Only disputed cyber-fraud amounts may remain secured; remaining bank funds must be defrozen.

The petitioner sought relief under Article 226 of the Constitution for defreezing its bank accounts identified in Annexure P/4, contending that the accounts had been frozen pursuant to communications from cyber-crime authorities.

The petitioner’s case was held to be squarely covered by Malcolm Murayis & Others v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024, where similar bank-account freezes arising from alleged cyber fraud had been considered.

In Malcolm Murayis, the Court had directed that the disputed amounts be placed in fixed deposits pending appropriate orders from the competent Judicial Magistrate, while permitting operation of the remaining account balance.

1. Whether the petitioner’s bank accounts, frozen pursuant to communications from cyber-crime agencies, should be defrozen where the case is covered by the principle laid down in Malcolm Murayis.

2. Whether any amount allegedly connected with cyber crime should be preserved in fixed deposit pending orders of the competent Judicial Magistrate, while permitting the petitioner to operate the undisputed balance.

The Court applied Article 226 of the Constitution, under which the High Court may issue appropriate writs and directions to prevent unlawful or procedurally defective deprivation of access to property and bank accounts.

It relied on the precedent in Malcolm Murayis & Others v. State Bank of India & Others, which required investigating agencies to proceed in accordance with Section 102 of the Code of Criminal Procedure, 1973, or the applicable law, and required disputed amounts to be preserved in fixed deposits subject to orders of the competent Judicial Magistrate.

In the present case, the Court referred to compliance with the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 (“BNSS”), or any other law relied upon by the police agency.

The governing principle was that only the amount specifically linked to the alleged offence may remain secured; the undisputed balance should not remain frozen indefinitely.

The Court found that the petitioner’s case was materially identical to Malcolm Murayis and therefore applied that decision mutatis mutandis.

Balancing the investigative need to preserve allegedly tainted funds against the petitioner’s right to access its account, the Court directed that any disputed amount identified by the crime agencies be placed in fixed deposits.

Such deposits could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months, thereby requiring the police agency to take appropriate legal steps under the BNSS or other applicable law.

If no such order were obtained within the stipulated period, the fixed-deposit amount could also be released to the petitioner under intimation to the police agency.

The Court further held that the remaining undisputed funds were not required to remain frozen.

The petitioner’s bank account(s) mentioned in the relief clause were directed to be unfrozen.

Any amount identified by the crime agencies as disputed or connected with cyber crime was to be kept in fixed deposit and could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months.

In the absence of such an order, the petitioner could seek withdrawal of the fixed-deposit amount after informing the police agency.

The balance amount, if any, was directed to be released from the freeze.