The Kerala High Court has restrained the Kerala State Financial Enterprises (KSFE) and Revenue Recovery officials from transferring money from borrowers’ frozen bank accounts to Recovery Officers’ accounts, holding that such a transfer would amount to deprivation of property without authority of law in violation of Article 300A of the Constitution.

Justice V.G. Arun passed the interim order in a writ petition filed by borrowers whose bank accounts were frozen as part of recovery proceedings initiated under the Kerala Revenue Recovery Act, 1968. The petitioners had taken loans from KSFE, and the Special Deputy Tahsildar (Revenue Recovery) issued directions under Sections 19 and 80 of the Act to freeze their accounts and transfer the existing balance to a government account.

The petitioners argued that the loan was secured by mortgaged land and that while the Act may allow attachment of bank accounts, it does not authorize the transfer of funds out of such frozen accounts. They contended that the authorities had exceeded their statutory power.

The Court accepted that while Section 19 permits attachment of debts and intangible movable property (including bank balances), there is no provision authorizing the transfer of money from the borrower’s account to the Recovery Officer’s account. Such movement of funds, the Court held, would be without legal authority.

The Court stated:

“In the absence of such power, the direction militates against Article 300A of the Constitution of India, which protects a person from being deprived of his property except by authority of law.”

At the same time, the Court recognized that freezing accounts is a stringent but statutorily permitted measure, and therefore did not interfere with the attachment/freezing orders themselves.

Accordingly, the Court stayed only the direction to transfer funds while leaving the freeze on the accounts intact.

Case Title: Sameer Khan & Ors. v. Special Deputy Tahsildar (RR) & Ors.
Case No.: WP(C) 39775/2025