The Kerala High Court has clarified that banks cannot freeze a customer’s account solely on the basis of a police requisition absent any connection between the account holder and the alleged crime. This judgment reinforces constitutional protections against arbitrary deprivation of property and mandates procedural fairness in financial freeze mechanisms under emerging cybercrime protocols.
Background & Facts
The Dispute
The Petitioner, Aswin Krishna, a resident of Pulpally, Wayanad, Kerala, had his savings account with the South Indian Bank, Pulpally Branch, frozen on the basis of a requisition issued by the Bhimawaram 2 Town Police Station, Andhra Pradesh. The police sought to mark a lien of Rs. 63,435/- on the account, alleging it was linked to a cyber-enabled financial crime involving other persons. The Petitioner was not named as an accused, investigated, or even mentioned in the FIR or charge sheet. He had no knowledge of the investigation, nor was he ever questioned or summoned.
Key Facts
- The Petitioner’s account was frozen on or about 12.06.2025, following a requisition from Respondent No. 2 (Bhimawaram 2 Town Police Station)
- The requisition did not allege any involvement of the Petitioner in the crime, nor did it provide evidence linking him to the transaction
- The Petitioner received no notice or opportunity to be heard before the freeze was imposed
- The frozen amount of Rs. 63,435/- was the entire balance in the account at the time of freeze
- The Petitioner’s account was used for legitimate personal and business transactions, with no history of suspicious activity
- Exhibit P1, dated 12.06.2025, is the only official communication received by the Petitioner from the Bank regarding the freeze
Procedural History
- 12.06.2025: Bank freezes Petitioner’s account upon receipt of police requisition
- 15.06.2025: Petitioner files representation with the Bank seeking unfreezing; no response received
- 20.06.2025: Petitioner files writ petition before the Kerala High Court
- 20.01.2026: Pulpally Police Station (Addl. R3) impleaded as additional respondent via IA No. 1/2026
- 01.06.2026: Final hearing conducted before the Hon’ble Mr. Justice M.A. Abdul Hakhim
Relief Sought
The Petitioner sought: (i) quashing of the account freeze; (ii) direction to the Bank to permit full operation of the account; (iii) declaration that the freeze violated Article 300A of the Constitution and Sections 106 and 107 of the Bharatiya Nagarik Suraksha Sanhita, 2023; and (iv) costs.
The Legal Issue
The central question was whether a bank may freeze a customer’s account based solely on a police requisition, without any evidence of the account holder’s involvement in the alleged crime, and whether such action violates Article 300A and the procedural safeguards under Sections 106 and 107 of the BNSS.
Arguments Presented
For the Petitioner
The Petitioner’s counsel argued that the freeze was arbitrary and violative of Article 300A, which guarantees protection against deprivation of property except by authority of law. They contended that Sections 106 and 107 of the BNSS require a judicial order or at least a prima facie nexus between the account holder and the offence before any financial restraint can be imposed. Reliance was placed on Dr. Sajeer v. Reserve Bank of India and Nazeer K.T. v. Federal Bank to establish that banks cannot act as enforcement agents without due process. The absence of any accusation, inquiry, or notice to the Petitioner rendered the freeze illegal.
For the Respondent/Bank
The Bank’s counsel conceded that the freeze was effected solely on the basis of the police requisition, without independent verification. They submitted that the Bank was bound by the requisition under the prevailing practice and had no authority to question the police’s request. However, they acknowledged the absence of any suspicion or evidence linking the Petitioner to the crime.
For the Respondent/Police
The Police did not file a separate written submission. The Government Pleader, appearing for Addl. R3, did not contest the Petitioner’s claim of non-involvement and acknowledged the lack of specific allegations against him.
The Court's Analysis
The Court examined the evolving legal framework governing financial freezes in cybercrime cases. It noted that while the police have the power to requisition financial information under Section 107 of the BNSS, such requisition does not, by itself, authorize a bank to freeze an account. The Court emphasized that Article 300A imposes a duty on the State to ensure that any deprivation of property is not arbitrary.
"The mere receipt of a police requisition, without any independent assessment of the account holder’s involvement or a judicial order, cannot justify the complete freezing of a bank account. The account holder is not a suspect merely because his account is mentioned in a requisition."
The Court reviewed its own precedents in Dr. Sajeer, Nazeer K.T., and Abhiraj Rajan, reaffirming that banks must permit account operation subject to a lien only on the specific amount mentioned in the requisition, provided there is no suspicion of the account being used for cybercrime or money mule activities. The Court further noted the recent issuance of the Indian Cyber Crime Co-ordination Centre’s SOP for NCRP-CFCFRMS (2026), which establishes a transparent, time-bound grievance redressal mechanism for affected account holders.
The Court held that the Bank’s action, while technically compliant with internal procedures, was legally unsustainable in the absence of any nexus between the Petitioner and the alleged offence. The freeze, as implemented, amounted to a de facto seizure without due process.
The Verdict
The Petitioner succeeded. The Court directed the South Indian Bank to permit the Petitioner to fully operate his account, limiting the lien to the amount of Rs. 63,435/- as specified in the police requisition. The disposal of the frozen amount shall be governed by the SOP for NCRP-CFCFRMS (2026). The Petitioner may seek redressal under Clause 10 of the SOP. The Bank may impose future liens only upon receipt of valid requisitions, subject to the same conditions. No costs were awarded.
What This Means For Similar Cases
Freeze Requires More Than a Requisition
- Banks cannot rely on police requisitions alone to freeze accounts; there must be either a judicial order or credible, case-specific suspicion of the account holder’s involvement
- Practitioners must challenge freezes where the client is not named in the FIR, not under investigation, and has received no notice
SOP Provides New Remedial Pathway
- Account holders now have a statutory grievance mechanism under Clause 10 of the NCRP-CFCFRMS SOP (2026) to contest freezes
- Legal advisors should advise clients to file grievances under this SOP within 30 days of freeze, as it is the prescribed first remedy
Bank Liability Is Not Absolute
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Banks are not immune from constitutional scrutiny when acting on police requisitions
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Banks must conduct minimal due diligence: verify if the account holder is named in the FIR, whether the requisition cites specific transactions, and whether the amount claimed matches the account balance
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Always request a copy of the requisition and the FIR before agreeing to any freeze
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Document all communications with the bank and police regarding the freeze
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File a grievance under the SOP within 30 days if the freeze persists without judicial oversight
