Police Can Freeze Bank Accounts Under Section 106 BNSS Upon Suspicion Of 'Proceeds Of Crime': Punjab & Haryana High Court

"It was well within the jurisdiction of the police officer to issue a direction for freezing of account of the petitioner as there was a doubt that the amount lying in the account... was the proceeds of crime." Punjab & Haryana High Court, in a significant ruling, held that investigating agencies possess the statutory authority under Section 106 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) to freeze bank accounts suspected of containing "proceeds of crime."

A bench of Justice Surya Partap Singh observed that while Section 107 of the BNSS provides a procedure for the attachment of property through a Magistrate, it does not derogate from the police’s immediate power to seize or prohibit the operation of accounts during an active investigation.

The case arose from a writ petition filed by M/s OM Circuit Boards Pvt. Ltd. challenging a lien of Rs. 32,09,907/- placed on its ICICI Bank account by the Gurugram Police. The police action followed an FIR involving allegations of cheating and forgery to the tune of Rs. 55.55 crores lodged by Rah Infotech Pvt. Ltd. against the 'Goel Group'. The petitioner company argued that the funds received were part of a bona fide business transaction for the supply of printed circuit boards and that the mandatory procedure for attachment under Section 107 of the BNSS had been bypassed.

Court Outlines Scope of Investigating Agency's Power

The primary question before the court was whether a police officer has the right to place a lien on a bank account under the new criminal laws. The court was also called upon to determine if the Investigating Agency must strictly follow the attachment procedure under Section 107 of the BNSS before freezing an account suspected of holding proceeds of crime.

Bank Accounts Constitute 'Property' Susceptible To Seizure Under BNSS

The Court relied heavily on the principles established by the Supreme Court in State of Maharashtra V/s Tapas D. Neogy and Teesta Atul Setalvad V/s State of Gujarat. It noted that Section 106 of the BNSS, which is akin to Section 102 of the erstwhile CrPC, empowers a police officer to seize any property alleged or suspected to have been stolen or found under circumstances creating suspicion of an offence.

Justice Singh observed that the term 'property' must not be given a narrow interpretation. The bench noted that if there can be no order of seizure of a bank account, then money which is ultimately found to be the outcome of illegal activity could be withdrawn, leaving the Courts powerless to recover it.

"The Investigating Officer in the course of investigation has power to seize or prohibit operation of bank account of any person, which may be found under circumstances creating suspicion of commission of any offence."

Distinction Between Section 106 Seizure And Section 107 Attachment

The petitioner had contended that the police should have approached a Magistrate under Section 107 of the BNSS for an attachment order after obtaining approval from senior police officials. However, the Court clarified that Section 106 remains a vital tool for investigation and collection of evidence.

The Court held that once it is established that the Investigating Officer had a reasonable suspicion that the amount lying in the account was a "proceed of crime" as defined under Section 111(c) of the BNSS, the authority to issue a direction for a lien is squarely within the police's jurisdiction.

"Taking into consideration the cumulative effect of all the provisions... it was well within the jurisdiction of the police officer to issue a direction for freezing of account of the petitioner as there was a doubt that the amount... was the proceeds of crime."

Balancing Petitioner's Business Interests With Complainant's Rights

While upholding the legality of the freeze, the Court acknowledged the difficulty faced by a company that may eventually be found innocent. To harmonize the interests of the petitioner and the complainant, the Court proposed a "win-win situation" involving the furnishing of security.

The bench noted that allowing the petitioner to utilize the funds upon providing an equivalent security bond would safeguard the complainant's right to recover the money if the trial concludes that the funds were indeed proceeds of crime. This arrangement ensures that the business can continue its operations without permanently losing the liquid capital during the pendency of the trial.

"In order to harmonize the difficulty... and also to safeguard the rights of the complainant... the petitioner shall avail the advantage of utilizing the money for which the lien has been created and on the other hand, the rights of the complainant... would be duly secured."

Final Directions On De-Freezing Of Account

The High Court disposed of the petition by directing the respondent authorities to remove the lien from the petitioner's bank account. This direction was made subject to the petitioner furnishing security bonds equivalent to the frozen amount of Rs. 32,09,907/- to the satisfaction of the jurisdictional Magistrate or the Trial Court.

The Court further mandated that once the bonds are furnished and the Investigating Agency is intimated by the Court, the bank must withdraw the lien within three working days. This mechanism, the Court held, balances the rigors of criminal investigation with the protection of commercial interests.

The ruling reinforces that under the BNSS regime, the police maintain robust powers to freeze assets at the investigative stage to prevent the dissipation of alleged criminal proceeds, provided there is a nexus between the funds and the offence being investigated.

Date of Decision: 10 July 2026