Kerala HC warns junior lawyers to be careful while handling pleas to defreeze bank accounts linked to cybercrime

The Kerala High Court recently issued a word of caution to young lawyers who represent litigants who seek the unfreezing of bank accounts, observing that they may unwittingly aid the continued operation of mule accounts that are used to store the proceeds of cybercrime.

Justice MA Abdul Hakhim observed that young lawyers often take up cases involving prayers to defreeze bank accounts because such litigation seems effortless, with uniform pleadings to file and assured interim orders.

The judge went on to note that in such cases, the Court has earlier permitted the operation of frozen bank accounts by limiting a lien on the disputed amount.

"It gave undue confidence to several junior lawyers to start independent practice during the initial stage of their practice itself. Junior Lawyers have found it a lucrative field for their practice on account of effortless practice and assured orders. There are several lawyers who started independent practice immediately after their enrolment," the Court added.

However, such reliefs were then being misused by mule account holders to continue facilitating cyber fraud.

Meanwhile, lawyers continue filing petitions for such fraudsters in order to get assured reliefs. The Court acknowledged that there were some genuine cases, but added that other such petitions involve more suspicious transactions.

"Of course, there are several junior lawyers who have been fairly conducting these types of cases of genuine Account Holders. Some junior lawyers get trapped in this field only because of their carelessness alone," the Court said.

It also recalled in one such case, the Court also took note of the possibility that artificial intelligence was used to generate pleadings, when the lawyer who appeared was unable to answer even basic queries during the hearing.

In the said case, the Court had further directed that the jurisdictional police station should be added a party to all petitions filed in future to defreeze bank accounts, to better verify the details of the petitioners.

"After this direction, this Court noticed a significant decline in the filing of new Writ Petitions pertaining to the unfreezing of Accounts," Justice Hakim observed in his latest order.

The Bench, however, emphasised that these observations were not meant to undermine the younger generation of lawyers.

"Today’s young law graduates are brilliant and capable, owing to their rigorous law school curriculum, moot court experiences, and legal internships. They enter the profession with astute theoretical knowledge and possess the practical skills to deal with legal issues. Their tech- savviness and passion for justice make them a valuable addition to the Bar. The future of our legal system is in safe hands, provided these sharp minds are nurtured with the proper guidance from the Senior Bar and Bench," the July 10 ruling said.

The Court made the observations while dismissing a writ petition filed by a 21-year-old woman seeking the unfreezing of her bank account. The Court held that the materials prima facie indicated that the account had been opened solely to facilitate cyber fraud.

It, therefore, directed the Station House Officer of Tanur Police Station to register an FIR against the woman under Section 111 (organised crime) of the Bhartiya Nyaya Sanhita (BNS), 2023 and investigate the matter.

The Court went on to make comments on larger issues. It noted that financial cyber frauds increasingly relied on 'money mule' accounts to conceal and transfer proceeds of crime. Stolen funds are split into smaller amounts and routed through multiple bank accounts. making the money difficult to trace and recover.

The account holders, commonly known as 'money mules', receive a share of the fraud proceeds in return for allowing their accounts to be used by cyber fraudsters, the Court observed.

The judge also expressed concern that in may cases involving frozen bank accounts, the junior lawyers who represent the petitioners were unable to respond to the Court's queries.

In several such cases, the petitions were also found to have been filed without the account holder's counse.

Such developments, coupled with the increasing use of money mule accounts in financial cyber fraud cases, call for a stricter approach by the courts while dealing with petitions to defreeze bank accounts, the judge observed.

Advocates Viswanath Salish, Akash Jitthu T, Nidha Sherin and Sandra Paul appeared for the petitioner.

Senior government pleader VK Rafeek appeared for the State.

Standing counsel Jawahar Jose appeared for the Kerala Gramin Bank.

[Read Judgment]