MP HC Unfreezes Firm’s Account, Keeps ₹2,000 Disputed Sum in Fixed Deposit for Up to Three Months

The petitioner filed a petition under Article 226 seeking removal of the hold/freeze on its current account with City Union Bank.

The petitioner relied on Malcolm Murayis v. State Bank of India and the later decision in Archana v. State of Madhya Pradesh, which considered the Ministry of Home Affairs’ Standard Operating Procedure (SOP) dated 10 April 2026 for grievances concerning bank accounts frozen in cybercrime cases.

The disputed amount identified in this petition was Rs. 2,000.

Article 226 of the Constitution empowers the High Court to grant appropriate relief against an unjustified or disproportionate restraint on a bank account.

In Malcolm Murayis v. State Bank of India, the Court directed that the disputed amount be kept in fixed deposits and permitted withdrawal if the police did not proceed before the competent Magistrate within the specified period.

In Archana v. State of Madhya Pradesh, the Court considered the SOP dated 10 April 2026 and laid down guidelines requiring bank-account freezes in cybercrime cases to be proportionate, with a lien or debit freeze ordinarily limited to the suspected amount where that would adequately protect the investigation; investigative action must also comply with the applicable law and provide for appropriate judicial oversight.

The Court held that the principles in Malcolm Murayis and Archana applied mutatis mutandis.

Since the disputed amount in this case was identified as Rs. 2,000, the Court considered it appropriate to secure that sum in a fixed deposit rather than continue freezing the petitioner’s entire account.

This preserved the disputed amount while allowing the petitioner to operate the account, consistently with the proportionality approach reflected in the SOP and the cited decisions.

The disputed amount may be liquidated only after orders are passed by the competent Judicial Magistrate within three months; if the police do not proceed within that period, the petitioner may withdraw the amount, after giving intimation to the police agency.

The Bank may take action in respect of any other complaint concerning another transaction in accordance with law and the SOP.