In a batch of petitions filed before the Allahabad High Court seeking the issuance of a writ/order/direction to the respondents for de-freezing the petitioner’s bank accounts, a Division Bench of Justice Ajit Kumar and Justice Swarupama Chaturvedi issued certain directions to protect the rights of the bank account holders and held that only the suspected amount is to be restricted and not the entire operations of the bank accounts.
The petitioners were aggrieved by the actions of the bank authorities, as their bank accounts had been frozen and restrictions were placed on their operations due to investigations into certain cyber offenses which involved financial transactions in the petitioners’ bank accounts.
One of the petitioners contended that even assuming that Section 106 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) was applicable, a debit bank could not have been completely frozen, and that the same should only be up to the amount suspected to be a part of the offense after complying with the procedure under Section 106, BNSS.
It was contended on behalf of the Union of India that the procedure was clear at every step, as the Standard Operating Procedure/Guidelines (SoP) published by the Ministry of Home Affairs provided a detailed procedure for seizing and freezing bank accounts. In consonance with this SoP, it was asserted that non-furnishing of detailed information to the bank account holder does not invalidate freezing of a bank account.
The State asserted that the police are empowered under Section 106 of BNSS to direct the seizure of the account and that prior information was not necessary to the account holder, but only to the magistrate, after the seizure.
The Court perused Sections 106 and 107 of BNSS and stated that these provisions empower the investigating agency to take necessary steps for the seizure or securing of property suspected to be connected with the commission of any offense during the investigation. Further, the Court stated that the Supreme Court in State of Maharashtra v. Tapas D. Neogy (1999) 7 SCC 685, had recognized that a bank account is ‘property’ within the meaning of Section 102 of the Code of Criminal Procedure, 1973 (CrPC), which corresponds to Section 106 BNSS.
Further, the Court said that Section 106(1) made it clear that only such property, which is suspected to be stolen or is linked to suspicious circumstances, is liable to be seized. Hence, it was held that the power of seizure cannot be construed to permit freezing of the entire operation of the bank account in the absence of the twin conditions of Section 106 BNSS. The Court also held that a police officer can instruct the freezing of a bank account only with full compliance with Section 106 BNSS and not dehors the same.
The Court did not find any requirement in the statutory scheme for prior notice or a judicial order regarding seizure to be given to the property owner, and said that requiring the same would affect the purpose of Section 106 BNSS. It was said that any interpretation mandating a prior notice would unnecessarily curtail the power expressly granted and would frustrate the very object of enabling prompt action to preserve property connected to suspected offenses. Hence, the Court held that prior intimation was not a precondition to the exercise of power under Section 106, but giving information as per Section 106(2) and 106(3) is mandatory. However, it was stated that the banks shall inform the bank account holders of the operational status of their accounts upon instructions from the investigating agency.
The Court held that Sections 106 and 107 of BNSS operate at distinct stages and serve different purposes during investigation, and that the applicability of one provision does not automatically trigger the other, as each provision must be exercised in accordance with the specific object and scope envisaged. Further, considering Section 106(3), the Court said that there was not an iota of doubt that the jurisdiction is in the place where the account is being seized, irrespective of the place from which the transfer or deposit was made.
The Court stated that, barring one petition already before the jurisdictional Magistrate, there has been non-compliance with the requirements of Section 106 BNSS in the remaining matters, and issued the following directions to protect the rights of the account holders:
• The respondent banks were directed to place only the amount specified by the investigating officer under lien for all bank accounts, and to restore the operation of the said accounts.
• The petitioners were given liberty to approach the jurisdictional Magistrate for compliance with Section 106 wherever the bank accounts were frozen in non-compliance with the same.
• The investigating agency was directed to specify the suspected amount to be restricted while issuing directions to the banks.
• The banks were directed to promptly inform the account holder in case of any seizure, freezing, or marking of lien after the above directions from the investigating agency, including the reason for such action, as well as the account’s operational status.
The Court allowed 8 petitions, held that 2 had rendered infructuous, and disposed of the petition already before the Magistrate with a direction that the amount withheld by the bank would be governed by the final order of the Magistrate.
Appearances:
For Petitioners – Mr. Akash Kumar Sharma, Mr. Ashwani Kumar, Mr. Shamasul Eslam
For Respondents – ASGI, CSC, Mr. Sanjay Singh, Mr. Tushar Kant
