Binna Lodhi vs. Kotak Mahindra Bank Rau Branch Through Its Branch Manager

Held

The Court held that the decisions in Malcolm Murayis and Archana were applicable mutatis mutandis to the present case. The Court directed that the disputed amount of Rs. 45,294.81 be kept in a Fixed Deposit (FD). The Court further stipulated that if any other complaint is received by the bank regarding another entry, the bank may take appropriate action in accordance with law, keeping in mind the SOP issued by the Government. The disputed amount shall be allowed to be liquidated only after orders are passed by the competent Judicial Magistrate within three months. If the police agency fails to proceed in accordance with law within this period, the amount kept in FD may be allowed to be withdrawn by the petitioner under intimation to the Police agency. Consequently, the bank account of the petitioner shall be unfrozen, and the petitioner will be permitted to operate the account. The petition was disposed of with these directions.

Facts

The petitioner, Binna Lodhi, filed a writ petition seeking a direction to Kotak Mahindra Bank to defreeze their bank account. The petitioner contended that their case was covered by previous judgments of the High Court, specifically Malcolm Murayis & Ors. Vs. State Bank of India and Others (W.P. No.1100 of 2024) and Archana Vs. The State of Madhya Pradesh and Others (dated 27.07.2026). These judgments dealt with the freezing of bank accounts based on intimations from cyber cells, often without prior notice to the account holder. The petitioner argued that they were lawfully conducting their business and that the freezing of their account was done without proper procedure or notice. The disputed amount in the present petition is Rs. 45,294.81.

Key Issues

1. Whether the High Court can direct the defreezing of a bank account frozen by a bank on the intimation of cyber crime cells, particularly when the account holder claims to be conducting lawful business and has not received any notice regarding involvement in any offense? (Question of law, relying on principles of natural justice and procedural fairness). 2. Whether the principles laid down in Malcolm Murayis & Ors. Vs. State Bank of India and Others and Archana Vs. The State of Madhya Pradesh and Others are applicable to the present case? Petitioner's arguments: The petitioner argued that their case is squarely covered by the aforementioned High Court decisions, which provided relief to account holders whose accounts were frozen without notice. They emphasized that they were engaged in lawful trading and that the freezing was done abruptly. They relied on the procedure outlined in these judgments, including the possibility of keeping disputed amounts in fixed deposits. Revenue/State's arguments: The judgment does not record specific arguments from the revenue or state. The banks' submissions in the cited cases indicated they froze accounts only upon instructions from cyber cell police stations and were bound by those instructions. The judgment in Archana's case also refers to the Standard Operating Procedure (SOP) issued by the Ministry of Home Affairs for grievance redressal in cyber crime cases.