Court distinguishes between seizure under Section 106 and attachment under Section 107 of BNSS, affirming police’s power to freeze accounts as seizure with mandatory reporting to Magistrate, and condemns unauthorized releases.
In a significant judgment dated August 10, 2026, the Karnataka High Court, presided by Justice M. Nagaprasanna, resolved critical questions concerning the investigative powers of police officers under the Bharatiya Nagarika Suraksha Sanhita, 2023 (BNSS). The case arose from a suo-motu registered crime against Jar Gold Retail Private Limited (‘the Company’), an online gold seller, accused of contravening the Banning of Unregulated Deposit Schemes Act, 2019.
The controversy centered on whether police officers require prior judicial approval under Section 107 of BNSS to freeze bank accounts (debit freeze) or whether such action falls within the seizure powers under Section 106, which requires only forthwith reporting to the jurisdictional Magistrate after the fact.
The Company had filed applications for release of seized gold and de-freezing of bank accounts pending investigation. The Sessions Court granted these orders. The State of Karnataka challenged these orders, asserting that the procedures prescribed under Section 107 were not followed, rendering the release and defreezing unlawful.
The Court undertook a comprehensive analysis of the statutory provisions, prior Supreme Court and High Court judgments, and the legislative intent behind BNSS. It noted that Section 106 of BNSS is a re-enactment of Section 102 of the erstwhile Cr.P.C., which empowers police officers to seize property suspected to be involved in a crime without prior Magistrate approval but with mandatory immediate reporting to the Magistrate. Section 107, newly introduced in BNSS, governs attachment, forfeiture, or restoration of property that is proceeds of crime and requires a judicial process involving notice, hearing, and order by the Magistrate.
The Court emphasized the fundamental distinction that seizure under Section 106 is an investigative and preservative measure by the police, while attachment under Section 107 is an adjudicatory process requiring judicial sanction. It held that freezing bank accounts as a preventive measure to secure evidence or prevent dissipation of crime proceeds falls within the police's power under Section 106. Imposing a requirement of prior judicial approval for every debit freeze would render Section 106 redundant and seriously hamper effective investigation, especially in cybercrime cases where rapid action is essential.
The Court referred to several authoritative Supreme Court precedents (State of Maharashtra v. Tapas D. Neogy, Teesta Atul Setalvad v. State of Gujarat) and multiple High Court judgments, including those from Kerala, Andhra Pradesh, Bombay, Delhi, Madras, Punjab & Haryana, and Rajasthan. Most courts distinguished between seizure and attachment, holding that police can freeze accounts under Section 106 with immediate reporting to Magistrate, but attachment or forfeiture requires compliance with Section 107.
While some High Courts had diverged, treating debit freeze as attachment requiring prior Magistrate order (notably the Kerala High Court in Headstar Global Pvt. Ltd.), the Karnataka High Court aligned with the coordinate Bench of this Court in IIFL Finance Ltd. and the Allahabad High Court in Ashish Rawat v. Union of India, which recognized Sections 106 and 107 as independent and distinct provisions. The Court underscored that Section 107 does not nullify police's seizure powers under Section 106.
Applying these principles, the Court quashed the Sessions Court orders directing release of seized gold and de-freezing of bank accounts, as they failed to appreciate the distinction and procedural requirements under BNSS. The Court observed that seizure of gold was lawful and necessary to preserve evidence and prevent misappropriation, while freezing bank accounts was also a valid seizure action under Section 106, requiring only prompt reporting to the Magistrate.
The Court recognized the practical realities of cybercrime investigations where delays in judicial process could lead to dissipation of crime proceeds. It pointed out that the law mandates seizure first with reporting thereafter, not prior permission before seizure.
However, the Court noted the hardship faced by the Company in paying salaries and statutory dues and allowed restricted de-freezing of bank accounts for such payments upon furnishing indemnity and surety bonds.
The judgment thus strikes a balance between safeguarding investigative powers and protecting fundamental rights against arbitrary freezing. It reaffirms that police can seize property, including freezing bank accounts, under Section 106 with mandatory immediate reporting, while attachment and forfeiture under Section 107 require judicial orders following a detailed process.
This ruling will guide investigating agencies, banks, and courts across India in handling freezing and attachment of bank accounts during criminal investigations, especially in financial and cybercrime matters, ensuring procedural compliance without compromising effective law enforcement.
Bottom Line :
Under the Bharatiya Nagarika Suraksha Sanhita, 2023 (BNSS), Section 106 preserves the investigative power of police officers to seize property, including debit freezing of bank accounts as a form of seizure, requiring only forthwith reporting to the jurisdictional Magistrate. The orders directing release of seized gold and de-freezing of bank accounts, passed without following the procedure under Section 107 for attachment, are quashed as the seizure and freezing fall within Section 106 regime.
Statutory provision(s): Sections 106, 107, 94, 497, 503 of Bharatiya Nagarika Suraksha Sanhita, 2023; Sections 21, 22, 15(3) of Banning of Unregulated Deposit Schemes Act, 2019; Section 102 of Criminal Procedure Code (predecessor to Section 106 BNSS).
State of Karnataka v. Jar Gold Retail Private Limited, (Karnataka) : Law Finder Doc id # 2959853
