MP HC Orders Kotak To Unfreeze Account, Keep ₹21,000 In FD; Petitioner May Withdraw If No Magistrate Order In 3 Months

The petitioner’s Kotak Mahindra Bank savings account was frozen in connection with Complaint No. 20810260090190. The petitioner sought restoration of normal account operations and release of the amount subject to a second lien, while retaining a lien over the disputed sum of ₹21,000.

Relying on Malcolm Murayis and Archana, the petitioner argued that the case was covered by those decisions. The Court considered the grievance in light of those precedents and the Government’s Standard Operating Procedure dated 10 April 2026 concerning accounts placed on hold through the NCRP-CFCFRMS mechanism.

The Court applied the principles in Malcolm Murayis & Ors. v. State Bank of India and Others, under which a disputed amount may be kept in a fixed deposit pending lawful action by the competent Magistrate, with release permitted if the required action is not taken within three months.

It also applied the SOP dated 10 April 2026 and the guidelines discussed in Archana v. State of Madhya Pradesh and Others: an account restraint should be proportionate, ordinarily limited to the suspected amount where that is sufficient, and the account holder should be able to use undisputed funds; any continued whole-account freeze should be justified by reasons. The order referred to action by the police agency under the relevant provisions of the BNSS or other applicable law.

The Court considered Malcolm Murayis and Archana applicable mutatis mutandis.

Consistent with the proportionality approach in Archana, it separated preservation of the disputed ₹21,000 from the restraint on the account as a whole. It therefore directed that the disputed amount be placed in a fixed deposit, while allowing the petitioner to operate the account. The Court also preserved the bank’s ability to act lawfully if it received a complaint concerning another transaction.

If the police agency does not proceed in accordance with law within that period, the petitioner may withdraw the fixed-deposit amount after notifying the police agency. The bank may take appropriate action under the SOP if it receives a complaint concerning another entry.