Freezing of Bank Accounts Under Section 106 BNSS: Scope, Safeguards and Judicial Limits
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Introduction
The expansion of digital banking and online transactions has significantly increased the detection of financial crimes, particularly cyber fraud. In response, investigating agencies frequently direct banks to freeze accounts suspected of holding proceeds of crime. Under the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), such action is generally taken under Section 106, which deals with seizure of property during investigation.
However, recent judicial scrutiny has clarified that the power to seize property does not automatically translate into unrestricted authority to freeze or block entire bank accounts. Courts have emphasized procedural safeguards, proportionality, and judicial oversight to prevent arbitrary interference with property rights.
This article examines the legal framework, interpretative issues, and emerging judicial standards governing bank account freezing under Section 106 BNSS.
Statutory Framework: Section 106 BNSS
Section 106 BNSS empowers a police officer to seize property that:
- Is suspected to be stolen, or
- Is found under circumstances creating suspicion of involvement in an offence.
Bank accounts are treated as “property” for this purpose because they represent a legally enforceable right to money.
The provision allows seizure during investigation, but it does not expressly provide for long-term attachment or permanent deprivation. Therefore, its scope must be read in conjunction with constitutional protections and judicial supervision.
Seizure vs. Freezing: Understanding the Distinction
A key legal issue concerns the difference between:
- Seizure, and
- Debit freeze or attachment.
Seizure in the context of a bank account typically means instructing the bank to restrict operations so that suspected funds are preserved for investigation. However, a blanket debit freeze—which prevents any withdrawal from the entire account regardless of the disputed amount—may go beyond the investigative purpose if not properly justified.
Courts have repeatedly observed that freezing an entire account, especially where only a specific transaction is under suspicion, may be disproportionate.
Mandatory Reporting to the Magistrate
Section 106 BNSS requires that when property is seized, the investigating officer must report the action to the jurisdictional magistrate without delay.
This requirement serves several purposes:
- It introduces judicial oversight at an early stage.
- It prevents misuse of police powers.
- It allows the affected party to seek redress before a neutral authority.
Failure to report the seizure promptly may render the action procedurally defective.
Judicial Principles Emerging from Recent Decisions
Indian High Courts have developed important principles regarding bank account freezing:
1. No Arbitrary Blanket Freezing
Freezing an entire bank account without specifying the amount allegedly linked to the offence is considered excessive. Courts have directed that only the suspected sum should be restrained, unless clear reasons justify a broader freeze.
2. Existence of Reasonable Nexus
The investigating agency must demonstrate a reasonable connection between the bank account and the alleged offence. Mere suspicion without supporting material is insufficient.
3. Proportionality
The freezing measure must be proportionate to the objective of investigation. If restricting a specific amount is sufficient, a total debit freeze may be unjustified.
4. Right to Representation
The account holder must have the opportunity to approach the magistrate or higher courts to seek modification or lifting of the freeze.
Interaction with Section 107 BNSS
Where authorities seek to attach or permanently secure property believed to be proceeds of crime, additional statutory mechanisms may apply. Attachment typically requires a more structured process and judicial involvement.
Thus, Section 106 functions primarily as an interim investigative tool, not as a substitute for formal attachment proceedings.
Constitutional Perspective
Freezing a bank account directly impacts an individual’s ability to:
- Conduct business,
- Pay salaries,
- Meet contractual obligations,
- Access personal savings.
Although the right to property is no longer a fundamental right, it remains a constitutional and statutory right protected under Article 300A. Any deprivation must follow authority of law and satisfy standards of fairness and non-arbitrariness under Article 14.
Unrestricted freezing without procedural safeguards may violate these constitutional guarantees.
Practical Implications for Account Holders
If a bank account is frozen:
- Request written communication stating the legal basis.
- Verify whether the seizure has been reported to the magistrate.
- Apply before the jurisdictional magistrate seeking partial or full de-freezing.
- If necessary, approach the High Court under writ jurisdiction.
Courts have shown willingness to grant relief where procedural requirements were not followed or where the freezing was excessive.
Need for Clearer Guidelines
Given the increasing number of cybercrime investigations, standardized protocols would help balance enforcement needs with individual rights. Suggested reforms include:
- Clear rules limiting freezes to disputed amounts.
- Mandatory timelines for review of freezing orders.
- Structured communication formats between police and banks.
- Digital tracking systems ensuring magistrate reporting compliance.
Such reforms would reduce arbitrary action while preserving investigative efficiency.
Conclusion
Section 106 BNSS provides an important mechanism to secure suspected property during criminal investigation. However, its scope is not unlimited. Judicial decisions have made it clear that:
- Blanket freezing of entire bank accounts is not automatically justified.
- Specificity, proportionality, and prompt magistrate oversight are essential.
- Affected individuals retain the right to challenge freezing actions.
As financial transactions become increasingly digital, careful adherence to procedural safeguards is essential to maintain the balance between crime control and constitutional protections.
