Pramesh S Jain
The Karnataka High Court has upheld the statutory power of police officers to debit-freeze bank accounts under Section 106 of the Bharatiya Nagarik Suraksha Sanhita (BNSS),2023,without obtaining a prior court order.
In a significant ruling concerning the investigation of financial crimes,a bench headed by Justice M. Nagaprasanna clarified the distinction between the police power to preserve suspected proceeds of crime and the subsequent judicial process for attachment and confiscation.
The case relates to Crime No.25/2026 of Koramangala Police Station,registered against M/s Jar Gold Retail Private Limited under Sections 21(1)and 21(2) of the Banning of Unregulated Deposit Schemes (BUDS) Act, 2019.
The High Court set aside an earlier order of the Bengaluru Principal City Civil and Sessions Court directing the release of seized gold and silver and the de-freezing of bank accounts.
Section 106 allows immediate protective action
The High Court held that Section 106 BNSS empowers police to freeze an account during investigation when necessary to preserve property suspected to be connected with an offence.
The police are required to promptly report such action to the jurisdictional Magistrate.
The court distinguished this from Section 107 BNSS, which deals with the formal judicial process of attachment and forfeiture.
According to the court’s interpretation,Section 106 serves as an immediate protective mechanism to prevent suspected proceeds of crime from being transferred or dissipated,while Section 107 involves a formal judicial process,including an application before the court,notice and judicial consideration.
Prior court approval not mandatory:
The High Court observed that making prior judicial permission mandatory for every account freeze could seriously hamper investigations,particularly in cases involving cybercrime and digital financial fraud, where money can be transferred across accounts within minutes.
By the time a formal judicial process is completed, investigators could be left with an attachment order against an account from which the fraud proceeds have already been transferred.
The ruling therefore confirms that police action under Section 106 BNSS is independently valid and does not depend upon the procedure prescribed under Section 107.
Director General of Police,State Cyber Command,Pranab Mohanty,said the judgment would have significant implications for investigations into cyber-enabled financial frauds and would strengthen the ability of law-enforcement agencies to protect victims’money and prevent suspected proceeds of crime from being siphoned off.
