Investigating Agencies Cannot Debit Freeze Accounts Under Section 106 BNSS: Bombay High Court - 2025-11-20

Beyond the Freeze: Bombay High Court Clarifies Attachment Limits Under BNSS

In a significant ruling clarifying the scope of investigative powers under the Bharatiya Nagarik Suraksha Sanhita ( BNSS ), 2023, the Nagpur Bench of the Bombay High Court has declared that investigating agencies cannot unilaterally "debit freeze" bank accounts under Section 106 of the Code. The judgment, delivered by Justices Anil L. Pansare and Raj D. Wakode, draws a sharp distinction between the power of "seizure" and the more stringent requirement of "attachment" for financial assets.

The Backdrop: A "Mystery" of Frozen Funds

The petitions brought before the court originated from widespread cyber-fraud investigations. Numerous account holders found their funds trapped after banks, acting upon informal communications from investigating agencies, placed a "debit freeze" on their accounts—at times without even providing formal notice or documentation. The court expressed bewilderment at the lack of transparency, noting that in several instances, there was no record of even a communication being sent, raising questions as to how the banks determined to freeze the accounts on their own volition.

The Legal Crossroads: Section 106 vs. Section 107

The central legal question was whether Section 106 of the BNSS grants police the authority to debit freeze an account. Relying on the precedent set by the Kerala High Court and established Supreme Court interpretations of the predecessor Section 102 of the CrPC , the Bombay High Court clarified that the BNSS addresses a prior "lacuna" in the law.

The court explained that while Section 106 pertains to the seizure of property to secure evidence, Section 107 is the specific provision meant for the attachment of proceeds of crime.

Key Observations

The judgment provides a clear roadmap for the future of financial investigations. The court’s reasoning was anchored in the following observations:

• On the limits of Section 106 : "That being so, the law stands well settled that under Section 106 of the BNSS , an Investigating Agency has no power to attach or debit freeze an account."
• On the role of the Magistrate: "Seizure under Section 106 can be carried out by a police officer and an ex post facto report submitted to the Magistrate. On the other hand, attachment under Section 107 can be effected only upon the orders of the Magistrate."
• On Bank protocols: "Bank/intermediaries can put the disputed amount on lien, but cannot debit freeze the account."

Impact on Banking and Investigation

The court emphasized that while investigating agencies have the power to target proceeds of crime, they must follow the procedure under Section 107 , which mandates approaching a jurisdictional Magistrate. The court also took note of the Citizen Financial Cyber Frauds Reporting and Management System , clarifying that banks are empowered to place a "lien" on disputed amounts—effectively separating the disputed funds without imposing a blanket freeze on the entire account.

Final Verdict and Implications

The High Court allowed the petitions, quashing the unauthorized orders under Section 106 that had resulted in indiscriminate debit freezes. Furthermore, the court left the door open for petitioners to seek compensation for losses suffered due to these high-handed actions.

This ruling serves as a vital check on both law enforcement and financial institutions, reinforcing that even in the fight against cyber fraud, the rule of law must prevail over administrative convenience. Authorities are now expected to strictly follow the statutory framework of Section 107 , ensuring that while crime is investigated, the fundamental rights of account holders are not bypassed.