Only disputed cyber-fraud amounts may remain secured; the balance must be defreezed pending Magistrate’s orders.

The petitioner challenged the freezing of his bank account maintained with Utkarsh Small Finance Bank, Indore, Account No. 1764019179535566, pursuant to communications from cyber-crime/police authorities alleging that the account was connected with cyber fraud.

He contended that the entire account had been frozen despite the disputed amount being limited to ₹11,000, comprising ₹5,000 and ₹6,000, and sought defreezing of the account while retaining only the disputed amount under lien.

The Court noted that the matter was squarely covered by Malcolm Murayis & Ors. v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024.

In Malcolm Murayis, the Court had directed that the disputed amount be placed in fixed deposits, subject to orders of the competent Judicial Magistrate, while permitting operation of the remaining account balance.

Whether the petitioner’s entire bank account could remain frozen when the police/cyber-crime authorities had identified only ₹11,000 as the disputed amount.

Whether the disputed amount should be retained in a fixed deposit pending proceedings before the competent Judicial Magistrate under the applicable law, while the remaining balance is defrozen.

Whether the directions issued in Malcolm Murayis & Ors. v. State Bank of India & Others applied mutatis mutandis to the present case.

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

It applied the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Others, W.P. No. 1100 of 2024, that where a bank account is frozen on the instructions of cyber-crime authorities, only the amount allegedly connected with the offence should be segregated and kept in fixed deposit, while the remaining balance should be made available to the account holder.

The disputed amount may be liquidated only pursuant to an order of the competent Judicial Magistrate within three months; the police agency is expected to proceed in accordance with the relevant provisions of the BNSS or any other applicable law.

If no such order is obtained within the stipulated period, the fixed-deposit amount may be withdrawn by the petitioner after intimation to the police agency.

The Court’s earlier decision had referred to Section 102 of the CrPC; the present order referred to the corresponding or otherwise applicable provisions of the BNSS.

The Court found the present case materially identical to Malcolm Murayis, where an indiscriminate freeze of bank accounts based solely on cyber-crime communications was held to require procedural and factual limitation to the allegedly tainted amount.

Since the authorities had identified the disputed sum as ₹11,000, freezing the petitioner’s entire account was disproportionate. Applying the precedent, the Court directed that only ₹11,000 be secured in fixed deposits pending appropriate orders from the competent Judicial Magistrate within three months. The remaining funds were not shown to be connected with the alleged cyber offence and therefore were not required to remain frozen.

If no such order was passed within that period, the amount could be withdrawn by the petitioner after informing the police agency. The petitioner’s bank account was directed to be unfrozen, and the remaining balance was expressly ordered to be defreezed.