The notes were of the demonitised Rs 1000 and Rs 500 denominations. The money was seized during a vehicle inspection after the police became suspicious of the packets in the car.
Riyaz of Farook (42), Aslam of Chaliyam (29) and Ajith of Naduvattom (29) were arrested by the police near the Koduvally petrol pump.
According to police, the money was kept in the car in 40 bundles. The vehicle used by the accused has also been taken into custody as the police probe to identify the owner.
A special team, led by Circle Inspector K Ashraf, made the arrests and recovered the notes.