In a significant judgment, the Kerala High Court has strongly criticized the growing practice of banks transferring money from customers’ accounts based solely on court orders—without giving prior notice to the account holder. The ruling came in WP(C) No. 40571 of 2025, delivered on 4 December 2025 by Justice M.A. Abdul Hakhim.
Background of the Case
The petitioner, Shameera K.K., approached the High Court seeking a direction to de-freeze her bank account maintained with Canara Bank, which had been frozen following a requisition from the Cybercrime Police, Jaipur.
According to the bank, the freeze was initiated based on a police request relating to an alleged cybercrime involving ₹3,34,000/-. Later, the Additional Metropolitan Magistrate Court, Jaipur, passed an order directing the transfer of this amount to the account of the complainant. The bank complied and transferred the full amount without informing the petitioner.
Court’s Observations
The High Court took serious note of this practice and observed:
The bank should have informed the account holder before transferring the frozen funds.
The Magistrate Court, too, appears to have issued the transfer order without issuing notice to the petitioner.
Such practices prejudicially affect the rights of account holders, who may be deprived of their money without an opportunity to defend themselves.
The Court emphasized that:
“It is a wrong practice adopted by the Banks that prejudicially affects the rights of the Account Holders… It violates the right of the Account Holders under Article 300A of the Constitution of India.”
The judgment highlighted several real-world consequences of this unchecked practice:
Account holders may lose access to funds for a long period.
Recovery becomes difficult when courts issuing orders are located in far-off states.
Fraudsters can misuse the system by filing false cybercrime complaints, leading to innocent persons losing money
Court’s Decision
Since the money had already been transferred, the Court did not interfere with the transfer. However, it issued the following directions:
The bank must allow the petitioner to operate her account.
The petitioner is free to pursue remedies against the Magistrate Court’s order
Significance of the Judgment
This ruling is important for several reasons:
1. Reinforces Protection Under Article 300A
Article 300A of the Constitution protects the right to property. The Court made it clear that bank customers cannot be deprived of their money without due process and notice.
2. Puts Responsibility on Banks
Banks cannot blindly execute freezing or transfer orders. They must:
Inform the customer, and
Give them an opportunity to challenge or respond.
3. Addresses Cybercrime-related Misuse
The judgment recognizes that cybercrime complaints can be misused to obtain quick ex-parte transfer orders from distant courts.
4. Provides Guidance for Law Enforcement & Courts
Courts issuing freezing/transfer orders must ensure notice is served to the affected account holder.
Conclusion
The Kerala High Court’s decision is a strong reminder that procedural fairness cannot be sacrificed—even in cybercrime-related matters. Banks, police, and courts must act with caution and ensure that citizens’ constitutional rights are protected.
For individuals whose accounts are frozen or funds transferred without notice, this judgment provides important support and a clear basis for seeking relief.