Only the disputed amount may remain frozen pending a Magistrate’s order; remaining bank funds must be defreezed.

The petitioner approached the Madhya Pradesh High Court under Article 226 of the Constitution seeking removal of the hold/freeze placed on his bank account and release of the amount therein.

The account had been restricted pursuant to information or directions received from cyber-crime/police authorities in connection with an alleged cyber fraud.

The petitioner relied upon the High Court’s earlier decision in Malcolm Murayis & Ors. v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024, concerning similar bank-account freezes.

In the present case, the amount identified as disputed was Rs. 3,000.

1. Whether the petitioner’s bank account, frozen pursuant to communication from cyber-crime/police authorities, should be permitted to operate subject to safeguarding the disputed amount.

2. Whether the disputed amount of Rs. 3,000 should be retained in a fixed deposit pending an order by the competent Judicial Magistrate under the applicable criminal procedure law.

3. Whether the remaining balance in the petitioner’s account, not connected with the alleged cyber fraud, should be released from the freeze.

The Court exercised its jurisdiction under Article 226 of the Constitution to issue appropriate directions concerning 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, decided on 26 April 2024, that where an account is frozen on the basis of cyber-crime allegations, the disputed amount may be secured in a fixed deposit and may be liquidated only pursuant to an order of the competent Judicial Magistrate within the prescribed period.

The Court also relied on the statutory requirement that the investigating agency proceed in accordance with Section 102 of the CrPC, or the corresponding applicable provisions of the BNSS, and obtain appropriate judicial oversight over the seized or restrained amount.

The Court found that the petitioner’s case was squarely covered by Malcolm Murayis and applied that decision mutatis mutandis.

Balancing the need to preserve any amount potentially connected with cyber fraud against the petitioner’s right to access his lawful funds, the Court directed that only the identified disputed amount of Rs. 3,000 be kept in a fixed deposit.

Its liquidation was made conditional upon an order of the competent Judicial Magistrate within three months, thereby requiring the police agency to proceed in accordance with law.

Since the remaining funds were not shown to be connected with the alleged cyber offence, there was no justification for continuing the freeze over the entire account.

The respondent bank was directed to keep Rs. 3,000 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 amount could be released to the petitioner under intimation to the police agency.

The petitioner’s bank account was otherwise directed to be unfrozen, and any remaining amount was ordered to be released from the freeze.