Nagpur Bench Of Bombay HC: 'Investigating Agencies Cannot Debit-Freeze Bank Accounts Under BNSS; Only Lien Allowed'

Mumbai, Nov 22: The Nagpur bench of the Bombay High Court has ruled that an investigating agency has no power to debit-freeze a bank account allegedly involved in a cyber-fraud transaction under the Bharatiya Nagarik Suraksha Sanhita (BNSS).

A bench of Justices Anil Pansare and Raj Wakode held on November 20 that agencies or banks may place a lien on the disputed amount, but cannot freeze the account by debiting it.

Petitions Challenge Debit-Freezing of Accounts Under Section 106 BNSS

The ruling came on seven petitions filed by individuals whose accounts had been debit-frozen under Section 106 of the BNSS after cyber-fraud amounts were credited to them.

Section 106 empowers an investigating agency to seize property suspected to be stolen or linked to criminal activity. However, the bench clarified that freezing or attaching an account is not the same as seizure under this provision.

Court Clarifies Proper Procedure for Attachment Under Section 107

The court held that Section 107 of the BNSS specifically requires police to approach the jurisdictional magistrate to attach any property believed to be derived directly or indirectly from criminal activity. “Section 106 of the BNSS deals with seizure and section 1907 of the Act deals with attachment, forfeiture and restoration,” the bench noted.

Bench States Investigating Agencies Have No Power to Debit-Freeze Accounts

Reiterating the legal position, the judges observed: “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.” Accordingly, the court quashed the police communications directing banks to freeze the petitioners’ accounts.

Court Refers to National Cyber Fraud Management Protocol

The bench also referred to an existing national protocol titled the ‘Citizen Financial Cyber Frauds Reporting and Management System’, published by the Indian Cybercrime Coordination Centre under the Ministry of Home Affairs. This system guides how banks should respond to communications from investigating agencies.

Banks May Place Lien, Not Freeze Entire Account, Says Court

“As could be seen from this system, bank / intermediaries can put the disputed amount on lien, but cannot debit freeze the account,” the court observed. Despite this, the HC noted, several banks act on agency communications — even those that do not expressly seek a debit freeze — and freeze entire accounts, affecting customers’ daily financial operations.

HC Questions Why Banks Freeze Accounts Without Authority

Calling out this practice, the bench remarked: “It is a mystery as to how the bank chose to debit freeze the accounts on their own.”

Attachment Possible Only After Due Process Under Section 107

The judges further clarified that an investigating agency may proceed to attach or debit-freeze an account only under Section 107, following due process before a competent authority.

Banks must therefore act strictly in accordance with the management system “unless there is a specific order of debit freezing an account by a competent authority.”

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Petitioners Free to Seek Compensation

Finally, the bench permitted affected petitioners to seek compensation, if they so choose, through appropriate legal proceedings.

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