Cybercrime-related bank freezes must be limited to disputed amounts, with the balance released.

The petitioner invoked Article 226 of the Constitution seeking, inter alia, a direction to Axis Bank to unfreeze its current account bearing No. 924020052166867 and permit its operation.

The High Court noted that the petitioner’s case was squarely covered by its earlier decision in 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 dealt with bank accounts frozen pursuant to communications from cyber-crime authorities concerning suspected cyber-fraud transactions and directed that the disputed amounts be placed in fixed deposits pending appropriate orders from the competent Magistrate.

In the present case, the crime agencies had identified ₹3,79,811 as the disputed amount in the petitioner’s account.

1. Whether the petitioner’s bank account, frozen pursuant to communications from cyber-crime authorities, should be permitted to be operated subject to safeguarding the disputed amount of ₹3,79,811.

2. Whether the disputed amount should be retained in a fixed deposit pending orders of the competent Judicial Magistrate under the applicable law, while the remaining balance is released from the freeze.

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

It applied Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024, where it held that the amount allegedly connected with cyber-fraud may be secured in a fixed deposit, but the entire account need not remain frozen; liquidation of the fixed deposit is to depend on orders of the competent Judicial Magistrate within the prescribed period.

The Court referred to the requirement that investigating agencies proceed in accordance with Section 102 of the Code of Criminal Procedure, or the corresponding provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, and applicable law.

The Court found the present matter to be covered mutatis mutandis by Malcolm Murayis.

Applying that precedent, it balanced the investigative interest in preserving allegedly tainted funds against the petitioner’s right to operate its business bank account.

Accordingly, only the specifically identified disputed amount of ₹3,79,811 was required to be segregated in a fixed deposit.

The deposit could be liquidated only upon an order of the competent Judicial Magistrate within three months, thereby preserving the investigating agency’s claim while preventing an indefinite and overbroad freeze of the petitioner’s entire account.

Since the remaining funds were not identified as disputed, they were not required to remain frozen.

The Bank was directed to place ₹3,79,811—the amount reported by the crime agencies as disputed—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 amount in the fixed deposit could be released to the petitioner under intimation to the police agency.

The petitioner’s bank account was otherwise directed to be unfrozen, and the remaining balance, if any, was ordered to be made available for operation.