New directives mandate timely police involvement and grievance redressal under Bharatiya Nyaya Sanhita, 2023
In a significant ruling, the Kerala High Court, presided over by Justice M.A. Abdul Hakhim, has revised the operational guidelines for banks dealing with accounts suspected of involvement in money mule activities. The judgment, dated July 14, 2026, in the case of Ajith P.R v. Union of India, addresses the procedural handling of suspicious bank accounts, emphasizing the need for transparent communication and swift police intervention under Section 111 of the Bharatiya Nyaya Sanhita, 2023.
The court recognized the critical role banks play in identifying mule accounts and empowered them to freeze such accounts without prior notice to the account holders. This measure aims to prevent the misuse of accounts for cyber fraud. Banks are instructed to notify account holders via SMS/Email and registered post within three working days, detailing the reasons for suspicion.
Account holders are granted a one-month window to provide an explanation. If the explanation is unsatisfactory or not provided, the bank must lodge a written complaint with the local police, prompting the registration of an FIR under the specified section of the Bharatiya Nyaya Sanhita, 2023. The police are then tasked with investigating the matter, ensuring a robust response to cybercrime.
The judgment also highlights the importance of grievance redressal, allowing account holders to challenge the rejection of their explanations through legal channels. This move is aimed at safeguarding the rights of individuals while maintaining stringent checks against financial misconduct.
This ruling revises previous guidelines set in Abdul Azeez v. Union of India, addressing concerns that banks were compelled to allow account operations after three months if police authorities did not respond in time. The new directives seek to enhance accountability and prevent the continuation of illicit activities.
The court's decision underscores the seriousness with which financial cybercrimes are treated and reinforces the role of the judiciary and law enforcement in combating organized crime. It aligns with the broader objectives of the Bharatiya Nyaya Sanhita, 2023, in ensuring security and justice in financial transactions.
Bottom line:-
Guidelines for freezing and operation of bank accounts suspected to be money mule accounts revised, with provisions for grievance redressal and police investigation under Section 111 of Bharatiya Nyaya Sanhita, 2023.
Statutory provision(s): Section 111 of Bharatiya Nyaya Sanhita, 2023
Ajith P.R v. Union of India, (Kerala) : Law Finder Doc id # 2941931
