Only the disputed cyber-fraud amount may remain secured; the bank must defreeze the remaining account balance.

The petitioner filed a petition under Article 226 of the Constitution challenging the freezing/holding of his IDFC First Bank account No. 10148528303, allegedly pursuant to communications from cyber-crime/police authorities in connection with suspected cyber fraud.

He sought removal of the freeze and permission to operate the account. The Court noted 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, which dealt with bank-account freezes based on cyber-crime investigations.

Whether the continued freezing of the petitioner’s bank account, on the basis of information received from cyber-crime/police authorities, could be sustained without the disputed amount being dealt with in accordance with the procedure contemplated under Section 102 of the CrPC or the corresponding provisions of the BNSS.

Whether the petitioner was entitled to operate the bank account with only the amount allegedly linked to cyber fraud being secured separately.

The Court exercised its jurisdiction under Article 226 of the Constitution to regulate the freezing of the petitioner’s bank account.

It relied on the principle in Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, decided on 26 April 2024, that where a bank account is frozen at the instance of cyber-crime authorities, the disputed amount may be retained in a fixed deposit and may be liquidated only upon an order of the competent Judicial Magistrate.

The investigating agency is expected to proceed in accordance with Section 102 of the CrPC or the corresponding provisions of the BNSS, and failure to obtain the Magistrate’s order within the stipulated period may justify release of the secured amount.

Amounts not shown to be connected with the alleged offence should not remain frozen.

The Court found the present case to be squarely covered by Malcolm Murayis.

Applying that precedent, it balanced the investigative interest in preserving allegedly tainted funds against the petitioner’s right to operate his bank account.

Accordingly, only the amount identified by the police/cyber-crime agencies as disputed was to be placed in a fixed deposit, subject to liquidation only on an order of the competent Judicial Magistrate within three months.

The remaining funds were not required to remain frozen and had to be released to the petitioner.

The concerned bank was directed to unfreeze the petitioner’s account, while placing the disputed amount, as communicated by the police/cyber-crime authorities, in a fixed deposit.

The fixed deposit could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months; failing such an order, the amount could also be withdrawn by the petitioner under intimation to the police agency.

All other amounts in the account were directed to be defreezed.