Mr. Gurudev Singh vs. Kotak Mahindra Bank

Held

The Court held that the decisions in "Malcolm Murayis" and "Archana" were applicable mutatis mutandis to the present case. The disputed amount of Rs. 19,597/- shall be kept in a Fixed Deposit (FD). The bank account of the petitioner shall be unfrozen, and the petitioner will be permitted to operate the account. The FD will be liquidated only after orders are passed by the competent Judicial Magistrate within three months. If no further complaint is received by the bank regarding other entries, and if the police agency does not proceed in accordance with law within the stipulated time, the amount in FD may be allowed to be withdrawn by the petitioner under intimation to the police agency. The Court also noted the importance of adhering to the SOP issued by the Government, as discussed in the "Archana" case, and that banks should take appropriate action in accordance with law.

Facts

The petitioner, Mr. Gurudev Singh, filed a writ petition seeking to unfreeze his bank account held with Kotak Mahindra Bank. The account was 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 virtual currency trading business. He argued that he had not received any notice and that the freezing was done without adhering to procedural requirements. The bank stated it acted solely on instructions from the cyber cell police. The Court referred to previous judgments in "Malcolm Murayis & Ors. Vs. State Bank of India and Others" and "Archana Vs. The State of Madhya Pradesh and Others", which dealt with similar issues of frozen bank accounts due to cyber crime allegations and the Standard Operating Procedure (SOP) for grievance redressal.

Key Issues

1. Whether the freezing of the petitioner's bank account by the respondent bank, based on intimation from cyber cell police stations, is legally sustainable without prior notice to the petitioner and adherence to due process? (Question of law and mixed fact and law, concerning principles of natural justice and procedural fairness). 2. Whether the Standard Operating Procedure (SOP) dated 10.04.2026, issued by the Ministry of Home Affairs, for grievance redressal in respect of bank accounts put on hold through NCRP-CFCFRMS, and the principles laid down in "Archana Vs. The State of Madhya Pradesh and Others" and "Malcolm Murayis & Ors. Vs. State Bank of India and Others" are applicable to the present case? (Question of law, concerning the application of established legal precedents and administrative procedures). Petitioner's arguments: The petitioner argued that the freezing was arbitrary and lacked procedural fairness, as no notice was issued. They relied on the principle that lawful business activities should not be unduly hampered. They also pointed to the non-compliance with Section 102 of Cr.P.C. by the investigating agencies. The petitioner sought the unfreezing of the account, with the disputed amount to be kept in fixed deposits pending further orders. Revenue/State's arguments: The respondent bank argued that they were bound by the instructions of the cyber cell police stations and had not frozen the accounts on their own initiative. The judgment does not explicitly record arguments from the cyber cell police stations.