Karnataka HC Sends Fino Bank’s ₹11.92-Crore Lien Plea Back for Review Under RBI Payments Bank Guidelines

In brief

The question

1. Whether the trial court’s order rejecting Fino’s application to remove the lien on ₹11.92 crore should be set aside

The court held

The petition was allowed in part.

It also directed

The High Court quashed the trial court’s order dated 4 March 2026 and remitted the application for reconsideration under Sections 451 and 457 CrPC, directing the trial court to decide it within eight weeks while bearing in mind the observations in the judgment.

The Court did not itself order removal of the lien or release of the ₹11.92 crore.

01Facts

Crime No. 243/2023 was registered over the alleged misappropriation of funds belonging to D. Devaraj Urs Truck Terminal Limited.

pp. 3–6

During the investigation, police marked a lien of ₹11.92 crore in an account held by Fino Payments Bank with Punjab National Bank.

pp. 3–6

Fino was not named as an accused and sought removal of the lien under Sections 451 and 457 CrPC, asserting that the amount belonged to the Bank and was unconnected to the alleged crime.

pp. 3–6, 11

The trial court rejected the application, reasoning that the claim could not be decided while related investigation proceedings were stayed.

pp. 12–15

Fino challenged that order before the High Court.

pp. 1–3

02Issues

i.1. Whether the trial court’s order rejecting Fino’s application to remove the lien on ₹11.92 crore should be set aside

pp. 3–5, 15–16

ii.2. Whether the application should be reconsidered having regard to the RBI’s Operating Guidelines for Payments Banks

p. 16

03Law Applied

The application before the trial court was made under Sections 451 and 457 of the Code of Criminal Procedure, concerning the court’s powers in relation to the custody and disposal of property during or following an inquiry or trial.

p. 3, 7

The High Court also referred to the RBI’s Operating Guidelines for Payments Banks as relevant to reconsideration of the Bank’s application.

p. 16

Provisions in the judgment · 9 · Linked ones open on LawLens

Code of Criminal Procedure, 1973 Section 451 Section 457 Section 482

Bharatiya Nagarik Suraksha Sanhita, 2023 Section 528

Indian Penal Code, 1860 Section 409 Section 420 Section 465 Section 471 Section 486

04Reasoning

The High Court noted the Bank’s contention that it was not an accused and that no finding linked the ₹11.92 crore to the alleged proceeds of crime; the State, in contrast, maintained that the amount was connected to transactions under investigation and should remain secured.

pp. 4–6

Rather than deciding those competing claims on the merits, the Court found that the trial court should reconsider the application with reference to the RBI’s Operating Guidelines for Payments Banks, which had not been considered.

p. 16

The remand left the question of lien removal open for fresh determination.

p. 16