Police Can Freeze Bank Accounts During Investigation Under Section 106 BNSS: Karnataka High Court In Jar Gold Case

The Karnataka High Court has held that investigating officers are empowered to freeze bank accounts during investigation under Section 106 of the BNSS and are not required to invoke Section 107 for attachment of property in every case. [2026 LiveLaw (Kar) 286]

The single judge bench of Justice M. Nagaprasanna made the ruling while allowing criminal petitions filed by the State of Karnataka against JAR Gold Retail Private Limited and setting aside orders of the jurisdictional court directing the defreezing of the company's bank accounts.

The Court held that Sections 106 and 107 of the BNSS operate in distinct fields and that interpreting Section 107 as the sole mechanism for securing bank accounts would render Section 106 ineffective.

“…Section 106 and 107 of the BNSS deals with different situations. An interpretative exercise that breathes life into one provision by suffocating the another is one that this Court could never undertake. The submissions of learned Senior Counsel for the respondent[Jar Gold] would tumble down under the weight of the statutory text, binding precedents, legislative intent and inevitable consequence of the interpretation canvassed hereinabove…”, it observed.

The petitions arose from an investigation by the Koramangala Police into alleged offences under the Banning of Unregulated Deposit Schemes Act, 2019 (BUDS Act). According to the prosecution, JAR Gold's digital platform for the purchase and sale of gold was, in substance, an unregulated deposit-taking scheme.

During the investigation, the police froze the respondent's bank accounts by issuing prohibitory directions to the banks. JAR Gold thereafter approached the jurisdictional court under Section 15(3) of the BUDS Act read with Sections 497 and 503 of the BNSS seeking release of the accounts.

By an order dated April 4, 2026, the lower court directed the accounts to be defrozen, observing that the case had been registered merely on suspicion. Aggrieved, the State approached the High Court.

The principle question before the court was:

“..Whether a police officer investigating an offence may, in exercise of the power of seizure under Section 106 of the BNSS, secure a bank account by a prohibitory (debit-freeze) direction; or whether the sole permissible course is an application to the Court for attachment under Section 107”.

The Court noted that divergent views had emerged among High Courts on the issue, with some decisions, including that of the Kerala High Court in Headstar Global Pvt. Ltd. v. State of Kerala, taking the view that bank accounts could be secured only through attachment under Section 107.

Assisting the Court as Amicus Curiae, Advocate Angad Kamath submitted that Section 106 of the BNSS substantially reenacts Section 102 of the Code of Criminal Procedure, under which police had consistently been held to possess the power to freeze bank accounts during investigation.

Accepting the State's contention, the High Court held that the power of seizure under Section 106 includes the power to issue debit-freeze directions to banks and the attachment mechanism under Section 107 is not the exclusive route for securing bank accounts during investigation.

Accordingly, the Court quashed the orders directing defreezing of JAR Gold's bank accounts. However, it clarified that the interim arrangement permitting operation of the accounts solely for payment of GST would continue, considering it was a statutory obligation.

During the proceedings, Senior Advocate Sandesh Chouta, appearing for JAR Gold, had submitted that the accounts should remain operational to enable payment of salaries to around 200 employees of the company.

Case Title: State of Karnataka v. JAR Gold Retail Private Limited & Connected Matters

Case Nos: Crl.P. 5929/2026, 5930/2026, 5935/2026

Citation: 2026 LiveLaw (Kar) 286