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

The petitioner, Aarti Enterprises, challenged the freezing/holding of its Axis Bank account, Account No. 923020050083127, alleging that the account had been frozen without lawful authority or a judicial order.

The account was frozen pursuant to information or directions received from cyber-crime authorities concerning an amount allegedly linked to cyber fraud.

The disputed amount identified by the authorities was ₹7,376.

The petitioner sought unfreezing of the account and permission to operate it.

The Court recorded that the case 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.

Whether the petitioner’s bank account, frozen pursuant to cyber-crime authorities’ instructions, should be wholly unfrozen in the absence of further lawful proceedings or a judicial order?

Whether the disputed amount of ₹7,376 should remain secured through a fixed deposit pending orders of the competent Judicial Magistrate under the applicable legal provisions?

The Court applied the principles laid down in Malcolm Murayis & Ors. v. State Bank of India & Ors., wherein it directed that the amount allegedly connected with cyber fraud be placed in a fixed deposit and permitted its liquidation only upon an order of the competent Judicial Magistrate within the prescribed period; failure of the investigating agency to proceed in accordance with law would justify release of the amount to the account-holder.

The Court relied on the statutory procedure governing seizure or freezing of property during investigation, earlier referred to as Section 102 of the Code of Criminal Procedure, and in the present order described as the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 (“BNSS”) or any other applicable law.

It further applied the principle that only the specifically disputed amount need remain secured, while the undisputed balance should not continue to be frozen.

The Court found the petitioner’s case to be materially identical to Malcolm Murayis, where accounts had been frozen on cyber-crime authorities’ instructions without effective follow-up proceedings before the competent Magistrate.

Applying that precedent, the Court balanced the investigating agency’s interest in preserving the allegedly tainted amount against the petitioner’s right to operate its business account.

It therefore directed that ₹7,376 be placed in a fixed deposit, subject to liquidation only upon a Judicial Magistrate’s order within three months, while requiring the remaining balance, if any, to be released from the freeze.

The respondent bank was directed to unfreeze the petitioner’s account, except that the disputed amount of ₹7,376 was to be maintained in a fixed deposit and 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 the applicable law within that period, the fixed-deposit amount could also be released to the petitioner under intimation to the police agency.

The undisputed amount in the account was directed to be defreezed.