Debit-freezing bank accounts during investigation u/s106 BNSS: police lack power to attach accounts; freeze orders quashed.

Section 106 of the BNSS, 2023 does not confer power on the investigating agency to attach or debit-freeze a bank account. Relying on SC authority interpreting s.102 CrPC (now replaced by BNSS) and the reasoning adopted by another HC, the Court held that police power to seize "property" is confined to property suspected to be stolen or found in circumstances creating suspicion of commission of an offence; property outside these conditions cannot be seized. Consequently, debit-freeze/attachment orders issued by the investigating agency purportedly under s.106 BNSS were quashed and set aside, and the petition was disposed of.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether an Investigating Agency has power under Section 106 of the Bharatiya Nagarik Suraksha Sanhita, 2023 to attach or debit freeze a bank account merely because amounts suspected to be linked to a cyber fraud are credited to that account.

(ii) Whether, and in what manner, debit-freezing/attachment of a bank account suspected to contain "proceeds of crime" is required to be undertaken under the BNSS, including the role of Section 107 and the Magistrate's authority.

(iii) Whether banks may debit freeze accounts on their own or upon investigative communications not amounting to a competent freezing/attachment order, and what is the permissible course indicated by the Court.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Power of Investigating Agency to debit freeze/attach under Section 106 BNSS

Legal framework: The Court examined Section 106 of the BNSS (treated as akin to the earlier seizure provision) and contrasted it with Section 107 BNSS (dealing with attachment/forfeiture/restoration). The Court relied on, and applied, the reasoning adopted in an identical context that Section 106 concerns "seizure" during investigation and does not confer authority to attach/debit freeze an account as proceeds of crime.

Interpretation and reasoning: The Court accepted the distinction that seizure under Section 106 is meant to secure evidence and can be done by the police with an ex post facto report to the Magistrate, whereas attachment (including measures aimed at securing "proceeds of crime" by preventing disposal) falls within Section 107 and requires Magistrate's order. The Court treated debit freezing of a bank account as an attachment-type measure rather than a mere investigative seizure.

Conclusion: The Court conclusively held that debit freezing/attachment of a bank account is not permissible under Section 106 BNSS; therefore, the Investigating Agency has no power under Section 106 to attach or debit freeze accounts.

Issue (ii): Proper route under BNSS for debit freezing/attachment of accounts suspected to contain proceeds of crime

Legal framework: The Court examined Section 107 BNSS as the provision enabling attachment of property believed to be derived directly or indirectly from criminal activity or commission of an offence, upon approaching the jurisdictional Magistrate.

Interpretation and reasoning: The Court endorsed the mechanism that the investigating officer must move the jurisdictional Magistrate for attachment; the Magistrate may order attachment after hearing parties or may issue an interim attachment order where notice would defeat the purpose. The Court accepted that subsequent steps concerning confirmation of proceeds of crime and distribution/restoration are to follow the Magistrate's process contemplated under Section 107.

Conclusion: The Court held that the Investigating Agency may proceed under Section 107 BNSS to debit freeze or attach a bank account, i.e., only through Magistrate-authorised attachment, not by unilateral action under Section 106.

Issue (iii): Legality of banks debit freezing accounts without a competent freezing/attachment order; permissible course

Legal framework: The Court took note of the "Citizen Financial Cyber Frauds Reporting and Management System" and its guidance indicating that banks/intermediaries may place the disputed amount on lien on the basis of acknowledgement details, enabling later refund after investigation, but this does not equate to debit freezing the entire account. The Court also considered the factual position that in several matters there was no clear investigative communication placed showing an instruction to debit freeze, making it unclear how the banks debit froze the accounts.

Interpretation and reasoning: The Court held that banks should not proceed to debit freeze accounts merely upon communications that do not specifically require debit freezing by a competent authority, particularly when the lawful framework differentiates between lien on disputed amounts and account-wide debit freeze/attachment requiring appropriate authority. The Court recognized that wrongful debit freezing can cause day-to-day losses and expressly permitted affected persons to seek compensation through appropriate proceedings, to be decided on merits.

Conclusion: The Court directed that banks should act in terms of the stated management system unless there is a specific debit-freezing order by a competent authority; and it left open compensation claims to be pursued separately on merits.

Final operative determination (material to outcome): Since the impugned debit freezes were imposed under Section 106 BNSS, the Court held them unlawful and quashed and set aside the Investigating Agency's orders debit freezing the concerned accounts, allowing the petitions to that extent.

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