Bank Account Freezed by Police Declared Illegal: Detailed Analysis of the Bombay High Court Judgment (2025)

When a person becomes a victim of sudden bank account freezing due to alleged cyber fraud transactions, the immediate impact is severe. Salaries cannot be withdrawn, businesses get disrupted, and daily financial commitments come to a standstill. In November 2025, the Bombay High Court (Nagpur Bench) delivered a landmark judgment that directly addresses this issue. This decision clarifies that police authorities do not have the power to freeze or debit-freeze bank accounts under Section 106 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), a provision that replaced Section 102 of the earlier Code of Criminal Procedure.

The direct answer to the core legal question is: The police cannot freeze or debit-freeze a bank account under Section 106 BNSS.

This blog post explains the full legal background, reasoning of the High Court, relevant Supreme Court references, and practical remedies available to anyone whose bank account has been illegally frozen under Section 106 BNSS.

1. Background of the Case

Several writ petitions were filed before the Nagpur Bench of the Bombay High Court, challenging the action of various Investigating Agencies who had debit-frozen the petitioners’ bank accounts under Section 106 BNSS.

In each of these cases:

• The petitioners’ accounts were frozen because some amount allegedly linked to cyber fraud had been credited into their accounts.
• Banks either acted on vague police communications or—shockingly—froze the accounts without any communication at all, leaving the Court to question how such unilateral decisions were made.

This prompted the Court to examine a crucial question:
Does Section 106 BNSS empower police to freeze or attach bank accounts?

2. Understanding Section 106 BNSS and Its Purpose

Section 106 BNSS corresponds to the earlier Section 102 CrPC, which empowered police to “seize property” that was:

• Stolen, or
• Found under suspicious circumstances during investigation.

Historically, Section 102 CrPC never explicitly mentioned freezing bank accounts, yet courts interpreted the term “seizure of property” broadly to include bank accounts.

However, this interpretation created a legal vacuum for dealing with “proceeds of crime,” especially in cyber cases, because Section 102 lacked an independent mechanism for attachment and restoration of such funds.

This is where the newly introduced Section 107 BNSS becomes critical.

3. The Kerala High Court Judgment: The Starting Point

The Bombay High Court relied heavily on the Kerala High Court judgment in Headstar Global Pvt. Ltd. vs. State of Kerala (2025).

That judgment had relied on:

• State of Maharashtra v. Tapas D. Neogy (1999)
• M.T. Enrica Lexie v. Doramma (2012)
• Shento Varghese v. Julfikar Husen (2024)

Through these, the Kerala High Court held that:

1. Section 106 BNSS allows only seizure — aimed at securing evidence.
2. Section 107 BNSS allows attachment — aimed at securing proceeds of crime, restoring money to victims, and preventing disposal of funds.
3. Police can seize property under Section 106, but cannot attach or freeze bank accounts under it.
4. Attachment of bank accounts can only be done after obtaining an order from the jurisdictional Magistrate under Section 107 BNSS.

The Supreme Court refused to interfere with the Kerala High Court judgment, strengthening its authority.

4. Key Findings of the Bombay High Court

After considering arguments, reviewing the relevant provisions, and examining the Kerala High Court decision, the Bombay High Court laid down the following:

1. Debit freezing under Section 106 BNSS is illegal.

The Court clearly held that:

Debit freezing or attaching a bank account is not permissible under Section 106 BNSS.

2. Only Section 107 BNSS allows account attachment.

Under Section 107:

• Police must approach the Magistrate for attachment orders.
• The Magistrate must hear all concerned parties or issue temporary orders only where notice would defeat the purpose.
• Only after confirming that the property is “proceeds of crime” can the Magistrate order restoration to victims.

3. Banks cannot freeze accounts merely on police communication.

The judgment highlighted:

• In several cases, Banks acted without any formal communication.
• In many others, the communication did not even direct a debit freeze.
• Banks acted beyond legal authority.

4. Banks are to follow Citizen Financial Cyber Fraud Reporting & Management System guidelines.

As per FAQ No. 21:

• Banks may put disputed amount on lien,
• But cannot freeze the entire account without a competent authority’s order.

5. Affected persons can seek compensation.

The Court granted liberty to petitioners to file appropriate proceedings seeking compensation from agencies or banks that acted illegally.

6. All freezing orders under Section 106 BNSS were quashed.

The Court set aside all such freezing directions made by police.

5. Why Section 106 Cannot Be Used to Freeze Accounts

Understanding the distinction is crucial.

Section 106 BNSS (Seizure):

• Applies to property that is stolen or suspicious.
• Police can seize without court permission.
• Intended to secure evidence, not proceeds of crime.
• Does not empower attachment or freezing of accounts.

Section 107 BNSS (Attachment):

• Applies to proceeds of crime.
• Mandatory judicial oversight.
• The Magistrate must pass attachment orders.
• Provides steps for restoration, distribution, and forfeiture.

The Bombay High Court emphasized that freezing a bank account amounts to attachment, not seizure. Therefore, it cannot be done under Section 106 BNSS.

6. How Banks Are Sup­posed to Act in Cyber Fraud Cases

Many banks panic upon receiving police intimation about cyber fraud and freeze accounts entirely. This approach is legally flawed.

The correct procedure is:

1. Verify that the communication is from a competent agency.
2. Place the disputed amount only on lien (temporary hold).
3. Avoid freezing the entire bank account.
4. Freeze only when a Magistrate’s order under Section 107 BNSS is received.

Failure to follow this process can expose banks to litigation and compensation claims.

7. Practical Implications for Victims of Illegal Account Freeze

If your bank account was frozen by police under Section 106 BNSS, the law is entirely in your favour.

You can take the following steps:

Step 1: Ask the Bank for the reason and written order.

If they cannot produce a Section 107 order, the freeze is illegal.

Step 2: Ask the police for a copy of the freezing communication.

If they claim Section 106 BNSS, that is unlawful.

Step 3: File a representation to Bank and Police.

Attach the Bombay High Court judgment.

Step 4: Approach the High Court under Article 226.

Courts can direct:

• Immediate unfreezing of the account
• Compensation for losses
• Disciplinary action against officers

Step 5: Seek compensation for the illegal action.

The Court explicitly permitted compensation proceedings.

8. Importance of This Judgment in Cyber Fraud Investigations

Cyber fraud cases have been rising rapidly. However, investigative agencies often take shortcuts by freezing accounts without following due procedure. This judgment:

• Restores procedural safeguards.
• Prevents arbitrary actions by police.
• Protects innocent account holders.
• Ensures that only judicially-approved attachment happens.
• Helps victims of wrongful freezing get relief and compensation.

The Bombay High Court’s (Nagpur Bench) Judgement of November 2025

Conclusion

The Bombay High Court’s judgment of November 2025 marks a crucial milestone in protecting citizens from arbitrary bank account freezing. The Court has categorically ruled that police authorities cannot freeze or attach bank accounts under Section 106 BNSS, and such actions are illegal. Only Section 107 BNSS, which mandates a Magistrate’s order, can be used for bank account attachment in cases involving proceeds of crime.

For anyone whose account has been frozen without judicial authorization, this judgment provides strong legal grounds to challenge the action, seek immediate unfreezing, and even pursue compensation for the hardships suffered. This ruling ensures that cybercrime investigations must proceed within the boundaries of law while upholding citizens’ financial rights and procedural protections.

Disclaimer: This information is intended for general guidance only and does not constitute legal advice. Please consult with a qualified lawyer for personalized advice specific to your situation.

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Advocate J.S. Rohilla (Civil & Criminal Lawyer in Indore)

Contact: 88271 22304

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