Only disputed cybercrime proceeds may remain secured; banks must unfreeze the account’s remaining funds.

The petitioner filed a writ petition under Article 226 of the Constitution seeking defreezing of his savings bank account bearing No. 63007385199 maintained with respondent No. 2 bank and permission to operate it.

The High Court found that the petition was squarely covered by its earlier decision in Malcolm Murayis & Others v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024.

In the present case, an amount of ₹38,725 had been identified by crime agencies as the disputed amount connected with the alleged cyber-crime transactions.

Whether the petitioner’s bank account, frozen on the basis of information received from crime/police agencies, should be defreezed and the petitioner permitted to operate it?

Whether the disputed amount of ₹38,725 should remain secured in a fixed deposit pending action by the competent Judicial Magistrate under the applicable criminal-procedure law?

The Court exercised its jurisdiction under Article 226 of the Constitution of India to grant appropriate relief against the continued freezing of the bank account.

It relied on the principle laid down in Malcolm Murayis & Others v. State Bank of India & Others, W.P. No. 1100 of 2024, that where a bank account is frozen pursuant to instructions from cyber-crime or investigating agencies, the disputed amount may be segregated and kept in a fixed deposit, while the remaining account balance should ordinarily be released for operation; the investigating agency must proceed before the competent Judicial Magistrate in accordance with Section 102 of the CrPC or the corresponding applicable provisions of the BNSS.

The disputed amount may be released only pursuant to the Magistrate’s order within the prescribed period, failing which it may be withdrawn by the account holder under intimation to the police agency.

The Court considered the petitioner’s case to be governed by the ratio of Malcolm Murayis and applied that decision mutatis mutandis.

Balancing the investigative interest in preserving the allegedly tainted funds against the petitioner’s right to operate his bank account, the Court directed that only the identified disputed sum of ₹38,725 be protected by placing it in a fixed deposit.

The police agency was expected to obtain appropriate orders from the competent Judicial Magistrate under the relevant criminal-procedure provisions within three months.

Since the remaining funds were not shown to require continued restraint, the Court held that the account should be unfrozen and the petitioner allowed to operate it.

The respondent bank was directed to keep ₹38,725 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 obtain such an order within that period, the petitioner could withdraw the fixed-deposit amount under intimation to the concerned police agency.

The petitioner’s bank account was ordered to be unfrozen, and any remaining amount in the account was held not to require continued freezing.