The Punjab and Haryana High Court has reinforced that mere denial of direct involvement in cyber fraud does not shield an accused from denial of bail when their bank account is used as a conduit for laundering proceeds. This judgment clarifies the threshold for bail in cases involving organized financial fraud under the new Bharatiya Nyaya Sanhita.
Background & Facts
The Dispute
The petitioner, Mohd. Javed Ansari, was arrested for allegedly facilitating a cyber fraud scheme by allowing his proprietary bank account to receive and transfer Rs.10 lakhs of defrauded funds. The complainant, Manjit Singh, was induced via WhatsApp to invest Rs.88 lakh, which was routed through multiple bank accounts. The petitioner’s account, registered under the name of M/s Saathi Collection, received funds from a prior beneficiary account linked to another accused, Amita Ajay Kumar Mishra. The petitioner’s mobile number was registered with this account, and the transaction formed part of a layered money trail designed to obscure the origin of illicit funds.
Procedural History
- 06.06.2025: FIR No.23 registered under Sections 61(2), 318(4), and 319(2) of the Bharatiya Nyaya Sanhita, 2023 at Cyber Crime Police Station, Patiala
- 19.06.2025: Primary accused arrested
- 27.06.2025: Petitioner arrested as additional accused after investigation revealed fund transfer to his account
- 06.03.2026: Petition filed under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023 seeking regular bail
Relief Sought
The petitioner sought release on bail, claiming he was an illiterate fabric cutter with no knowledge of banking operations, and that his employer Sameer had fraudulently obtained his identity documents to open the account. He argued he was a victim, not a perpetrator, and posed no flight risk or threat to investigation.
The Legal Issue
The central question was whether using a personal bank account as a mule for laundering proceeds of cyber fraud constitutes active participation sufficient to deny bail under Section 483 of the BNSS, even in the absence of direct communication with the victim or inclusion in the original FIR.
Arguments Presented
For the Petitioner
Learned counsel contended that the petitioner had no role in inducing victims, was not named in the FIR, and had no control over the account or transactions. He relied on Arnesh Kumar v. State of Bihar to argue that bail should not be denied solely on the basis of serious allegations without prima facie evidence of intent. He emphasized his clean antecedents, lack of education, and the fact that his documents were misused by his employer.
For the Respondent/State
The Senior Deputy Advocate General argued that the petitioner knowingly permitted his account to be used for layering proceeds of crime. The transfer of Rs.10 lakhs into his account, coupled with the registration of his mobile number, demonstrated conscious participation. The State cited State of Maharashtra v. Mohd. Sadiq to assert that facilitating financial channels in organized fraud is a substantive offence under Section 319(2) of the BNS, and that bail must be denied where the accused plays an integral role in the criminal mechanism.
The Court's Analysis
The Court examined the nature of cyber fraud as an organized economic crime requiring systemic disruption. It held that the use of a bank account as a mule is not passive but an active facilitation of concealment, which falls squarely within Section 319(2) of the BNS - criminalizing the receipt, retention, or transfer of proceeds of crime with knowledge of their illicit origin.
"The fact that his phone number was also used for operating the aforesaid account, clearly indicates his active and conscious participation in the offence."
The Court rejected the petitioner’s claim of ignorance as implausible given the scale and structure of the transaction. It noted that the account was opened in the name of a proprietary concern, suggesting commercial intent, and that the mobile number linkage negated the assertion of complete lack of control. The Court distinguished Arnesh Kumar by emphasizing that the case involved a non-bailable, organized economic crime with interstate financial implications, not a solitary act of negligence.
The Court further observed that cyber fraud undermines public trust in digital finance, and that denying bail in such cases serves as a deterrent against the normalization of mule accounts. The petitioner’s role was not incidental but structural to the fraud’s success.
The Verdict
The petition was dismissed. The Court held that using a personal bank account as a mule for laundering proceeds of cyber fraud constitutes active participation, and that such conduct, even without direct victim contact, justifies denial of bail under Section 483 of the BNSS where the accused’s role is integral to the crime’s execution.
What This Means For Similar Cases
Mule Accounts Are Not Innocent
- Practitioners must now treat any client whose account receives unexplained funds from known fraudsters as a potential co-conspirator, not merely a victim
- Claims of ignorance or document misuse require corroborative evidence - mere assertion will not suffice
- Banks and fintech platforms may be required to flag accounts used in layered transactions under Section 319(2) of the BNS
Bail Is Not Automatic Even for Peripheral Accused
- Section 483 of the BNSS does not guarantee bail merely because the accused was not named in the FIR
- Courts will examine functional involvement, not formal inclusion
- The burden shifts to the accused to demonstrate absence of knowledge or intent, especially where mobile registration and account ownership align
Layering = Intent
- Any transaction that routes funds through multiple accounts to obscure origin will be treated as evidence of conscious participation
- The presence of a proprietary firm name on the account elevates the level of culpability
- Legal advisors must advise clients against allowing third parties to use their accounts for any financial activity, even if framed as "helping" or "credit building"
