Only the disputed amount may be secured in fixed deposit; remaining account funds must be defreezed.

The petitioner’s Savings Bank Account No. 1549162501 maintained with Kotak Mahindra Bank, LIG Branch, Indore, was frozen pursuant to a communication/request from the police or cyber-crime authorities in connection with an alleged cyber-fraud transaction.

The petitioner approached the High Court under Article 226 of the Constitution seeking withdrawal of the freezing request, restoration of full operation of the account, or, alternatively, confinement of the freeze to the alleged disputed amount of ₹1,500, with the remaining balance made available for use.

The petitioner relied on Malcolm Murayis & Others v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024, where the Court had directed that only the disputed amount be placed in fixed deposit and the bank account otherwise be unfrozen.

Whether the petitioner’s entire bank account could remain frozen merely on the basis of a police or cyber-crime agency communication concerning an alleged disputed amount of ₹1,500.

Whether the disputed amount alone should be secured in fixed deposit pending action by the competent Judicial Magistrate, while the remainder of the account balance is released for operation by the petitioner.

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 & Others v. State Bank of India & Others, under which the bank may retain only the amount linked to the alleged cyber-fraud in fixed deposit, subject to liquidation upon orders of the competent Judicial Magistrate, while the balance account should not remain frozen.

The Court further directed the police authorities to proceed in accordance with the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS), or any other applicable law, concerning seizure or restraint of property and to obtain appropriate orders from the competent Judicial Magistrate within three months.

The Court found that the petitioner’s case was squarely covered by Malcolm Murayis, which had rejected the practice of keeping an entire bank account frozen when the investigating agency had identified only a specific amount as allegedly connected with cyber-fraud.

Applying that principle, the Court held that the alleged disputed amount of ₹1,500 could be protected by placing it in a fixed deposit, thereby preserving the subject matter of the investigation without unnecessarily preventing the petitioner from operating the remainder of the account.

The fixed deposit was made subject to liquidation only after an order of the competent Judicial Magistrate within three months; failing such action, the petitioner could seek withdrawal of that amount after intimating the police agency.

The Court expressly clarified that the remaining balance was not required to remain frozen.

The respondents/bank were directed to keep ₹1,500, being the disputed amount communicated by the crime agencies, in fixed deposit, subject to orders of the competent Judicial Magistrate within three months.

The petitioner’s bank account was ordered to be unfrozen, and the remaining amount, if any, was directed to be made available for operation.

If the police agency failed to obtain appropriate judicial orders within the stipulated period, the fixed-deposit amount could also be withdrawn by the petitioner after intimation to the agency.