Police Cannot Freeze Bank Accounts Without Magistrate’s Order — Kerala High Court Clarifies Scope of BNSS Section 107”

“Debit Freeze Amounts to Attachment, Not Seizure — Requires Judicial Approval Under BNSS” - In a significant judgment Kerala High Court set aside a debit freeze order imposed on the petitioner’s bank account by the police, ruling that “a debit freeze amounts to attachment of property and cannot be ordered by police without prior approval of the Magistrate as mandated under Section 107 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023.”

Justice V.G. Arun unequivocally held that “police cannot unilaterally freeze bank accounts by invoking Section 106 of BNSS (earlier Section 102 CrPC) when such action amounts to attachment of proceeds of crime — it must follow the judicial process laid down under Section 107 of BNSS.”

“Debit Freeze Without Judicial Order Is Illegal — Police Must Follow BNSS Section 107”

The Court emphasized that “Section 106 of BNSS, akin to Section 102 of CrPC, empowers police officers to seize property directly linked to an offence under suspicious circumstances for investigation purposes.”

However, the Court clarified that “attachment of properties suspected to be proceeds of crime, including freezing of bank accounts, falls squarely under Section 107 of BNSS, which explicitly requires the intervention and order of a Magistrate.”

Justice Arun observed:

“Attachment cannot be equated with seizure. While seizure is for investigation, attachment is to prevent disposal of suspected proceeds of crime, and this is possible only upon the Magistrate’s satisfaction after following due process.”

The case arose from a cheating complaint filed by Apple Middle East General Trading LLC based in the UAE, which had paid ₹49.53 lakhs in advance for the supply of sugar through Spezia Organic Condiments Pvt. Ltd. in Kochi. The consignment was never delivered, allegedly due to a change in government policy, but the amount was not refunded.

Investigations revealed that the money was transferred first to Headstar Trading LLP, and then partly to the petitioner Headstar Global Pvt. Ltd. Based on this, the police registered Crime No. 732/2024 under Sections 406, 420 read with 34 IPC, and issued a notice to freeze the petitioner’s bank account.

The petitioner challenged the freeze before the Judicial First Class Magistrate, Kalamassery, which rejected the plea. The petitioner then approached the High Court.

“Freezing Bank Accounts is Attachment, Not Mere Seizure — BNSS Makes It Mandatory to Approach Magistrate”

The Court noted that before the BNSS came into force, Section 102 CrPC permitted seizure of property during investigation if it was allegedly stolen or found under suspicious circumstances. However, there was no clear statutory framework for attaching proceeds of crime within India’s domestic law.

Justice Arun explained: “The BNSS, 2023, has plugged this gap by introducing Section 107, which deals specifically with attachment, forfeiture, or restoration of property considered as proceeds of crime.”

Quoting directly from the judgment, the Court remarked: “Section 106 speaks of seizure; Section 107 deals with attachment, forfeiture, and restoration. Debit freeze of a bank account amounts to attachment, not seizure, and hence must comply with Section 107.”

The Court further elaborated that under Section 107(1) of BNSS, the police must approach the Magistrate with an application, and only the Magistrate can issue an attachment order after issuing notice, giving a hearing, or, in exceptional cases, passing an ex parte interim order if delay would defeat the purpose.

“Police Action Without Compliance of Section 107 Is Illegal — Debit Freeze Lifted”

The Court categorically ruled: “The police, by issuing a mere notice to the bank under Section 106 of BNSS, have acted beyond their jurisdiction. Attachment of proceeds of crime can only be undertaken by following the procedure under Section 107.”

It held that: “Even assuming that money in the petitioner’s account was transferred from the account of the accused and may constitute proceeds of crime, the debit freeze can only be effected through an order of the jurisdictional Magistrate following due process.”

Key Observations by the Court

• “Debit freeze amounts to attachment, not seizure.”

• “Attachment of proceeds of crime is a judicial act, not a police function.”

• “Police cannot bypass the Magistrate while attempting to attach or freeze bank accounts.”

• “Section 107 BNSS provides a detailed framework including notice, hearing, interim orders, and final attachment, which was not followed in this case.”

Setting aside the debit freeze order, the Court declared: “The impugned order passed by the Judicial First Class Magistrate Court, Kalamassery in C.M.P. No.739/2025 is quashed. The debit freeze imposed on the petitioner’s account is lifted. Liberty is granted to the investigating officer to proceed under Section 107 BNSS if so warranted.”

This judgment establishes a critical precedent clarifying that police cannot unilaterally freeze bank accounts under BNSS without Magistrate’s sanction, reinforcing the mandatory judicial safeguards now embedded in Indian criminal procedure under BNSS, 2023.

Date of Decision: 2 June 2025