MP High Court orders Canara Bank to unfreeze business account in cyber fraud hold

The Madhya Pradesh High Court at Indore on 13 October 2026 directed Canara Bank to unfreeze the current account of a business and allowed it to operate the account. The court ordered that only the disputed amount mentioned in the petition be kept in a fixed deposit, pending orders from a Judicial Magistrate within three months.

What Happened

The account holder, a sole proprietorship, filed a writ petition asking the court to remove a freeze on its Canara Bank account, which it said had been imposed without any lawful authority or order. Its counsel argued that the case was covered by two earlier decisions of the High Court.

In the first, from 2024, the court had directed banks to keep the amount flagged by cyber crime agencies in fixed deposits, to be released only after a Judicial Magistrate passes orders within three months. In the second, dated 27 July 2026, a bench at Jabalpur referred to a Standard Operating Procedure (SOP) of 10 April 2026 from the Ministry of Home Affairs for accounts put on hold through the national cyber crime reporting system, and framed guidelines. Under these, police should ordinarily direct a lien or debit freeze only up to the suspected amount; freezing a whole account is for exceptional cases, with reasons recorded in writing.

The court held that both decisions apply to this case. It ordered the disputed amount kept in a fixed deposit and the account unfrozen. If no Magistrate's order is passed within three months, the account holder may withdraw the deposit after informing the police. The bank may still act under the SOP if it receives a complaint about any other entry.

What It Means

For customers whose accounts are frozen over a cyber fraud complaint, the order reinforces that a hold is meant to cover the disputed amount, not the whole balance. Under the guidelines the court applied, the bank is the first point of contact: it should inform the customer of the freeze and the grievance mechanism and upload a grievance on the portal within seven days. The Investigating Officer must decide within fifteen days, with escalation to a District Grievance Redressal Officer. Cyber fraud can be reported at https://cybercrime.gov.in or on helpline 1930.

Source: High Court judgment