Only disputed cybercrime-linked funds may remain secured; banks must unfreeze the remaining account balance.

The petitioner approached the High Court under Article 226 of the Constitution seeking removal of the hold/freeze imposed on four bank accounts maintained in his name with the State Bank of India.

The petitioner’s case was treated as being covered by the High Court’s earlier decision in Malcolm Murayis & Others v. State Bank of India and Others, W.P. No. 1100 of 2024, decided on 26 April 2024.

In that precedent, bank accounts had been frozen on the basis of communications from cyber-crime police authorities alleging that the accounts were connected with cyber fraud, without the investigating agencies taking further procedural steps under the applicable law.

Whether the petitioner’s bank accounts, which had been frozen pursuant to communications from cyber-crime agencies, should be unfrozen under Article 226 of the Constitution.

Whether any amount allegedly connected with cyber crime should be retained separately in fixed deposits pending appropriate orders from the competent Judicial Magistrate.

Whether the undisputed balance in the petitioner’s accounts should be released from the freeze.

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

It relied on the principle stated in Malcolm Murayis & Others v. State Bank of India and Others, that where a bank account is frozen on the request of investigating agencies, the entire account need not remain blocked; instead, the amount specifically linked to the alleged cyber crime may be secured in a fixed deposit, subject to orders of the competent Judicial Magistrate.

The Court further directed the police authorities to proceed in accordance with the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), or any other applicable law, concerning seizure or attachment of property during investigation.

The balance not connected with the alleged offence should not remain frozen.

The Court found that the petitioner’s case was mutatis mutandis covered by the reasoning in Malcolm Murayis.

Applying that principle, it held that a blanket freeze of the petitioner’s bank accounts was not warranted merely because cyber-crime agencies had identified or communicated a potentially tainted amount.

The proper course was to preserve only the disputed amount in fixed deposits and leave its withdrawal or liquidation to the orders of the competent Judicial Magistrate within three months.

Since the remaining funds were not shown to be connected with the alleged cyber offence, they were not required to remain frozen and had to be released.

The respondent bank was directed to keep any amount identified by the investigating or cyber-crime agencies as disputed in fixed deposits.

Such fixed deposits could be liquidated only pursuant to orders of the competent Judicial Magistrate within three months; failing such orders, the amount could also be withdrawn by the petitioner under intimation to the police agency.

The specified bank accounts were directed to be unfrozen, and the undisputed balance, if any, was directed to be released from the freeze.