Banks must unfreeze accounts while retaining only disputed funds in fixed deposit pending lawful orders.

The petitioner sought a writ of mandamus directing IDBI Bank to unfreeze its current account and permit it to operate the account.

The petitioner relied on Malcolm Murayis & Ors. v. State Bank of India & Ors., W.P. No. 1100 of 2024, and Archana v. State of Madhya Pradesh & Ors., decided on 27 July 2026.

The Court recorded that the disputed amount comprised multiple transactions totalling ₹3,52,061.

1. Whether the petitioner’s account should be unfrozen while the disputed amount is preserved for the investigation.

2. Whether the disputed amount should remain secured pending action by the competent Judicial Magistrate under the applicable law.

Under Article 226 of the Constitution, the High Court may grant appropriate relief concerning the freezing of a bank account.

In Malcolm Murayis, the Court directed that the disputed amount be kept in fixed deposits and permitted its withdrawal if the competent Magistrate did not pass an order within three months.

Archana applied the Ministry of Home Affairs’ Standard Operating Procedure dated 10 April 2026 and set out principles requiring account freezes to be proportionate, grievance procedures to be followed, and investigative action to be taken within the prescribed timelines.

The Court held that these decisions applied mutatis mutandis to the present case.

The Court treated the principles in Malcolm Murayis and Archana as applicable to the petitioner’s account-freezing grievance.

It balanced preservation of the disputed funds against the petitioner’s ability to conduct banking transactions by directing that only the identified disputed amount of ₹3,52,061 be secured in a fixed deposit, while the account itself was unfrozen.

The direction was subject to any other complaint concerning a separate transaction being addressed by the Bank in accordance with law and the SOP.

The disputed amount of ₹3,52,061 is to be kept in a fixed deposit and may be liquidated only upon an order of the competent Judicial Magistrate within three months.

If no such order is passed within that period, the petitioner may withdraw the amount upon informing the Police agency.