‘Drastic and disproportionate’: Karnataka HC orders defreezing of Bengaluru school account that got ‘proceeds of crime’ as fees

The cybercrime police issued a showcause notice to the school in March under section 41A of the Code of Criminal Procedure, directing it to respond within five days with supporting documents and particulars relating to the alleged transaction.

The school submitted a detailed explanation, yet the police directed the freezing of its bank account.

Advocate Amit Deshpande, appearing for the school, argued that the institution is an international school widely known for its high standards in imparting quality education not only in and around Bengaluru, but also among the global academic community.

The court observed in its order, “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.”

Further, the court noted that the police action appeared “wholly arbitrary” and “unreasonable”.

The court also considered that the school needs to pay salaries to its teaching and non-teaching staff and meet other 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 opined.

Striking a balance between the rights of the school and the police, the court permitted the school to operate its bank account by marking a lien of Rs 5 lakh, pending further clarification from the cybercrime police or the conclusion of court proceedings against the parent.