Introduction:

The Kerala High Court has granted relief to a woman who claimed to have been defrauded through an online loan scam, directing Axis Bank to permit her to operate and close her bank account despite 21 requisitions seeking a freeze over transactions amounting to ₹1,16,32,892. The Court held that, on the materials placed before it, the disputed transactions resulted from fraud allegedly committed against the petitioner by an establishment operating under the name “Zenith Finance” and that she was not responsible for those transactions.

Justice M. A. Abdul Hakhim passed the order while considering a writ petition filed by the woman seeking directions to unfreeze an account maintained in the name of her LPG distributorship. The account had been subjected to restrictions following multiple requisitions relating to suspected cybercrime transactions. The bank informed the Court that the cumulative lien amounted to more than ₹1.16 crore and that the account balance had become negative.

The decision, reported as 2026 LiveLaw (Ker) 604, addresses an important issue arising from cybercrime investigations: whether a bank account belonging to a person who claims to be a fraud victim can remain frozen indefinitely merely because several investigating agencies or authorities have issued requisitions concerning disputed transactions. The case also highlights the distinction between preserving funds potentially connected with a criminal investigation and restricting the banking operations of an individual whom the Court finds, on the available material, to have been victimised by fraud.

Cyber fraud cases frequently involve transactions routed through bank accounts belonging to persons who may not fully understand the nature of the activities being conducted. Fraudsters may persuade individuals to disclose account details, identity documents or other banking information by making attractive financial offers, including promises of loans. Once the information is obtained, the accounts may become involved in transactions that attract the attention of law enforcement agencies.

In such circumstances, banks may receive instructions to freeze accounts, mark liens or restrict withdrawals while the transactions are investigated. These measures can serve legitimate investigative purposes, particularly where authorities suspect that funds have been transferred through accounts connected with cybercrime. However, restrictions can also cause serious hardship when the account holder maintains that the account was misused without their knowledge or involvement.

The present case arose from such circumstances. The petitioner alleged that she had been deceived by an establishment named Zenith Finance, which approached her through WhatsApp with an offer of a loan. In connection with that offer, she shared her account details and identity information. According to her, Zenith Finance subsequently routed the disputed transactions through the account maintained for her LPG distributorship.

The petitioner produced WhatsApp communications with the purported finance establishment to support her version of events. She also informed the Court that she had promptly reported the fraud to the bank and sought relief from the restrictions imposed on her account.

Axis Bank, in its submissions, disclosed that it had received 21 requisitions concerning the account, resulting in a total lien of ₹1,16,32,892. The bank also stated that the account balance was negative and that the disputed transactions had taken place within a period of three days. It confirmed that there were no other requisitions relating to the account.

After considering the available materials and the parties’ submissions, the High Court concluded that the disputed transactions were the result of the fraud allegedly committed against the petitioner and that she was not responsible for them. It consequently directed the bank to permit her to operate the account and process any request to close it, notwithstanding the 21 requisitions relating to the disputed amount.

The ruling is significant because it demonstrates the importance of examining the circumstances of an account holder’s involvement before allowing banking restrictions to continue. It also illustrates the role of the High Court’s writ jurisdiction in addressing grievances arising from administrative or banking actions that may adversely affect a person claiming to be a victim of cybercrime.

The decision does not establish that every account frozen in connection with a cybercrime investigation must automatically be unfrozen. Rather, the relief was based on the materials available in this particular case and the Court’s conclusion concerning the petitioner’s lack of responsibility for the disputed transactions.

Arguments of the Parties:

The petitioner approached the Kerala High Court seeking a direction to Axis Bank to remove the restrictions imposed on the bank account maintained in the name of her LPG distributorship. Her principal grievance was that the account had become inaccessible because of disputed transactions allegedly arising from a fraud perpetrated against her, even though she maintained that she had not knowingly participated in any wrongdoing.

According to the petitioner, the incident began when an establishment operating under the name Zenith Finance contacted her through WhatsApp and offered her a loan. Believing the communication to be genuine, she shared her account details and identity card information with the establishment. She subsequently discovered that the account had been used for transactions that were being treated as suspicious and had attracted requisitions from the relevant authorities.

The petitioner maintained that Zenith Finance was responsible for routing the disputed transactions through her account. Her case was that the account had been used as part of a fraudulent arrangement without her knowledge of the actual nature or purpose of the transactions. She relied upon the WhatsApp communications with the establishment to substantiate her explanation and demonstrate the circumstances in which her banking information had been shared.

A key aspect of the petitioner’s position was that she was a victim of fraud rather than a person responsible for the transactions under investigation. She contended, in substance, that the restrictions imposed on the account had serious consequences for her despite her claim that she had been deceived by the purported finance establishment.

The account was maintained for her LPG distributorship, making the restrictions particularly significant from a practical perspective. A frozen account can interfere with ordinary banking operations and the management of a business, especially where the account holder is unable to access funds or carry out transactions because of restrictions arising from disputed transfers.

The petitioner therefore sought the removal of the restrictions so that she could resume operating the account. She also specifically informed the Court that she wished to close it. Her request was not limited to obtaining access to the funds in the account; she sought permission to discontinue the banking relationship without the 21 requisitions preventing the bank from processing her closure request.

The petitioner’s position was supported by her assertion that she had promptly informed the bank about the fraud. This was relevant to her explanation that she had acted as a victim seeking assistance rather than knowingly allowing the account to be used for suspicious transactions. Her prompt reporting, together with the WhatsApp communications, formed part of the material considered by the Court.

Axis Bank, represented by counsel Premchand M., placed the account’s status before the Court and explained the restrictions recorded against it. The bank stated that it had received 21 requisitions relating to the account and that the aggregate lien imposed in connection with those requisitions amounted to ₹1,16,32,892.

The bank also informed the Court that the account balance was negative. This meant that the amount reflected as a lien could not simply be treated as an equivalent sum of money available in the account. The discrepancy between the cumulative amount covered by the requisitions and the actual account balance formed part of the banking circumstances placed before the Court.

According to the bank, the disputed transactions had occurred over a period of only three days. It further stated that there were no additional requisitions relating to the account beyond the 21 already received. This information provided the Court with an understanding of the number of restrictions involved, the total amount claimed under them and the period during which the disputed transactions had taken place.

The bank also confirmed that the petitioner had promptly informed it about the alleged fraud. This aspect was consistent with the petitioner’s assertion that she had approached the bank after becoming aware of the suspicious activity.

The bank submitted that it had received court orders directing the transfer of amounts to the petitioner’s account. However, it stated that it could not comply with those directions because the account balance was negative. The bank’s explanation therefore highlighted the practical consequences of the existing account position and the restrictions recorded against it.

The bank’s submissions, as reflected in the case summary, primarily concerned the status of the account, the requisitions received, the cumulative lien and the negative balance. The available summary does not record a detailed adversarial argument by the bank disputing the petitioner’s claim that she had been defrauded, nor does it set out a separate substantive defence seeking to maintain all the restrictions against her.

It would therefore be inaccurate to attribute to Axis Bank any specific argument that the petitioner was knowingly involved in the disputed transactions. The recorded submissions establish that the bank explained the restrictions and the account’s financial position while acknowledging that the petitioner had promptly reported the fraud.

The dispute before the Court consequently required consideration of the petitioner’s explanation, the supporting communications, the bank’s account records and the effect of the 21 requisitions. The central question was whether the bank should continue to prevent the petitioner from operating or closing her account when the Court found, on the available material, that the disputed transactions resulted from fraud against her rather than from conduct for which she was responsible.

The Court was therefore required to consider the consequences of the restrictions in light of the specific circumstances of the case. While requisitions connected with cybercrime investigations may require banks to preserve funds or comply with lawful directions, the existence of such requisitions does not eliminate the need to examine the legal and factual basis for continuing restrictions against a person who claims to have been deceived.

Court’s Judgment:

Justice M. A. Abdul Hakhim considered the materials placed before the Kerala High Court, including the petitioner’s explanation of the alleged fraud, the WhatsApp communications with Zenith Finance and the bank’s submissions concerning the 21 requisitions and the cumulative lien of ₹1,16,32,892.

The Court concluded that the available material established that the disputed transactions had resulted from the fraud committed against the petitioner and that she was not responsible for those transactions. This finding formed the basis of the relief granted in the writ petition.

The Court’s reasoning focused on the circumstances in which the transactions had occurred and the petitioner’s alleged role in them. The petitioner had explained that she shared her banking details and identity information after receiving a loan offer through WhatsApp. She maintained that the purported finance establishment subsequently routed the disputed transactions through her account.

The communications produced before the Court supported her explanation of how the relationship with Zenith Finance began. The Court considered these materials alongside the bank’s confirmation that the petitioner had promptly reported the fraud. On the basis of the material available, it concluded that the petitioner was not responsible for the disputed transactions.

The finding was important because the restrictions on the account arose from transactions that the petitioner claimed had been carried out through a fraudulent arrangement. Where an account holder is found, on the available evidence, to have been a victim rather than a person responsible for the disputed activity, the justification for continuing to restrict that person’s banking operations must be considered in light of the particular circumstances.

The Court consequently held that the petitioner could be permitted to operate the account notwithstanding the 21 requisitions concerning the amount of ₹1,16,32,892. It also expressly directed that, if she requested closure of the account, the bank should process that request without allowing the same requisitions to prevent it.

In its operative direction, the Court stated that the petitioner could be permitted to operate the account while disregarding the 21 requisitions for the specified amount. It further directed that any request made by her to close the account should be processed by Axis Bank notwithstanding those requisitions.

The direction addressed both aspects of the petitioner’s grievance. First, it allowed her to operate the account despite the existing restrictions. Second, it ensured that she would not be prevented from closing the account if she chose to discontinue the banking relationship.

The distinction between operating an account and closing it is practically important. Removing restrictions on account operations allows the account holder to carry out banking transactions, subject to applicable requirements. Processing an account closure request, by contrast, enables the customer to end the banking relationship. The Court’s order expressly addressed both requests rather than limiting the relief to one form of access.

The decision also took account of the fact that the bank had reported a negative balance. The bank stated that it had been unable to comply with certain court orders directing the transfer of amounts to the petitioner’s account because the balance was negative. The Court’s direction concerning operation and closure addressed the effect of the 21 requisitions on the petitioner’s banking relationship, although the order should not be understood as a determination of the actual availability of funds that were not present in the account.

The aggregate lien of ₹1,16,32,892 was substantial, and the existence of 21 separate requisitions created a complex restriction on the account. However, the Court did not treat the number or aggregate amount of the requisitions as conclusive proof that the petitioner was responsible for the underlying transactions. Instead, it considered the material explaining how the disputed activity had arisen.

This aspect of the decision is particularly relevant to cybercrime cases involving suspected fraudulent use of bank accounts. A transaction may trigger an investigation or a restriction even where the account holder maintains that they were deceived into sharing account information. The existence of a requisition is relevant to the bank’s obligations, but the circumstances of the account holder’s involvement may also be important when a court is asked to examine the continuation of restrictions.

The ruling illustrates the role of judicial review in addressing grievances involving banking restrictions. A writ petition may provide a means of seeking judicial scrutiny where an account holder contends that restrictions have been imposed or maintained in circumstances that cause serious prejudice. The Court’s intervention in the present matter followed its assessment of the evidence and its conclusion that the petitioner was not responsible for the disputed transactions.

At the same time, the decision must be understood within its factual limits. The Court did not establish a universal rule that all bank accounts associated with cybercrime investigations must be unfrozen whenever the account holder alleges fraud. Nor does the judgment, as summarised in the available material, set out a comprehensive framework for resolving every conflict between an account holder’s request for access and a law enforcement authority’s requisition.

Instead, the Court granted relief after considering the specific materials in this case and concluding that the disputed transactions resulted from fraud against the petitioner. Its direction was directed at Axis Bank and the 21 requisitions concerning the petitioner’s account.

The decision also does not mean that suspected cybercrime transactions cease to be subject to investigation merely because an account holder is permitted to operate or close an account. The order concerns the restrictions imposed on the petitioner’s banking relationship. The summary does not record any direction terminating the underlying investigation, determining the ownership of all disputed funds or declaring that every transaction associated with the account was conclusively resolved for all purposes.

This distinction is important because the legal treatment of disputed funds and the rights of an account holder are related but separate matters. Investigating authorities may need to examine suspicious transfers, identify the persons who received funds and determine whether any amounts can be recovered. At the same time, restrictions affecting an account holder must be considered in light of the available evidence and the legal basis for maintaining them.

The Court’s approach recognised that a person who has been deceived into sharing banking information should not automatically be treated as responsible for every transaction subsequently routed through the account. The petitioner’s WhatsApp communications and her prompt report to the bank were relevant to the conclusion that she had been defrauded.

The ruling also underscores the importance of timely reporting in suspected cyber fraud cases. In the present matter, the bank confirmed that the petitioner had promptly informed it of the fraud. Such reporting may help establish the circumstances in which suspicious activity was discovered and may assist banks and investigating authorities in examining the transactions. However, the legal consequences in any individual case will depend on the evidence and the applicable law.

Another important aspect is the Court’s treatment of the account closure request. The petitioner did not merely seek temporary access to the account; she wanted to close it. The Court expressly directed the bank to process such a request without allowing the 21 requisitions to prevent closure. This gave practical effect to the relief sought and ensured that the restrictions would not, by themselves, indefinitely obstruct the closure of the account in the circumstances considered by the Court.

The order also demonstrates the importance of distinguishing between an interim or administrative banking restriction and a final determination of responsibility for a suspected offence. The existence of disputed transactions and a substantial lien does not, without more, resolve whether the account holder knowingly participated in the underlying activity. Here, the Court’s assessment of the available materials led it to conclude that the petitioner was not responsible for the transactions.

The writ petition was accordingly disposed of with directions to Axis Bank o permit the petitioner to operate the account and t