Only the disputed amount may remain secured; the bank account’s remaining balance must be defreezed.

The petitioner approached the Madhya Pradesh High Court under Article 226 of the Constitution seeking removal of the hold/freeze imposed on Bank Account No. 176400000000014 maintained with Utkarsh Small Finance Bank.

The freeze had been imposed pursuant to information or directions issued by cyber-crime agencies concerning an amount allegedly connected with cyber fraud.

The disputed amount identified in the present case was ₹2,988.

The petitioner relied on the decision in Malcolm Murayis & Ors. v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024, concerning freezing of bank accounts on cyber-crime-related requests.

Whether the petitioner’s bank account could continue to remain completely frozen on the basis of a cyber-crime agency’s communication concerning only a disputed amount of ₹2,988.

Whether the disputed amount should be preserved in a fixed deposit pending proceedings before the competent Judicial Magistrate, while permitting the remaining balance and operation of the bank account.

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, under which the bank must segregate the amount allegedly linked to cyber fraud by placing it in a fixed deposit, while the account itself should not remain entirely frozen; liquidation of the fixed deposit is subject to orders of the competent Judicial Magistrate.

The Court further required the police agency to proceed in accordance with Section 102 of the CrPC, or the corresponding provisions of the Bharatiya Nagarik Suraksha Sanhita (BNSS), or any other applicable law, within the prescribed period.

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

Since only ₹2,988 was identified as being connected with the alleged cyber offence, a complete freeze of the account was disproportionate.

Following the earlier precedent, the Court directed preservation of the disputed sum in a fixed deposit, leaving its liquidation to the competent Judicial Magistrate after the investigating agency complied with the applicable statutory procedure.

The balance amount, not alleged to be connected with the cyber offence, was not required to remain frozen.

Utkarsh Small Finance Bank was directed to place ₹2,988 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 proceed in accordance with law within that period, the amount could also be withdrawn by the petitioner under intimation to the police agency.

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