A bank must follow proper procedures when freezing an account due to suspicion, ensuring communication and opportunity for account holder explanations.

JUDGMENT

The Petitioner has filed this Writ Petition challenging the debit

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freezing/lien of his Bank account with the Respondent/Bank at the requisition of the Police Authorities. The case of the Petitioner is that the Petitioner is not an accused in the Crime registered by the Police authorities against some other persons, in which the requisition was made; that the Petitioner is in no way connected with the said Crime; and that the debit freezing/lien of the account is in violation of Sections 106 & 107 of the Bharatiya Nagarik Suraksha Sanhita , 2023 ( BNSS ) and Article 300A of the Constitution of India .

The learned Counsel for the Respondent/Bank, after getting

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instructions from the Bank, submitted that the Bank has received a Requisition from the Respondent No.3 for an amount of Rs.50,442/- for marking lien on the account of the Petitioner mentioned in the Writ Petition, and hence, the Bank has effected the same. The learned Government Pleader for the Respondent No.3 confirmed the Requisition. Apart from that, the Bank has found some suspicious transactions in the account, and hence, the Bank has effected credit freezing on the account of the Petitioner mentioned in the Writ Petition.

The issue with respect to freezing/lien marking of the account at

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the instance of the police authorities is covered by the decisions of this Court inDr. Sajeer v. Reserve Bank of India [2024 (1) KLT 826] , Nazeer K.T. v. Manager, Federal Bank, Makkaraparamba Branch [2024 KHC 768] andAbhiraj Rajan v. State of Kerala [2025 KHC 1676] .

This Court has been consistently issuing the directions

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contained in the aforesaid decisions with two other directions for effecting uncommunicated/further requisitions for debit freeze/lien and making the frozen amount at the disposal of the jurisdictional Magistrate’s Court. This Writ Petition is to be disposed of incorporating the same directions.

With respect to the classification of the account of the Petitioner

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as a mule account or the prevention of operations therein by the Bank without any requisition from any Police Authorities, this Court in Abdul Azeez v. Union of India [2025 KLT OnLine 3447] considered the question of whether Bank has the right or authority to freeze the accounts of its account holders on the basis of suspicion with respect to the transactions in the account by itself 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.

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 Holde