Upon cyber-fraud freezes, banks must preserve only disputed amounts and unfreeze the remainder.

The petitioner invoked Article 226 of the Constitution seeking removal of the hold/freeze imposed on Current Account No. 178501000009732 maintained with Indian Overseas Bank in his name.

The account had been frozen pursuant to information received from cyber-crime authorities concerning an amount allegedly connected with cyber fraud.

Relying on its earlier decision in Malcolm Murayis v. State Bank of India, W.P. No. 1100 of 2024, decided on 26 April 2024, the Court considered the legality and extent of the freeze.

The disputed amount identified in the present case was Rs. 756.

Whether the petitioner’s bank account could continue to remain wholly frozen on the basis of a cyber-crime agency’s intimation without further proceedings before the competent Judicial Magistrate.

Whether the disputed amount of Rs. 756 should be secured separately while permitting operation of the remaining balance in the account.

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

It applied the principle laid down in Malcolm Murayis v. State Bank of India, that the disputed amount communicated by investigating agencies should be kept in a fixed deposit and should be liquidated only pursuant to an order of the competent Judicial Magistrate within the prescribed period, while the undisputed balance should not remain frozen.

The Court further directed the police agency to proceed in accordance with the relevant provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, or any other applicable law.

The earlier decision had referred to compliance with Section 102 of the Code of Criminal Procedure concerning seizure and reporting to the Magistrate.

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

It balanced the investigative agency’s interest in preserving the allegedly tainted amount against the petitioner’s right to operate the account.

Accordingly, only Rs. 756—the amount identified by the cyber-crime agencies—was required to be placed in a fixed deposit pending an order of the competent Judicial Magistrate.

Since there was no justification for freezing the entire account, the remaining amount was directed to be released from the freeze.

Indian Overseas Bank was directed to keep Rs. 756 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 withdrawn by the petitioner upon intimation to the police agency.

The petitioner’s bank account was otherwise directed to be unfrozen, and any remaining balance was not required to remain frozen.