid down in Malcolm Murayis & Others v. State Bank of India & Others, namely that where a bank account is frozen on the instructions of investigating or cyber-crime agencies, the disputed amount may be retained in a fixed deposit, while the remaining account may be unfrozen, subject to the investigating agency obtaining appropriate orders from the competent Judicial Magistrate under Section 102 of the Code of Criminal Procedure, 1973, or the corresponding applicable provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS).

The fixed deposit may be liquidated only pursuant to the Magistrate’s order within the prescribed period; failing such action, the amount may be released to the petitioner after intimation to the police agency.

The Court found that the petitioner’s case was squarely covered by the principle in Malcolm Murayis and held that the same directions applied mutatis mutandis.

Balancing the investigative interest in preserving the allegedly tainted amount against the petitioner’s right to operate its business account, the Court directed that only the disputed sum of Rs. 27,000 be placed in a fixed deposit.

Since the police agency was expected to proceed before the competent Judicial Magistrate under the BNSS or other applicable law within three months, the continued freezing of the entire account was considered unnecessary.

The respondents/bank were directed to unfreeze the petitioner’s bank account and permit its operation.

The disputed amount of Rs. 27,000 was to be kept in a fixed deposit and could be liquidated only pursuant to an order of the competent Judicial Magistrate passed within three months.

If the police agency failed to obtain such an order within that period, the fixed-deposit amount could also be withdrawn by the petitioner after intimating the police agency.