Freezing of Bank Accounts and the Mandate of Section 106 BNSS
In recent years, the indiscriminate freezing of bank accounts by cyber police across the country has emerged as a serious procedural and constitutional concern. In numerous cases, innocent account holders find their accounts frozen merely because a small amount of money has been credited to their accounts as part of a cyber fraud trail. Such persons are neither accused nor suspects, yet they are deprived of access to their own money for prolonged periods. The hardship is further aggravated when the cybercrime complaint is registered in one State while the bank account and the account holder are situated in another, resulting in a jurisdictional impasse where local courts are often told that they lack the authority to intervene, leaving the affected citizen remediless despite clear statutory safeguards.
The legal source of the power to freeze bank accounts during investigation is traceable to Section 102 of the Code of Criminal Procedure, which now finds place in Section 106 of the Bharatiya Nagarik Suraksha Sanhita, 2023. The Supreme Court in State of Maharashtra v. Tapas D. Neogy, (1999) 7 SCC 685, conclusively held that a bank account constitutes “property” and may be seized by the police during investigation. At the same time, the Court made it clear that such power is not unbridled and must be exercised strictly in accordance with the procedural safeguards embedded in the statute, thereby recognising that seizure of bank accounts has serious implications and requires judicial supervision.
One such safeguard, of fundamental importance, is the mandatory requirement under Section 102(3) CrPC, now Section 106(3) BNSS, which obligates the police officer effecting the seizure to forthwith report the same to the Magistrate having jurisdiction. This requirement is not a mere formality but a substantive condition designed to ensure immediate judicial oversight over coercive investigative action. The Madras High Court in T. Subbulakshmi v. Commissioner of Police, 2013 SCC OnLine Mad 1460, held that freezing of a bank account without informing the jurisdictional Magistrate is illegal and unsustainable. The Court quashed the freezing order solely on account of non-compliance with this statutory mandate, reaffirming that judicial scrutiny over seizures is compulsory and not dependent upon the discretion of the investigating agency.
Similar emphasis on strict compliance with Section 102(3) CrPC has been placed by other High Courts as well. Courts have consistently held that failure to report the seizure of a bank account to the Magistrate vitiates the action of the police, as the reporting requirement exists precisely to subject police action to prompt judicial examination. These judicial pronouncements clearly establish that the obligation to report seizure under Section 106 BNSS is mandatory in nature and that non-compliance renders the freezing legally vulnerable, irrespective of the stage of investigation or the place where the FIR is registered.
The power of the Magistrate in relation to seized property has always been conceived as supervisory rather than appellate. Once a seizure is required to be reported under Section 106(3) BNSS, the Magistrate does not act as a passive recipient of information but assumes jurisdiction to examine whether the seizure conforms to law. This supervisory role is inherent in the scheme of criminal procedure, which entrusts the Magistracy with the responsibility of acting as the first judicial check on investigative excesses. The authority to pass appropriate orders regarding custody, continuation, or release of seized property is an incident of this supervisory jurisdiction and cannot be rendered illusory by procedural non-compliance on the part of the police.
The power to order defreezing of a bank account is not an extraordinary or independent jurisdiction but flows naturally from the Magistrate's power to examine the legality of the seizure itself. Where the initial freezing is found to be procedurally defective, whether due to failure to report the seizure, lack of jurisdiction, or absence of demonstrable nexus with the alleged offence, the Magistrate would be well within jurisdiction to restore the account holder to their original position. Any interpretation to the contrary would defeat the purpose of Section 106(3) BNSS and allow statutory safeguards to be neutralised by investigative inaction.
In the context of inter-State cybercrime investigations, strict adherence to Section 106 BNSS assumes even greater significance. Digital financial transactions transcend territorial boundaries, while bank accounts remain anchored to specific branches and jurisdictions. If the Magistrate within whose territorial jurisdiction the bank account is maintained is divested of authority to examine the legality of an illegal or unreported freezing merely because the FIR is registered elsewhere, the affected account holder would be compelled to approach a distant court having no real or practical connection with them. Such an approach would undermine access to justice and frustrate the very objective of immediate judicial oversight contemplated by the statute.
Although the power to freeze bank accounts is recognised as a legitimate investigative tool, its exercise directly impacts the ability of an individual to access and utilize their own financial resources. Prolonged or unjustified freezing, particularly in cases involving persons who are neither accused nor suspects, has serious civil consequences. The consistent insistence by courts on strict procedural compliance reflects an underlying concern that coercive investigative measures must remain proportionate, accountable, and subject to judicial control, so that investigation does not assume a punitive character.
A recurring feature in cybercrime investigations is the freezing of accounts belonging to innocent persons who are incidentally linked through transactional trails. In such situations, the role of the Magistrate becomes crucial in preventing undue hardship. Judicial scrutiny at the earliest stage ensures that investigative convenience does not override basic fairness and that innocent account holders are not subjected to indefinite deprivation of their property without legal justification or oversight.
Ultimately, Section 106 BNSS must be interpreted in a manner that preserves its character as a meaningful safeguard against arbitrary police action. The consistent judicial emphasis on mandatory reporting, prompt judicial scrutiny, and accountability confirms that the Magistrate is not powerless when confronted with an illegal or procedurally flawed freezing of bank accounts. Recognising the jurisdiction of the Magistrate to examine such action and, where warranted, order defreezing is not an expansion of judicial power, but a faithful application of the statutory framework and the principles repeatedly affirmed by constitutional courts in the interest of fairness, legality, and the rule of law.
The author is an Advocate at High Court of Jammu & Kashmir and Ladakh. Views are personal