Kerala High Court tells Federal Bank to lift freeze if police fail to name disputed sum

The Kerala High Court on 12 October 2026 directed Federal Bank to lift a freeze on a customer's account if the police do not tell the bank the disputed amount within a set time. The court said it would be an injustice to stop the account holder from operating the account altogether when the police requisition did not state the amount.

What Happened

The account holder, who lives in Qatar and acted through a power of attorney holder, challenged a debit freeze placed on his Federal Bank account at the request of the police in Vijayawada. He said he was not an accused in the case and was not connected with it. The bank told the court that the requisition did not state the disputed amount, so it had frozen the whole account. The police in Vijayawada did not appear despite notice.

The court noted its earlier decisions directing banks to let account holders operate their accounts while limiting the lien to the amounts shown in requisitions, as long as the bank has no suspicion that the account is used for cyber crime or as a money mule account. It also referred to the 2026 Standard Operating Procedure (SOP) of the Indian Cyber Crime Co-ordination Centre under the Ministry of Home Affairs, whose Clause 10 gives a time-bound grievance mechanism.

The court ordered the bank to ask the police for the disputed amount within two weeks of receiving the judgment. The police must reply within one month; if they do not, the bank must lift the freeze. If the amount is given, the bank must limit the freeze to that amount and allow the account to be operated.

What It Means

For customers whose entire accounts are frozen on a police request that names no amount, the order shows the court requiring the hold to be confined to the disputed sum. The held amount will be dealt with under the SOP, and the account holder can use its Clause 10 grievance process. The bank remains free to act on any future requisition. Cyber fraud can be reported at https://cybercrime.gov.in or on helpline 1930.

Source: High Court judgment