Summary: The High Court ruled that banks can't freeze accounts just because the police ask them to. They need a proper order from a judge. This decision affects several cases, including one involving Mr. Gaurav Rajesh Mehta.
In a series of cases, including that of Mr. Gaurav Rajesh Mehta, the court dealt with whether banks can freeze accounts under Section 106 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS). The accounts were frozen because of suspected online fraud, but the court found that the right steps weren't taken.
"It is a mystery as to how the Bank chose to debit freeze the accounts of their own."
Judges Anil L. Pansare and Raj D. Wakode looked into the issue and found that many accounts were frozen without proper communication from the investigating agency. Some orders were based on a judge's decision, which was acceptable, but others were not.
The court referred to past judgments, including those by the Kerala High Court, which explained that Section 106 allows for taking things away, but not for freezing accounts. Section 107, however, involves the judge and is meant for taking and keeping crime proceeds.
"Debit freezing account is not permissible under Section 106 of the BNSS."
Banks can hold disputed amounts but can't freeze accounts without a specific order. The court pointed to guidelines from the Indian Cybercrime Coordination Centre, underlining that banks must follow proper procedures.
The court canceled the orders that led to the freezing of accounts under Section 106. They emphasized that only Section 107 allows for such actions, with a judge's involvement.
"The orders passed under Section 106 of the BNSS in respective petitions debit freezing the accounts of the petitioners stand quashed and set aside."
This ruling clarifies that banks need to act carefully and follow legal protocols when dealing with suspected fraud cases.
