Karnataka High Court Defreezes School's Bank Account Frozen Over ₹5 Lakh Fee Payment Linked To Cybercrime Probe, Calls It 'Drastic' Measure

The Karnataka High Court has granted relief to an International School in Bengaluru by ordering defreezing of its bank Account, and by quashing a final notice issued against it by the Varanasi Police over a five-lakh fee payment made by a student's parent, allegedly linked to a cybercrime probe.Justice Sachin Shankar Magadum stated that the freezing of the entire bank account of the school was a 'drastic and disproportionate measure'. According to the Varanasi Police, the parent who made the 5 lakh fee payment is involved in a cybercrime, and the subsequent fund recipient's (school's) account was also blocked in its entirety after the said transaction.“…the action of respondent No.2[Varanasi Cyber Crime PS] in directing the freezing of the petitioner's bank account merely on account of an alleged involvement of a parent of a student in a cybercrime registered in the State of Uttar Pradesh appears to be wholly arbitrary and unreasonable. The petitioner–institution cannot be penalised for having received bona fide fee payments in the ordinary course of its functioning”, the court noted in the order about the arbitrariness in freezing the entire proceeds in the school's account.However, to safeguard the interests of the investigating agency in the cybercrime, the court has allowed the Bank to mark a lien equivalent to the disputed transaction m(Rs 5 lakhs) on the School's Bank account, subject to further clarification from the Varanasi Police or the conclusion of cybercrime proceedings.The plea to defreeze the bank account was filed by The International School, Bengaluru (TISB). The account freeze was imposed by the Standard Chartered Bank upon receiving an intimation from the Varanasi Cyber Crime Department. An FIR was registered at Varanasi against the student's parent for offences under Section 420 of IPC and Section 66(D) of the IT Act, wherein the proceeds of crime are estimated to be nearly 70 lakhs.“…petitioner is an educational institution responsible for the administration of academic activities, including payment of salaries to teaching and non-teaching staff and meeting day-to-day operational expenses. Denial of access to its bank account would seriously impair its functioning and adversely affect the interests of students and staff alike…”, the court reasoned why restricting the lien to Rs 5 lakhs was necessary.The court also noted that the School responded to the Section 41-A notice issued by the Police in a time-bound manner and even reversed the 5 lakhs payment made by the parent.“…The facts of the present case disclose a peculiar and rather disturbing situation, wherein an educational institution has been drawn into the ambit of a criminal investigation solely on the ground that it received a fee payment through an online transaction from a parent who is allegedly involved in a cyber offence…”, it said.Accordingly, the court allowed the school management's petition by defreezing its account except for Rs 5 Lakhs. The court also quashed the Section 41A notice issued by the police Advocate Amith Deshpande appeared for the school. Advocate Avinash B.C represented the Bank.Case Title: The International School Bangalore (TISB) v. Standard Chartered Bank & Anr. Case No: Writ Petition No. 9430 of 2026Click Here To Read/Download Order

Karnataka High Court Defreezes School's Bank Account Frozen Over ₹5 Lakh Fee Payment Linked To Cybercrime Probe, Calls It 'Drastic' Measure

Sebin James

Tags