Delhi High Court Bars Blanket Freezing Under BNSS 107 Without Magistrate Order.

New Delhi; February 2026: In a writ petition while deciding the legality of bank account freezing under BNSS (Bharatiya Nagarik Suraksha Sanhita, 2023) of a business entity’s bank accounts on the basis of transactions with a third party accused of cyber fraud, in the absence of any allegation or material indicating the account holder’s complicity, a Single-Judge Bench of Purushaindra Kumar Kaurav, J., allowed the writ petition and held that the freezing of the petitioners’ bank accounts, without Magistrate’s order under Section 107 BNSS, was unjustified and illegal.

Background –  

In the instant matter, the petitioners are engaged in the business of buying and selling gold ornaments, gold bars, coins and precious stones and have been carrying on such business in compliance with applicable statutory and regulatory requirements. In July 2024, a company named Dallas E-com Infotech Private Limited (“the Customer”) approached the petitioners for the purchase of gold items. Prior to entering into any transactions, the petitioners undertook due diligence and complied with Know Your Customer (KYC) norms and the transactions were carried out through regular banking channels.

Between August 2024 and March 2025, transactions aggregating to approximately ₹14,20,74,954.99/- (Rupees Fourteen Crores, Twenty Lakhs, Seventy Four Thousand, Nine Hundred Fifty Four, and Paisa Ninety Nine) were conducted with the Customer. Subsequently, complaints were lodged by third parties against the Customer alleging fraud. No complaint, FIR or proceeding was registered against the petitioners.

Despite this, respondent authorities issued communications to respondent banks directing that the bank accounts of petitioner 1, Malabar Gold and Diamond Ltd., be put on hold/frozen. According to the petitioners, these directions were issued “without any verification or finding regarding the petitioners’ involvement or complicity”. No summons, notice or intimation was ever served upon the petitioners by any investigating agency.

In pursuant to instructions received from police authorities, amount totalling ₹80,10,857/- were put on hold in different accounts maintained with respondent banks in connection with a cyber fraud complaint against the Customer.

Procedures –

The Court issued notice and directed filing of status reports. In its order dated 02.12.2025, the Court noted that the status report did not disclose whether there existed any direct complicity of the petitioners in the investigation. The Court directed the Respondent 4 to liaise with the concerned police authorities and file a fresh status report clarifying this aspect. No further supporting material was produced. The respondents admitted that no complaint had been registered against the petitioners and that no investigation alleged their complicity.

Moot Points –

• Whether the freezing of the petitioners’ bank accounts without any allegation of their complicity was lawful?

• Whether police authorities could debit-freeze bank accounts under Section 106 of the BNSS?

• Whether such freezing violated the petitioners’ fundamental rights under Articles 19(1)(g) and 21 of the Constitution?

Court’s Analysis –

The Court examined Sections 106 and 107 of the BNSS and noted that Section 106 relates to seizure of property for evidentiary purposes, whereas Section 107 deals with attachment, forfeiture and restoration of property and requires orders of a Magistrate.

The Court relied on Headstar Global (P) Ltd. v. State of Kerala, 2025 SCC OnLine Ker 3546; Kartik Yogeshwar Chatur v. Union of India, 2025 SCC OnLine Bom 4778 and Neelkanth Pharma Logistics (P) Ltd. v. Union of India, 2025 SCC OnLine Del 1055, where it was held that “an Investigating Agency has no power to debit freeze or attach a bank account under Section 106 of the BNSS” and that attachment can only be ordered under Section 107 by a competent Magistrate.

The Court held that merely because offences may have been committed by the Customer, the same could not “by itself constitute a lawful basis for a unilateral freezing or withholding of the petitioners’ bank accounts.” The Court asserted that the petitioners were “at the very least, entitled to be informed of the reasons for freezing their bank accounts”.

The Court reiterated that Section 106 empowers police officers only to seize property for evidentiary purposes and does not confer authority to attach or debit-freeze bank accounts. Attachment is a distinct power exercisable only under Section 107 after following due procedure.

“It is fairly trite now that Section 106 of the BNSS empowers the police only to seize property for evidentiary purposes and does not confer any authority to attach or debit-freeze bank accounts. Attachment or freezing of bank accounts, being measures directed at securing alleged proceeds of crime, can be undertaken only under Section 107 of the BNSS and strictly upon

orders of a competent Magistrate, after following the prescribed procedural safeguards”.

Relying on Neelkanth Pharma Logistics (Supra), the Court observed that freezing an entire bank account merely because a small amount alleged to be proceeded of crime had passed through it was “a disproportionate and arbitrary exercise of power,” particularly when the account holder was “neither an accused nor even a suspect.”

The Court further noted that “innocent and unwary account holders cannot be made to suffer merely because proceeds of crime may have temporarily passed through their accounts, unless investigation reveals their complicity or conscious receipt of such funds”.

The Court noted that the respondents admitted that no complaint existed against the petitioners, and no material demonstrated their complicity. The Court further noted that the continued freezing had disabled petitioner 1 from paying salaries and meeting day-to-day business expenses, thereby paralysing its business operations. The Court held that such action, which encompass the right to livelihood and freedom to carry on trade and business, to be violative of Articles 19(1)(g) and 21 of the Constitution.

Court’s Decision –

The Court held that Police authorities have no power under Section 106 of the BNSS to debit-freeze or attach bank accounts. Freezing or attachment of bank accounts can be done only under Section 107 upon orders of a competent Magistrate. Blanket freezing of accounts of persons who are neither accused nor suspects is arbitrary, disproportionate and violative of Articles 19(1)(g) and 21 of the Constitution.

The Court allowed the writ petition and issued the following directions —

• Respondent 4 was directed to forthwith issue appropriate directions to respondent banks to defreeze the petitioners’ bank accounts.

• Investigating agencies were granted liberty to proceed against the petitioners strictly in accordance with law if material indicating complicity was found.

• In the event of discovery of “positive and specific material indicating the petitioners’ complicity”, fresh directions could be issued in accordance with law.

[[This has been reported after the availability of the order of the Court to give an accurate report to our Maverick News readers]].

Maverick News 30.