Kerala High Court Warns Against Misuse Of Writ Petitions By “Money Mule” Account Holders

The Kerala High Court on 10 July cautioned against the misuse of writ petitions seeking the unfreezing of bank accounts allegedly used as “money mule” accounts in cyber fraud cases, observing that account holders were increasingly filing such petitions to obtain orders allowing them to continue operating accounts used to facilitate fraudulent transactions.

Justice M.A. Abdul Hakhim dismissed a writ petition seeking the unfreezing of a bank account and directed the Station House Officer, Tanur Police Station, to register an FIR against Sinana Farvin, the petitioner, after finding that the account was prima facie opened to facilitate cyber fraud. He observed:

“Such indulgence of this Court is being misused by the Mule Account Holders. Whenever the operation of the Mule Account is frozen, the Mule Account Holder approaches this Court and gets an order for continuing operations of his Account, and on the strength of the Order of this Court, he continues with his money mule activities.”

Farvin, a 21-year-old woman, approached the High Court seeking to unfreeze her bank account after police authorities investigating an alleged cyber fraud froze it. One police requisition directed the creation of a lien over Rs. 3.50 lakh, while another sought complete debit freezing of the account.

During the proceedings, the police produced the petitioner's statement, in which she stated that she was unaware of the source of the Rs. 3.50 lakh credited to her account and no longer wished to pursue the writ petition. The statement contradicted her pleadings before the Court, where she claimed that she received the amount through legitimate cryptocurrency transactions.

The Court noted that the petitioner failed to provide details or supporting documents regarding the alleged cryptocurrency transactions. She later sought permission to withdraw the writ petition, which the Court declined.

Justice Hakhim observed that cybercriminals often use “money mule” accounts operated by young individuals to conceal illegal money trails, with the account holders receiving a share of the fraud proceeds in exchange for allowing the use of their bank accounts.

Expressing concern over the increasing number of petitions seeking the unfreezing of bank accounts, the Bench noted that account holders frequently approach the High Court after police authorities freeze their accounts in cyber fraud cases. Such account holders claim that the disputed funds arose from genuine transactions and seek permission to operate their accounts subject to a lien over the disputed amount.

It further held that money mule account holders had misused such orders by continuing to facilitate cyber fraud after obtaining permission to operate frozen accounts. The Court also expressed concern that some junior lawyers had developed an exclusive practice of filing such petitions. It observed:

“Such persons used to file the Writ Petitions through some of the young members of the Bar, as the pleadings and grounds are the same in all the Writ Petitions and this Court used to pass uniform orders in all such Writ Petitions permitting the operation of the Accounts while limiting the lien to the disputed amounts. It gave undue confidence to several junior lawyers to start independent practice during the initial stage of their practice itself.”

The Bench also observed that several individuals who had recently attained majority were opening multiple bank accounts as money mule accounts, through which crores of rupees were being routed within a few months of opening such accounts.

On the facts of the case, it found that the petitioner took inconsistent positions before the police and the Court. Refusing to permit withdrawal of the writ petition,it remarked:

“It has become a common practice to seek withdrawal of a Writ Petition or allow it to be dismissed for default when it is found that there is no likelihood of the Writ Petition being allowed.”

Accordingly, the High Court held that the materials prima facie indicated that the bank account was opened to facilitate cyber fraud, dismissed the writ petition and directed registration of an FIR against the petitioner under Section 111 of the Bharatiya Nyaya Sanhita, 2023, followed by an investigation.

For Petitioner: Advocates Viswanath Salish, Akash Jitthu T, Nidha Sherin and Sandra Paul

For Respondents: Advocates V.K Rafeek (Sr.G.P) and Jawahar Jose (SC)