Only the disputed cyber-fraud amount may remain secured in fixed deposit pending the Magistrate’s order.

The petitioner challenged the freezing/lien placed by IDBI Bank on its account bearing No. 0529 1020000242 13 and sought its defreezing under Article 226 of the Constitution.

The Court found that the petitioner’s case was covered by Malcolm Murayis & Others v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024, where bank accounts had been frozen pursuant to communications from cyber-crime police authorities alleging that the accounts were linked with cyber fraud.

Applying that precedent, the Court recorded that an amount of Rs. 49,813.87 had been identified by the crime agencies as disputed and required protective treatment.

1. Whether the petitioner’s bank account, frozen pursuant to communications from police/cyber-crime agencies, could continue to remain wholly frozen in the absence of further action under the applicable legal provisions.

2. Whether the disputed amount of Rs. 49,813.87 should be separately secured in a fixed deposit, while permitting the petitioner to operate the remainder of the account.

3. Whether the disputed amount could be released if the competent Judicial Magistrate did not pass appropriate orders within three months.

The Court applied the principle recognised in Malcolm Murayis & Others v. State Bank of India & Others, W.P. No. 1100 of 2024, that where a bank account is frozen on the request of investigating authorities in connection with alleged cyber fraud, the disputed amount may be preserved in a fixed deposit, but the entire account should not remain frozen indefinitely.

The Court referred to the requirement that the police proceed in accordance with law under the relevant provisions of the BNSS or any other applicable law, corresponding to the earlier reference to Section 102 of the Cr.P.C. concerning seizure of property and reporting to the competent Magistrate.

It further applied the precedent’s direction that liquidation of the fixed deposit should depend on orders of the competent Judicial Magistrate within three months, failing which the amount may be made available to the account-holder under intimation to the investigating agency.

The Court held that the present matter was mutatis mutandis covered by Malcolm Murayis because the account had been frozen on the basis of information supplied by crime agencies, rather than by any independent action of the bank.

Balancing the investigative interest in preserving the allegedly tainted amount against the petitioner’s right to operate its account, the Court directed that only Rs. 49,813.87 be segregated and placed in a fixed deposit. The remainder of the funds was not required to remain frozen.

The police authorities were expected to obtain appropriate orders from the competent Judicial Magistrate under the applicable law within three months; otherwise, the protective restraint on the fixed deposit would cease in accordance with the Court’s directions.

IDBI Bank was directed to keep Rs. 49,813.87 in a fixed deposit, which could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months.

If no such order was passed within that period, the amount could be released to the petitioner under intimation to the police agency.

The petitioner’s bank account was to be unfrozen, and any amount other than the disputed Rs. 49,813.87 was expressly ordered to be defreezed.