Mohammad Irfan K.I. Vs State Bank of India (Kerala High Court)
Bank Account Freeze Restricted to Disputed Credits; Large Entries Alone Cannot Justify Court-Ordered Probe: Kerala HC
Introduction
The Kerala High Court restricted the freezing of a bank account to amounts covered by six disputed credit entries, holding that the restriction could not extend beyond the transactions identified in the police requisition.
Allowing the account holder’s appeal, the Division Bench also disapproved a direction requiring police to investigate other entries merely because the account reflected certain large credits. It noted that none of the police officers before the Court had alleged that the appellant was involved in any crime.
The judgment distinguishes between preserving specifically disputed amounts and directing a broader investigation without an adequate factual foundation.
Background of the Dispute
Mohammad Irfan K.I. approached the High Court seeking removal of a freezing order affecting his account with the State Bank of India (SBI). The bank had imposed the restriction pursuant to a requisition from the Cyber Crimes Cell, Puducherry.
The appellant explained that the disputed credits represented money received from his cousin and her husband. He sought complete unfreezing of the account on that basis.
Alternatively, he requested that any continuing restriction be confined to the disputed amounts alone, allowing access to the remaining funds.
The Single Judge dismissed the writ petition. In addition, after noticing other substantial credits in the account statement, the Single Judge directed the police to investigate the appellant’s account. The appellant challenged that judgment before the Division Bench.
Appellant’s Arguments
The appellant submitted that he had offered an explanation for the source of the disputed funds. He maintained that no investigation was pending against him, including at the instance of the police officers arrayed as respondents.
His counsel argued that, even if the Single Judge was unwilling to grant the requested relief, dismissal of the petition did not justify an additional direction to investigate him.
The challenge therefore concerned both the extent of the account freeze and the basis for the court-directed investigation into other transactions.
Stand of SBI and the Government
SBI stated that it had received no information from the respondent police officers concerning any investigation launched, initiated or pending against the appellant or his account.
The bank explained that it was acting on the Puducherry police requisition and requested that no adverse findings be entered against it.
The Senior Government Pleader also confirmed that the Puducherry police officer had not issued any letter implicating the appellant or his account. The freezing appeared to concern six disputed entries.
These submissions were material because they identified the transactions underlying the existing restriction while revealing no police allegation of criminal involvement by the appellant.
Large Credits Alone Did Not Justify Investigation
The Division Bench examined the Single Judge’s reasoning and found that the additional investigation direction arose from the presence of certain large amounts credited to the account.
It held that an investigation could not be ordered against the appellant or his account solely on the basis of entries appearing in the statement furnished by SBI during the writ proceedings.
The Court noted that none of the police officers on record imputed involvement in any crime to the appellant. At most, the suspicion was that persons crediting money to his account might have obtained those sums as proceeds of crime.
That remained a presumption at the relevant stage. On this material, the Court could not independently direct an investigation into the appellant’s other account entries.
Freeze Confined to Six Disputed Entries
On the account restriction, the Division Bench found that the disputed amounts were limited to the six entries identified in the bank statement.
Accordingly, it held that the account could remain frozen only to that extent and not beyond.
The Court did not direct unconditional release of all funds or conclusively accept the appellant’s explanation concerning the disputed credits. Instead, it limited the operation of the existing freezing order to the amounts linked to the entries covered by the police requisition.
This preserved the restriction concerning the identified transactions while removing its wider operation over the account.
Further Police Requisitions Remained Open
The Court expressly preserved the position concerning any further requisition already issued or subsequently issued by the Puducherry police or another competent police officer.
SBI would remain bound to act on such a requisition, subject to the appellant’s rights in law. The judgment therefore did not grant permanent immunity from further lawful restrictions or prevent competent authorities from acting on additional material.
Final Decision
The Division Bench allowed the appeal and set aside the Single Judge’s judgment. It directed that the freezing order operate only to the extent of the disputed entries covered by the police requisition.
The ruling highlights that identified suspicious credits do not, on these facts, justify freezing unrelated funds or ordering a broader investigation merely because other sizeable transactions appear in an account.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The appellant filed the Writ Petition seeking that his account be discharged of the “freezing order” issued by the 2nd respondent Police Officer.
2. The appellant explains the disputed entries in his account as being the sums given to him by his cousin and her husband; and, alternatively, prays that, even if this Court is not inclined to “unfreeze” the account, such orders may be confined to the disputed amount alone.
3. The learned Single Judge, however, dismissed the Writ Petition; but then moved a step forward, directing that the account of the appellant itself be investigated into by the Police.
4. The appellant is thus in appeal.
5. Smt. Ipsita Ojal, learned counsel for the appellant, asserted that her client has made out a cogent case in support of his plea for “unfreezing” his account, explaining the source of the money; and hence, even if the learned Single Judge did not find favour with his prayer, he could have only dismissed the Writ Petition, but could not have ordered an investigation against him. She reiterated that, since her client had already explained the source of the money and since there was no other investigation pending against him – including at the hands of the 2nd or 3rd respondents, the learned Single Judge has erred egregiously in the impugned judgment. She prayed that this appeal be, therefore, allowed.
6. Shri. Amal George, learned Standing Counsel for the 1st respondent – State Bank of India (‘SBI’ for short), conceded that his client has not received any information from either the 2nd or the 3rd respondent – Police Officers, on any investigation launched, initiated or pending against the appellant or his account. He added that this is not relevant to his client either, because they are only acting as per the requisition given to them by the 2nd respondent, freezing the account of the appellant. He prayed that, therefore, no findings be entered against his client.
7. Smt. Nazeeba O.H. – the learned Senior Government Pleader, also affirmed that, as of now, the 2nd respondent Police Officer at Puducherry, has not issued any letter implicating the appellant or his account; and that the freezing of the same appears to have been issued consequent to six disputed entries therein.
8. When one reads the impugned judgment, it becomes perspicuous that, after the learned Single Judge found against the appellant on merits, he went on to order an investigation against him and his account, noticing that there were certain “large amounts also credited in the account of the petitioner”.(sic)
9. We are afraid that we cannot find favour with the judgment to the extent impugned because, the learned Judge could not have ordered an investigation against the appellant or his account, solely because of certain entries in the statement of such account presented by the SBI, in the course of the Writ Petition. None of the Police Officers on record imputes that the appellant is involved in any Crime; and, at best – at least as of now – the only insinuation appears to be that his account has entries of sums, which the creditors may have obtained as proceeds of Crime. This itself being only a presumption at this stage, an investigation cannot be ordered by this Court independently.
10. In such circumstances, the direction in the impugned judgment, that the Police conduct an investigation against the appellant qua other entries in his account, cannot find forensic favour.
11. That said, as far as the “freezing” of the account of the appellant is concerned, since the statement of the 2nd respondent renders it beyond doubt that the disputed amounts are only those relating to the six entries mentioned in the statement produced by the SBI, the account will stand frozen only to that extent and not beyond.
12. In summation, we allow this Appeal and set aside the impugned judgment; with a consequential direction that the order of the 2nd respondent freezing the account of the appellant, will stand only to the extent to which it relates to the disputed entries in the requisition of the 2nd respondent and not beyond.
Needless to say, if there are to be any further requisition already made, or to be made either by the 2nd respondent, or any other competent Police Officers – the SBI will be bound to act as per it, subject to the rights of the appellant in law.
