Cybercrime-related bank freezes must be confined to disputed amounts; undisputed funds must be released.

The petitioner maintained Bank Account No. 33220100007927 with the Bank of Baroda.

The account was subjected to a debit freeze pursuant to information or directions issued by cyber-crime authorities in connection with an alleged cyber-fraud transaction.

The petitioner contended that only ₹52,000 was disputed and sought an order directing the Bank to release the remaining undisputed funds while confining the freeze or lien to ₹52,000.

The petitioner relied on the Madhya Pradesh High Court’s decision in Malcolm Murayis & Others v. State Bank of India & Others , W.P. No. 1100 of 2024, decided on 26 April 2024, where the Court directed that the disputed amount be placed in a fixed deposit and that the remaining account funds be made available to the petitioners.

Whether the petitioner’s bank account could continue to remain wholly frozen when only ₹52,000 was identified as the disputed amount in connection with the alleged cyber-fraud?

Whether the disputed amount should be secured in a fixed deposit pending orders of the competent Judicial Magistrate under the applicable criminal-procedure law, while the undisputed balance is released to the petitioner?

The Court applied the principle in Malcolm Murayis & Others v. State Bank of India & Others , W.P. No. 1100 of 2024, decided on 26 April 2024, that where a bank account is frozen on the basis of cyber-crime complaints, the disputed amount may be retained in a fixed deposit and liquidated only pursuant to an order of the competent Judicial Magistrate, while the undisputed balance should not remain frozen.

The Court further relied on the requirement that the investigating agency 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, concerning seizure or attachment of property and reporting to the competent Magistrate.

The precedent was held applicable mutatis mutandis to the petitioner’s case.

The Court found the petitioner’s case to be squarely covered by Malcolm Murayis , which required a distinction between the amount allegedly connected with cyber-fraud and the remaining funds in the account.

Applying that principle, the Court held that the Bank could preserve the identified disputed amount of ₹52,000, but there was no justification for continuing a complete debit freeze over the petitioner’s account.

Accordingly, ₹52,000 was directed to be placed in a fixed deposit, subject to liquidation only after orders of the competent Judicial Magistrate within three months.

The balance amount, being undisputed, was required to be released and the account unfrozen.

The Bank was directed to keep ₹52,000 in a fixed deposit, which 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 law within that period, the petitioner could seek withdrawal of the fixed-deposit amount after giving intimation to the agency.

The petitioner’s bank account was directed to be unfrozen, and all remaining undisputed funds were ordered to be released.