Police can freeze bank accounts during probe without prior court approval: Karnataka HC

Karnataka high court has ruled that police do not need prior permission from a magistrate to freeze a bank account during investigation, holding that such action is within their powers under Section 106 of Bharatiya Nagarik Suraksha Sanhita (BNSS).

Justice M Nagaprasanna said Section 107 of BNSS, which requires judicial approval for attachment of property, does not override the police powers under Section 106 — the new equivalent of Section 102 of Code of Criminal Procedure (CrPC). Section 106 empowers investigating officers to seize property during an investigation, including by imposing a debit freeze on bank accounts.

The ruling came while rejecting arguments by Jar Gold Retail Pvt Ltd that freezing its bank accounts amounted to attachment of property and therefore required prior approval from a magistrate under Section 107.

The court held that the two provisions dealt with different matters and could operate alongside each other. “They may run parallel, but they don’t run into each other,” Justice Nagaprasanna observed.

Under Section 106, police have the power to seize property as part of an investigation, with the requirement that the seizure be reported to the jurisdictional magistrate immediately afterwards. Section 107, on the other hand, deals with attachment, forfeiture and restoration of property.

Such attachment requires a judicial order after the magistrate is satisfied that the legal requirements have been met.

“The two provisions, therefore, are complementary, not competitive; concurrent in the statutory scheme, but distinct in their fields of operation. One does not eclipse the other. One cannot be employed to denude the other of its content,” the judge said.

The court also rejected an interpretation under which Section 107 would effectively curtail the powers granted to police under Section 106. Such an interpretation, it said, would make Section 106 virtually redundant, even though Parliament had retained the police’s seizure powers while replacing CrPC with BNSS.

‘Catastrophic consequences’

Justice Nagaprasanna highlighted the implications for cybercrime investigations, where stolen money can move between multiple accounts within seconds. Requiring investigators to obtain prior judicial approval before every debit freeze, he said, could seriously undermine efforts to trace and secure fraudulently transferred funds.

“If the contention... that even a debit freeze of a bank account must necessarily pass through the entire procedural rigmarole contemplated under Section 107 of BNSS is accepted, the consequence would not merely be anomalous. It would be catastrophic to the very efficacy of investigation, particularly in the burgeoning universe of cybercrime,” he said.

The court noted that fraudsters often route stolen funds through several “mule” accounts almost instantaneously. “A naive and gullible citizen may see his life’s savings disappear at the click of a mouse or the stroke of a key,” the judge observed.

Case background

The ruling came on a petition filed by Koramangala police challenging a Bengaluru city civil and sessions court order directing the release of gold and silver seized from Jar Gold and the defreezing of its bank accounts. Police had registered a case against the company under the Banning of Unregulated Deposit Schemes Act, 2019. During investigation, they seized precious metals and froze the company’s bank accounts.

The sessions court, on April 4, ordered the release of seized articles and the lifting of the debit freeze. Police challenged the order, arguing that the lower court had misinterpreted the law.

Allowing the police petition, the high court clarified that while attachment under Section 107 requires judicial approval, a debit freeze imposed by police during investigation under Section 106 does not.

Source: The Times of India