Frozen Bank Accounts, Frozen Rights: How Far Can Police Go Under the BNSS?

Frozen Bank Accounts, Frozen Rights: How Far Can Police Go Under the BNSS?

Police Powers, Proportionality and the Emerging Judicial Safeguards in Cybercrime Investigations

The rapid growth of digital payments, online banking and cybercrime has created a difficult legal question: how far can investigating agencies go when they seek to freeze a bank account allegedly connected with a criminal transaction?

For victims of cyber fraud, immediate preservation of suspected funds can be crucial. Money can move through multiple bank accounts within minutes, making prompt investigative action important. At the same time, an indiscriminate debit-freeze can completely disable an innocent person’s savings account or bring a legitimate business to a standstill.

The issue has therefore moved beyond a simple question of police power. It now involves the interaction between the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), constitutional rights, proportionality, banking regulation and judicial oversight.

Recent decisions of the Delhi, Rajasthan, Andhra Pradesh and Chhattisgarh High Courts demonstrate a growing judicial insistence that account-freezing measures must have a demonstrable connection with the alleged offence and should, wherever possible, be limited to the disputed amount.

1. What Does the BNSS Provide?

Two provisions of the BNSS are particularly important: Sections 106 and 107.

Section 106 corresponds substantially to the former Section 102 of the Code of Criminal Procedure, 1973. It concerns the power of a police officer to seize certain property suspected to be connected with an offence. The provision also contains a requirement that the seizure be reported forthwith to the jurisdictional Magistrate.

Section 107, on the other hand, deals with attachment, forfeiture and restoration of property suspected to constitute proceeds of crime and incorporates a more structured procedure involving the competent Court.

The distinction between these provisions has become central to the modern law on bank-account freezing.

A bank account may constitute “property” for purposes of investigative seizure. However, seizure for evidentiary purposes is not necessarily equivalent to an unrestricted debit-freeze or attachment intended to preserve alleged proceeds of crime.

This distinction was examined closely by the Delhi High Court in Malabar Gold and Diamond Limited & Ors. v. Union of India & Ors., 2026 SCC OnLine Del 297, decided on 16 January 2026.

2. Malabar Gold: A Significant BNSS Development

In Malabar Gold, the petitioners were engaged in the business of dealing in gold and precious stones. Their accounts were frozen following transactions with a customer who subsequently became connected with complaints concerning alleged cyber fraud.

Importantly, there was no FIR, complaint or criminal proceeding against the petitioners themselves.

The Delhi High Court examined Sections 106 and 107 BNSS and held that Section 106 does not confer an independent power upon the police to attach or debit-freeze bank accounts for the purpose of securing alleged proceeds of crime. Such attachment/freezing must be undertaken through the mechanism contemplated by Section 107 and subject to the prescribed judicial safeguards.

The Court also found that blanket and disproportionate freezing of accounts, particularly where the account holder is neither an accused nor a suspect, can have serious consequences under Articles 19(1)(g) and 21 of the Constitution.

The Court directed that the accounts be defrozen, while leaving it open to the investigating authorities to proceed in accordance with law if positive and specific material indicating complicity subsequently emerged.

The judgment is particularly important because it demonstrates that mere association with a person or entity under investigation does not automatically justify disabling the entire bank account of another person or business.

3. The Foundational Supreme Court Position: Tapas D. Neogy

The starting point for understanding the police power to seize bank accounts remains the Supreme Court’s decision in:

State of Maharashtra v. Tapas D. Neogy, (1999) 7 SCC 685.

The Supreme Court held that a bank account can fall within the expression “property” for the purposes of Section 102 CrPC.

However, the judgment does not mean that every bank account connected remotely with an investigation can be frozen indefinitely.

The investigative power must still be exercised in accordance with the statutory requirements and in circumstances where the property has the necessary connection with the alleged offence.

The transition from Section 102 CrPC to Section 106 BNSS therefore does not eliminate the importance of nexus, statutory procedure and judicial control.

4. Blanket Freezing and the Principle of Proportionality

One of the most important developments in recent case law is the emergence of proportionality as a practical safeguard.

Consider a situation where a cybercrime investigation identifies a suspicious credit of ₹50,000 in a bank account containing ₹20 lakh belonging to a legitimate business.

Freezing the entire ₹20 lakh may be considerably more intrusive than necessary if the investigating agency can identify and preserve the disputed ₹50,000.

This was precisely the concern addressed by the Delhi High Court in Neelkanth Pharma Logistics Pvt. Ltd. v. Union of India, 2025 SCC OnLine Del 1055.

The Court considered a case where a substantial bank account had been frozen in connection with a disputed transaction of only ₹200. The Court observed the serious consequences of a blanket freeze and recommended that, wherever the disputed amount is identifiable, marking a lien over that amount should be explored as the more appropriate interim measure.

The decision also recognised the need for a uniform policy and standard operating procedure for dealing with bank-account freezing in cybercrime cases.

5. Rajasthan High Court: Stronger Guidelines in 2026

The principle has received significant reinforcement from the Rajasthan High Court.

In Jinat Bano v. State Bank of India & Another, S.B. Civil Writ Petition No. 5036/2026, decided on 30 June 2026, the Court directed removal of the debit freeze while permitting a lien or restraint to continue over the amount alleged to be connected with the investigation.

The Court subsequently developed the principle further in Faishal Khan v. Punjab National Bank, S.B. Civil Writ Petition No. 2679/2026 and connected matters, decided on 20 August 2026.

The Court emphasised that an account should not ordinarily be subjected to an indefinite blanket freeze merely on the basis of vague or unverified communication.

Among the safeguards articulated by the Court were:

• The investigating officer should identify material establishing a prima facie nexus between the account or transaction and the alleged offence.
• Where the disputed amount is identifiable, a lien or hold over that amount should ordinarily be preferred.
• If an entire account must be frozen, specific reasons should be recorded.
• A seizure under Section 106 must be reported to the competent Magistrate as required by law.
• Attachment of alleged proceeds of crime must follow Section 107 BNSS.
• A freeze should not continue indefinitely merely because the investigation remains pending.
• If investigation reveals that the account holder has no connection with the offence and the disputed amount need not be retained, the restraint should be withdrawn.

This represents an important movement from automatic freezing towards targeted financial restraint.

6. Recent Chhattisgarh and Andhra Pradesh Developments

The same proportionality principle has continued to appear in recent decisions.

In Vikram Singh Rana v. Union of India, WPCR No. 366 of 2026, decided on 27 July 2026, the Chhattisgarh High Court dealt with freezing of a salary-linked bank account and recognised that where the disputed amount can be identified, maintaining a lien over that amount may adequately protect the investigation while allowing legitimate transactions to continue.

In M/s Yajo Technologies Pvt. Ltd. v. State of Chhattisgarh, decided on 30 July 2026, the Court again considered the distinction between a complete debit-freeze and preservation of the disputed amount. The Court accepted the principle that legitimate business operations should ordinarily continue where the alleged tainted amount can be protected separately.

Similarly, in Blue Sea Ventures LLP v. State of Andhra Pradesh, W.P. No. 5034 of 2026, decided on 31 March 2026, the Andhra Pradesh High Court held that directions for debit-freezing under Section 106 BNSS were without jurisdiction and that any further restraint or attachment should comply with Section 107 and be placed before the jurisdictional Magistrate.

These decisions demonstrate that the issue is no longer confined to one High Court.

7. What About Article 300A?

The constitutional dimension of bank-account freezing cannot be ignored.

Article 300A of the Constitution provides that no person shall be deprived of property save by authority of law.

A bank balance represents an enforceable financial interest of the account holder. A prolonged restriction on access to those funds can have substantial consequences.

However, Article 300A does not mean that every temporary investigative restraint is unconstitutional.

The real constitutional question is whether the restriction is:

1. authorised by law;
2. imposed through the legally prescribed procedure;
3. connected with a legitimate investigative objective; and
4. proportionate to that objective.

Where a restriction becomes indefinite, unexplained or substantially broader than necessary, constitutional concerns become significantly stronger.

8. Article 21 and the Right to Livelihood

For individuals and businesses, a bank account is often much more than a passive repository of money.

It may be used to receive salary, pay employees, discharge statutory dues, pay suppliers, service loans and meet ordinary household expenses.

Consequently, a complete freeze may affect the right to livelihood and dignity recognised under Article 21.

For businesses, Article 19(1)(g), which protects the freedom to carry on a trade or profession, may also become relevant.

This is why courts have increasingly preferred a calibrated approach: protect the allegedly tainted money without unnecessarily paralysing the legitimate financial activities of the account holder.

9. The RBI’s Latest Development

The debate has also reached the banking-regulatory sphere.

On 14 September 2026, the Reserve Bank of India proposed a framework under which, in suspected cyber-fraud cases, banks would freeze only the disputed transaction amount rather than automatically blocking the entire account in specified circumstances.

The proposal reflects the same principle emerging from recent judicial decisions: cybercrime investigations require speed, but innocent customers should not lose access to unrelated legitimate funds.

If implemented, such a framework could become an important operational safeguard for customers whose accounts are caught in cybercrime money trails.

10. What Remedies Does an Account Holder Have?

An individual or business whose account has been frozen should first ascertain:

• Who directed the freeze?
• Which police station or investigating agency initiated it?
• What transaction is alleged to be suspicious?
• What amount is allegedly connected with the offence?
• Whether an FIR or complaint exists?
• Whether the account holder is an accused, suspect, witness or merely a third-party recipient?
• Whether the statutory procedure under the BNSS has been followed?

Depending on the circumstances, representations can be made to the investigating agency and bank seeking clarification or modification of the restraint.

Where the restriction is arbitrary, disproportionate or procedurally defective, appropriate judicial remedies may also be pursued, including proceedings before the jurisdictional High Court under Article 226 of the Constitution, subject to the facts and available statutory remedies.

In many cases, the practical relief sought need not be an unconditional release of every amount. A more proportionate solution may be to request that the disputed amount remain under lien while the balance is made operational.

Conclusion

The fight against cybercrime requires effective and rapid financial investigation. Investigating agencies must have meaningful tools to prevent suspected criminal proceeds from disappearing through the banking system.

But investigative necessity cannot automatically justify an indefinite or blanket deprivation of an account holder’s legitimate funds.

The recent judicial trend is toward a more carefully calibrated approach: establish a nexus with the alleged offence, identify the disputed amount wherever possible, follow the statutory procedure, obtain judicial oversight where required, periodically review the necessity of the restraint, and avoid unnecessarily paralysing innocent individuals or businesses.

The emerging principle can therefore be stated simply:

Freeze the suspected money where necessary—but do not freeze legitimate rights without lawful authority, procedural safeguards and proportional justification.

For account holders, businesses and financial institutions, the distinction between seizure, debit-freezing, lien and attachment under the BNSS is becoming increasingly important.

As cybercrime litigation continues to expand, the law will likely continue to develop around one central question:

How can the State protect victims of financial crime without making innocent account holders collateral victims of the investigation?

Key Case Laws

1. State of Maharashtra v. Tapas D. Neogy, (1999) 7 SCC 685 — Supreme Court.
2. Neelkanth Pharma Logistics Pvt. Ltd. v. Union of India, 2025 SCC OnLine Del 1055 — Delhi High Court.
3. Malabar Gold and Diamond Limited & Ors. v. Union of India & Ors., 2026 SCC OnLine Del 297 — Delhi High Court.
4. Jinat Bano v. State Bank of India & Another, S.B. Civil Writ Petition No. 5036/2026, decided 30 June 2026 — Rajasthan High Court.
5. Blue Sea Ventures LLP v. State of Andhra Pradesh, W.P. No. 5034/2026, decided 31 March 2026 — Andhra Pradesh High Court.
6. Vikram Singh Rana v. Union of India, WPCR No. 366/2026, decided 27 July 2026 — Chhattisgarh High Court.
7. M/s Yajo Technologies Pvt. Ltd. v. State of Chhattisgarh, decided 30 July 2026 — Chhattisgarh High Court.
8. Faishal Khan v. Punjab National Bank & Ors., S.B. Civil Writ Petition No. 2679/2026, decided 20 August 2026 — Rajasthan High Court.

Legal Disclaimer: This article is intended for general legal information and academic discussion. It does not constitute legal advice. The applicability of the BNSS and the appropriate remedy will depend upon the facts, nature of the investigation, source of the freezing direction and procedural stage of the matter.

Lexel Law – Legal Services & Litigation Chambers
Chandigarh
Contact: 9814004850