A police officer must establish a direct link to criminal activity before freezing a bank account, following due process under Section 107 of the BNSS.

ORDER :

1. The petitioner, a private limited company engaged in the business of export/import of food grains, pulses, and sugar, is aggrieved by Annexure D order, rejecting its application to unfreeze the company's bank account.

2. The essential facts are as under:

M/s. Apple Middle East General Trading LLC, located in the United Arab Emirates, is engaged in the import and export of food grains and other food articles to the Middle East. The aforementioned company having got impleaded as a party to these proceedings through its Public Relations Manager, will hereafter be referred to as the 3^rd respondent for convenience.

As part of its business, the 3^rd respondent raised proforma invoice with Spezia Organic Condiments Pvt. Ltd. through Headstar Trading LLP, for the export of 378 metric tons of sugar from Kochi to the UAE. As advance towards the order, the 3^rd respondent remitted Rs. 49.53 lakhs to the account of Spezia Organic Condiments Pvt. Ltd. maintained at the Kochi branch of the IDBI Bank. The advance payment was made based on the assurance that the consignment would reach the UAE within 30 days. However, contrary to the assurance, the sugar was never despatched from India. Upon inquiries, it came to light that the commitment to deliver the consignment was made by concealing the fact that, due to a change in Government policy, it was no longer possible to export sugar from India. On being confronted with this fact, the Directors of Spezia Organic Condiments Pvt. Ltd. promised to refund the advance amount, but failed to fulfill the promise. Thereupon it became evident that the intention from the very inception was to cheat the 3^rd respondent by collecting the advance amount based on the false promise. The complaint in this regard filed on behalf of the 3^rd respondent led to the registration of Crime No. 732 of 2024 at the Kalamassery Police Station against the Directors of Spezia Organic Condiments Pvt. Ltd., for offences under Sections 406 and 420, read with Section 34 of the Indian Penal Code (IPC). In the complaint, it was alleged that out of the advance paid by the 3^rd respondent, Rs.46,50,525 was transferred to another entity, M/s Headstar Trading LLP and from that account, Rs.52,44,750 was transferred to the account of Headstar Global Pvt.Ltd./the petitioner. After registering the crime, the Investigating Officer issued Annexure B notice, directing the bank to debit freeze the petitioner's account. Thereupon, the petitioner filed Annexure C requesting the jurisdictional Magistrate to lift the debit freeze. That petition stands dismissed by Annexure D order.

3. Assailing the impugned order and the direction to debit freeze the petitioner's account, Advocate Babu S. Nair put forth the following contentions:

Sections 94 and 106 of the BNSS does not empower the police to seize/freeze the account of a third party. While Section 94 has no application, Section 106 would apply only to tangible properties which are believed to be stolen or found under circumstances which create suspicion of the commission of any offence. There is no such allegation in the petitioner’s case. On the other hand, the direction to debit freeze the account is issued solely on the ground that money from the account of Spezia Organic Condiments Pvt. Ltd. was transferred to the account of M/s.Headstar Trading LLP and thereafter, to the petitioner’s account. These transfers were effected in the regular course of business and cannot therefore be termed even as proceeds of