Only disputed cyber-fraud amounts may remain secured; undisputed bank funds must be released pending Magistrate’s order.

The petitioner invoked Article 226 of the Constitution challenging the freezing/holding of his Indian Bank Account No. 8009079790 and State Bank of India Account No. 44556352306, contending that the accounts had been frozen without lawful authority or a judicial order.

The Court found that the matter was covered by Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. Nos. 1100 and 1185 of 2024, decided on 26 April 2024.

In Malcolm Murayis, accounts had been frozen on communications from cyber-crime police authorities alleging that the accounts were linked to cyber fraud; the Court had directed that the disputed amounts be placed in fixed deposits pending action under Section 102 of the Code of Criminal Procedure, 1973, or the applicable law.

Whether the petitioner’s bank accounts could remain wholly frozen on the basis of communications from cyber-crime/police authorities without compliance with the applicable law governing seizure or freezing of bank accounts.

Whether the disputed amount alleged to be connected with cyber crime should be segregated and retained in fixed deposits while the remaining funds are made available to the petitioner.

Whether the accounts should be unfrozen subject to the competent Judicial Magistrate passing appropriate orders within three months.

The High Court exercised its jurisdiction under Article 226 of the Constitution to examine the legality of the freezing of the petitioner’s bank accounts.

It applied the principle in Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024, that where bank accounts are frozen pursuant to cyber-crime investigations, the disputed amount may be secured in fixed deposits, but the entire account should not remain frozen indefinitely.

The Court relied on the requirement that investigating authorities proceed in accordance with Section 102 of the CrPC or the corresponding provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, and obtain appropriate orders from the competent Judicial Magistrate.

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

Following the earlier precedent, it balanced the investigative interest in preserving allegedly tainted funds against the petitioner’s right to operate the accounts.

Accordingly, only the amount identified by the crime agencies as disputed was required to be placed in fixed deposits, subject to liquidation upon an order of the competent Judicial Magistrate within three months.

Since continued freezing of the entire accounts was not justified, the accounts were directed to be unfrozen and any undisputed balance was expressly required to be released from the freeze.

The respondent banks were directed to unfreeze the petitioner’s Indian Bank and State Bank of India accounts.

The amount reported by the crime agencies as disputed was to be kept in fixed deposits and could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months.

If no such order was passed within that period, the fixed-deposit amount could also be withdrawn by the petitioner under intimation to the concerned police agency.

Any remaining undisputed amount was not to remain frozen and was required to be released.