Here's a look at a recent court decision where the Bombay High Court addressed the issue of freezing bank accounts without proper legal authority.
The case involved several complaints, including one by Mr. Dilip Gopaldas Duwani against the Union of India. The main question was whether an Investigating Agency could freeze a bank account under Section 106 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS).
The accounts were frozen due to claims of cyber fraud. It was alleged that some of the stolen money had been deposited into these accounts. However, the way the banks and the Investigating Agency handled the situation raised questions.
"It is a mystery as to how the Bank chose to freeze the accounts on their own."
The court, led by Judges Anil L. Pansare and Raj D. Wakode, looked at past decisions, including an important one by the Kerala High Court. This ruling made it clear that under Section 106 of the BNSS, freezing accounts without a Magistrate's order was not allowed.
Section 106 of the BNSS is similar to an older law. It allows taking control of property involved in a crime, but only under specific conditions. The Kerala High Court had earlier decided that:
"A police officer investigating a crime must ask the local Magistrate to take control of any property believed to be connected to criminal activity."
The court decided that the Investigating Agency went beyond its authority by freezing accounts without proper permission. The orders to freeze accounts under Section 106 were canceled.
Banks should not freeze accounts based only on messages from agencies. They can, however, hold the disputed amounts until an investigation is complete.
"Banks can hold the disputed amount but cannot freeze the account."
The court ruled that legal steps must be strictly followed when freezing bank accounts. This decision emphasizes the importance of protecting people's rights against unauthorized actions by authorities.
