Banking regulation — freezing suspected money-mule accounts · F2J-C-2937
Ajith P.R. v. Union of India & Ors.
VALIDATED · ACTUAL COURT DOCUMENTSource transparency: The local PDF is an actual court document retained from the complete public source. The official court portal is recorded separately. Verify the official record and subsequent history before reliance.
Holding (ratio)
A bank may impose a prompt debit freeze on its own suspicious-transaction assessment, but must notify reasons, consider the account holder's explanation and, if unsatisfied, lodge a police complaint and thereafter follow investigative directions.
Operative order (extract)
The petition was disposed of with a direction to communicate reasons within one week and follow the revised account-freezing guidelines.
Scope limits
The holding is confined to the issues actually decided in the retained judgment; no view is attributed to the court on questions expressly left open or remanded.
Sources and completeness
- PDF status
- Complete searchable public court copy, retained unchanged
- PDF origin
- Downloaded unchanged from the complete public court-copy source
- PDF pages
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- Extracted words
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- PDF SHA-256
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Complete searchable judgment text
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE M.A.ABDUL HAKHIM
TUESDAY, THE 14TH DAY OF JULY 2026 / 23RD ASHADHA, 1948
WP(C) NO. 48300 OF 2025
PETITIONER:
MR. AJITH P.R
AGED 26 YEARS
S/O.RAMESAN, PUTHUPPARAMBIL HOUSE, MULLANKOLLY P.O., WAYANAD
DISTRICT, KERALA, PIN - 673579
BY ADV SMT.BEENA V.
RESPONDENTS:
1 THE UNION OF INDIA
REPRESENTED BY ITS SECRETARY, MINISTRY OF HOME AFFAIRS, NEW
DELHI, PIN - 110001
2 THE STATE OF KERALA
REPRESENTED BY THE SECRETARY, HOME DEPARTMENT, GOVERNMENT
SECRETARIAT, THIRUVANANTHAPURAM, PIN - 695001
3 INDIAN CYBER CRIME COORDINATION CENTER
REPRESENTED BY ITS CEO,5 TH FLOOR, NDCC-II BUILDING ,JAI
SINGH ROAD , NEW -DELHI, PIN - 110001
4 THE SUPERINTENDENT OF POLICE (CYBER CRIME)
HARYANA, AMIT DAHIYA, IPS, OFFICE OF THE SUPERINTENDENT OF
POLICE (CYBER CELL), HARYANA STATE, PIN - 122009
5 THE BRANCH MANAGER
FEDERAL BANK, KALOOR, ERNAKULAM. KERALA STATE, PIN - 682017
ADDL.R6 STATION HOUSE OFFICER
SADARCOLONY ,BABAL ROAD , REWARI , HARYANA - 123401 (ADDL.R.6
IS IMPLEADED AS ADDL.6TH RESPONDENT AS PER ORDER DATED
13/02/2026 IN IA 1/2026)
ADDL.R7 The STATION HOUSE OFFICER, ERNAKULAM TOWN NORTH POLICE
STATION, ERNAKULAM,PIN 682018 (ADDL.R7 IS SUO MOTU
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IMPLEADED VIDE JUDGMENT DATED 14.07.2026 IN WPC NO.
48300/2025)
BY ADV SMT.V.GEETHA POTTI, CGC
ADV.SMT. O M SHALINA, DSGI
ADV.SRI MOHAN JACOB GEORGE, SC
OTHER PRESENT:
ADV. SUJAN K.A. (G.P.)
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
14.07.2026, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
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JUDGMENT CR
Dated this the 14th day of July, 2026
1. The Petitioner has filed this Writ Petition seeking a direction to
unfreeze his account maintained with the Respondent
No.5/Bank.
2. The learned Standing Counsel for the Respondent No.5/Bank,
after getting instructions, submitted that the operation of the
account of the Petitioner is prevented on account of the
suspicion on the part of the Bank with respect to the operation
of the account and that it is a money mule account.
3. There is no representation for the Petitioner. On the last
posting also, there was no representation for the Petitioner.
This Court is not inclined to dismiss the Writ Petition for default
since this Court has reason to believe that the Petitioner has
been purposefully absent to cause dismissal of the case to
avoid any Order against him, on account of the adverse Report
against him.
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4. This Court in Abdul Azeez v. Union of India [2025 KLT OnLine 3447]
considered the question of whether the Bank has the right or
authority to freeze the accounts of its account holders on the
basis of its own suspicion with respect to the transactions in
the account in the absence of any requisition to do so from a
law enforcement agency. This Court held that till the time the
RBI comes forward with a Standard Operating Procedure for
the Banks to deal with suspicious accounts, the following
guidelines are to be followed when the Bank entertains
suspicion about the operation of the account:
1. If the Bank is having reason to believe suspicious transactions in the
account, the Bank is free to effect a debit freeze of the account without
notice to the Account Holder.
2. The Bank shall intimate the freezing of the Account to the Account Holder
by sending a Communication with reasons for suspicion by SMS and
Registered post on the date of freezing itself.
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3. The Bank shall send a Communication detailing the freezing of the
account with reasons for suspicion to the jurisdictional Cyber Crime
Police Authority and all the authorities required under the Guidelines
issued by the RBI and ensure its receipt by them.
4. The Account Holder is free to submit a necessary Explanation to the
Bank regarding the suspicion entertained by the Bank, and on receipt of
such an Explanation, the appropriate authority of the Bank shall consider
the same and pass appropriate orders within a period of one week from
the date of receipt of the Explanation and communicate the same to the
Account Holder. If the Bank is satisfied with the Explanation submitted by
the Account Holder, the Bank is to de-freeze the account.
5. If no Explanation is received from the Account Holder or the Explanation
submitted by the Account Holder is not satisfactory to the Bank, the Bank
can continue with the freezing of the account for a period of three months
from the last date of delivery of the communication of freezing to the
aforesaid authorities mentioned in Point No.3.
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6. If the Bank receives any instruction/order from any of the aforesaid
authorities mentioned in Point No.3, the Bank has to comply with it and
communicate the same to the Account Holder without delay.
7. If no communication is received within a period of three months from the
last date of delivery of the communication of freezing to the aforesaid
authorities mentioned in Point No.3, the Bank shall lift the freezing of the
account, allowing the Account Holder to deal with the credit balance and
intimate the same to the Account Holder and thereafter the Bank may
either permit the operation of the account or demand closure of the
account.
8. If the Account Holder has a grievance that the Bank has illegally rejected
the Explanation submitted by him, the Account Holder is free to challenge
the same in accordance with law.
5. The Indian Cyber Crime Co-ordination Centre (I4C) formulated
an SOP for NCRP - CFCFRMS, Custody, Restoration of Money and
Grievance Redressal 2026 to establish a fair and transparent
system that prescribes a uniform process to be followed by all
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the Participating Entities in the matter of freezing of accounts.
The said SOP does not deal with the prevention of operation of
the Account by the Bank without any requisition from any
Police Authority, and hence this Court used to dispose of Writ
Petitions by directing the Banks to follow the guidelines in
Abdul Azeez (supra) when the Bank prevented the operation of
the account on its own suspicion, without any requisition from
any authority.
6. This Court in Sinana Farvin v. Kerala Gramin Bank and Others
[2026:KER:50777] observed that there must be an effective
deterrent against persons approaching this Court seeking
direction to unfreeze Bank Accounts that have been used as a
money mule; that while dismissing such Writ Petitions, it is for
this Court to consider whether a direction is to be issued to the
Police to register an FIR and investigate the involvement of the
Petitioner and his/her associates in the commission of financial
cybercrime; that ‘cybercrimes’ fall within the definition of
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‘organised crime’ under Section 111 of the Bharatiya Nyaya
Sanhita, 2023, and constitute a cognizable offence; and that it
is for the Police to investigate the commission of the said
offence by the Petitioner and to ascertain the involvement of
any other persons acting in concert with, or operating through,
the Petitioner. In the said case, this Court found that the facts
prima facie reveal that the Petitioner has opened the Bank
Account solely for the purpose of facilitating cyber fraud and
hence dismissed the Writ Petition, but directing the Police to
register an FIR against the Petitioner under Section 111 of the
Bharatiya Nyaya Sanhita, 2023, and investigate.
7. The Banks are the best persons to identify the mule accounts.
When the Banks report to this Court that the subject account is
a mule account, this Court has to give due weight to the same.
In several cases, it is reported that on account of the
Guidelines in Abdul Azeez (supra), the Banks were compelled to
permit the operation of the accounts on completion of three
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months from the date of intimation to the Police Authorities
since the Police Authorities do not respond within that time. In
such case, the mule account holders continue their money
mule activities, misusing the Guidelines in Abdul Azeez (supra).
In light of the decision in Sinana Farvin (supra), the Police have
to register FIR against the Mule Account Holders under
Section 111 BNS and investigate and prevent the operation of
the Account pending investigation and subject to the outcome
of the investigation. Hence, the Guidelines in Abdul Azeez
(supra) are to be revised as follows:
1. If the Bank has reason to believe that the transactions in the
account are suspicious, the Bank is free to effect a debit freeze of
the account without notice to the Account Holder.
2. The Bank shall intimate the freezing of the Account to the
Account Holder by sending a Communication through SMS/Email
on the date of freezing itself. Additionally, the Bank shall
communicate the freezing of the Account to the Account Holder
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with reasons for suspicion by Registered post within three
working days from the date of freezing.
3. The Account Holder is free to submit necessary Explanation to
the Bank regarding the suspicion entertained by the Bank within
one month from the date of receipt of communication from the
Bank, and on receipt of such an Explanation, the appropriate
authority of the Bank shall consider the same and pass
appropriate orders within a period of one week from the date of
receipt of the Explanation and communicate the same to the
Account Holder. If the Bank is satisfied with the Explanation
submitted by the Account Holder, the Bank is to unfreeze the
account.
4. If no Explanation is received from the Account Holder within one
month or the Explanation submitted by the Account Holder is not
satisfactory to the Bank, the Bank shall submit a Written
Complaint to the SHO of the local Police Station of the Bank with
copy to the Account Holder, as early as possible.
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5. The SHO of the local Police Station of the Bank shall register FIR
against the Account Holder for offences, including the offence
under Section 111 BNS, immediately on receipt of a Written
Complaint from the Bank and investigate.
6. The Bank shall permit operation of the Account, according to the
directions of the Police in case the Bank has submitted Complaint
to the Police. If the Police direct to permit the operation of the
account, the Bank may either permit operation of the account or
demand closure of the account.
7. If the Account Holder has a grievance that the Bank has illegally
rejected the Explanation submitted by him, the Account Holder is
free to challenge the same in accordance with law.
8. Since the Respondent No.5/Bank is situated within the local
limits of the Ernakulam Town North Police Station, the SHO,
Ernakulam Town North Police Station, Ernakulam, is suo motu
impleaded as the Additional Respondent No.7 in this Writ
Petition.
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9. Accordingly, this Writ Petition is disposed of, directing the
Respondent No.5/Bank to communicate the reasons for
suspicion/freezing of the account to the Petitioner within one
week from the date of receipt of a certified copy of the
judgment and to act in accordance with the above revised
Guidelines. The Respondent No.7/SHO is directed to act in
accordance with the above revised Guidelines, in case he
receives a Written Complaint from the Respondent No.5/Bank.
Sd/-
M.A.ABDUL HAKHIM
JUDGE
jma
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APPENDIX OF WP(C) NO. 48300 OF 2025
PETITIONER EXHIBITS
Exhibit P1 A TRUE COPY OF THE SAID PHOTOGRAPH
Exhibit P2 A TRUE COPY OF THE RELEVANT PAGES OF THE PASSBOOK
Exhibit P3 A TRUE COPY OF THE EMAIL
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