Only the disputed cyber-fraud amount may remain frozen; the remaining account balance must be defreezed.

The petitioner invoked Article 226 of the Constitution challenging the freezing of Savings Bank Account No. 42829243327 maintained with the respondent bank.

He sought restoration of full operational rights, a declaration that the freezing was arbitrary and violative of Articles 14, 19(1) and 21, and disclosure of the complaints or orders forming the basis of the freezing action.

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

In that precedent, bank accounts had been frozen pursuant to communications from cyber-crime police authorities alleging that the accounts were linked to cyber fraud, while the investigating agencies had not effectively proceeded in accordance with the applicable seizure procedure.

Whether the petitioner’s bank account, frozen pursuant to communications from cyber-crime authorities, should remain completely inoperative or be restored subject to safeguarding the disputed amount.

Whether the amount allegedly linked to cyber fraud should be segregated and kept in a fixed deposit pending orders of the competent Judicial Magistrate under the applicable law.

Whether the undisputed balance in the petitioner’s account was required to remain frozen.

The Court exercised its jurisdiction under Article 226 of the Constitution to regulate arbitrary or procedurally unsupported restrictions on the operation of a bank account.

It applied the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, dated 26 April 2024, that where an account is frozen on the basis of cyber-crime communications, the disputed amount may be preserved in a fixed deposit and may be liquidated only pursuant to an order of the competent Judicial Magistrate within the prescribed period.

The Court further required the police agency to proceed in accordance with the relevant provisions of the BNSS or any other applicable law, while permitting release of the preserved amount if no such lawful action is taken within three months.

The principle was also applied that amounts in the account not connected with the alleged offence should not remain frozen.

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

Accordingly, it balanced the investigative interest in preserving any amount allegedly connected with cyber fraud against the petitioner’s right to operate his bank account.

Rather than sustaining a blanket freeze, the Court directed that only the disputed amount communicated by the crime agencies be placed in a fixed deposit, subject to orders of the competent Judicial Magistrate within three months.

Since the police authorities were expected to initiate appropriate proceedings under the BNSS or other applicable law, failure to do so would permit withdrawal of the fixed-deposit amount by the petitioner after intimation to the police agency.

The remaining balance, being unrelated to the disputed amount, was not required to remain frozen.

The respondent bank was directed to unfreeze the petitioner’s bank account and restore its operation, while keeping only the disputed amount identified by the crime agencies in a fixed deposit.

The fixed deposit could be liquidated only upon an order of the competent Judicial Magistrate within three months; in the absence of such lawful proceedings or an order within that period, the petitioner could withdraw the amount after informing the police agency.

Any undisputed amount in the account was directed to be defreezed and made available to the petitioner.