Karnataka HC upholds police power to freeze bank accounts in probes

The Karnataka High Court ruled that police can freeze bank accounts during a crime probe under Section 106 of the BNSS without prior judicial permission. The court clarified this is a protective measure to prevent siphoning of funds.

The Karnataka High Court has upheld the power of police officers to debit-freeze bank accounts during a crime investigation under Section 106 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023, without obtaining prior judicial permission. According to a press release issued by the Karnataka State Cyber Command on Wednesday, the court, presided over by Justice M Nagaprasanna, clarified that police officers are required to freeze the account during the investigation and report the action forthwith to the jurisdictional Magistrate.

Court Quashes Lower Order in BUDS Act Case

The High Court also quashed earlier orders passed by the Principal City Civil and Sessions Judge, Bengaluru, directing the release of seized gold and silver and the de-freezing of bank accounts in connection with a crime registered at Koramangala Police Station. The case involves M/s JAR Gold Retail Pvt Ltd under Sections 21(1) and 21(2) of the Banning of Unregulated Deposit Schemes (BUDS) Act, 2019.

Distinction Between BNSS Sections 106 and 107

The High Court, according to the release, clearly delineated the functional boundary between statutory investigative powers and judicial adjudication under Sections 106 and 107 of the BNSS. "Section 106 preserves property while Section 107 adjudicates attachment," the release said.

Section 106 of the BNSS provides an immediate and protective mechanism for police officers to prevent suspected funds from being siphoned off during an investigation. In contrast, Section 107 governs formal judicial attachment and permanent forfeiture. Proceedings under Section 107 require approval from the Superintendent or Commissioner of Police, a formal application before the court, a 14-day show-cause notice and a full judicial hearing, it added.

Preventing Fund Disappearance in Digital Fraud

The High Court emphasised that requiring police to obtain prior court permission before freezing every suspected account would severely hamper investigations, particularly in cases involving swift digital financial transactions. According to the release, the court observed that victim funds could disappear before a formal judicial process is completed, leaving investigators with an attachment order over an empty account.

The judgment, therefore, affirmed that police action under Section 106 BNSS remains valid and operates independently of proceedings under Section 107.

A 'Vital' Clarification for Law Enforcement

The Karnataka State Cyber Command said the clarification is of "vital importance" to law enforcement, particularly in digital financial fraud and cybercrime investigations.

The judgment, it said, reinforces the state's ability to protect financial victims and secure suspected proceeds of crime effectively by allowing police to take immediate protective action during investigations.

The ruling also provides greater clarity on the distinction between the immediate investigative powers of police and the subsequent judicial process governing formal attachment and forfeiture of property, according to the release.

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