Jabbarul Malik vs. Kotak Mahindra Bank Greater Kailash Indore Thorugh Its Branch Manager

Held

The Court held that the principles laid down in the cases of 'Malcolm Murayis' and 'Archana' were applicable to the present case. It directed that the disputed amount of Rs. 2,000/- be kept in a Fixed Deposit (FD). The Court further stipulated that if any other complaint was received by the bank regarding other entries, the bank could take appropriate action in accordance with law, keeping in mind the SOP. The disputed amount would be allowed to be liquidated only after orders were passed by the competent Judicial Magistrate within three months, with the expectation that the police agency would proceed in accordance with law under the relevant provisions. Failing this, the amount in FD could be withdrawn by the petitioner under intimation to the police agency. The Court also directed that the petitioner's bank account be unfrozen, and the petitioner be permitted to operate the account. The ratio decidendi is that in cases of frozen bank accounts due to alleged cyber fraud, a balance must be struck between the need for investigation and the account holder's right to operate their funds, with a time-bound grievance redressal mechanism and judicial oversight being crucial.

Facts

The petitioner, Jabbarul Malik, filed a writ petition seeking to unfreeze his bank account (No. 5850062291) held with Kotak Mahindra Bank. The account had been frozen based on an intimation from cyber cell police stations, alleging involvement in cyber fraud. The petitioner contended that he was unaware of any such involvement and was lawfully conducting his business. He relied on previous judgments of the High Court in similar matters, specifically 'Malcolm Murayis & Ors. Vs. State Bank of India and Others' and 'Archana Vs. The State of Madhya Pradesh and Others', which dealt with the freezing of bank accounts in cyber crime cases and the Standard Operating Procedure (SOP) issued by the Ministry of Home Affairs. The disputed amount in this case was stated to be Rs. 2,000/-.

Key Issues

1. Whether the High Court has the jurisdiction to direct the unfreezing of a bank account when it has been frozen by law enforcement agencies due to allegations of cyber fraud, and if so, under what conditions? (Article 226 of the Constitution of India, Section 102 of Cr.P.C.) Petitioner's Arguments: - The petitioner argued that his bank account was frozen without prior notice and that he was engaged in legitimate business. He contended that the freezing was arbitrary and sought the removal of the hold on his account. - Reliance was placed on the High Court's decisions in 'Malcolm Murayis' and 'Archana', which established a procedure for dealing with frozen accounts in cyber crime cases, including the application of the SOP and the possibility of releasing funds after placing disputed amounts in fixed deposits. Revenue/State's Arguments: - The judgment does not explicitly record arguments from the revenue or state. However, the context implies that the freezing was done at the behest of law enforcement agencies based on allegations of cyber fraud. The banks' position, as reflected in the cited judgments, is that they act upon instructions from investigating authorities.