Karnataka High Court: Police Can Freeze Bank Accounts Without Judicial Order

• The Karnataka High Court has ruled that police do not need court permission to freeze bank accounts suspected of being involved in criminal activity.
• The ruling is based on Section 106 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), which allows police to seize property on suspicion of crime.
• The preservatory measure under Section 106 is intended to secure suspected tainted assets during an investigation, and warrants no judicial interference during this period.

Such seizure is a preservatory measure intended to secure suspected tainted assets during the investigation and ordinarily warrants no judicial interference during the pendency of investigation.

The Karnataka High Court has made a significant observation regarding the powers of police in freezing bank accounts. In the case of State of Karnataka v Jar Gold Retail Pvt Ltd, the court held that police do not need to obtain court permission before freezing a bank account suspected of being involved in criminal activity. This ruling is based on Section 106 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), which allows police to seize property on suspicion of crime.

The court emphasized that the seizure done under Section 106 is a preservatory measure intended to secure suspected tainted assets during an investigation. This means that police can freeze bank accounts without needing a judicial order, as long as they have reasonable grounds for suspecting that the account is involved in criminal activity.

The court's observation highlights the importance of Section 106 of the BNSS, which grants police the power to seize property on suspicion of crime. This provision is distinct from Section 107 of the BNSS, which requires a judicial order for seizure. The court noted that the preservatory measure under Section 106 is intended to secure suspected tainted assets during an investigation, and therefore warrants no judicial interference during this period.

The ruling also underscores the potential consequences of delaying the freezing of bank accounts. As Justice M Nagaprasanna observed, if police are required to first approach a magistrate for permission, the money in question may travel through multiple accounts or vanish before the procedural journey is complete.

This ruling has significant implications for lawyers and compliance officers who advise clients on asset protection during investigations. The ability of police to freeze bank accounts without court permission may impact a client's ability to secure assets in similar situations. As such, it is essential for these professionals to be aware of this development and consider advising their clients on the implications of this ruling.

Furthermore, the court's emphasis on the preservatory measure under Section 106 highlights the importance of prompt action by law enforcement agencies in securing suspected tainted assets. This may lead to a re-evaluation of current procedures for freezing bank accounts and seizing assets during investigations.

Lawyers and compliance officers should be aware of this development, as it may impact their clients' ability to freeze bank accounts in similar situations. They should consider advising clients on the implications of this ruling and whether alternative measures are necessary to secure assets during investigations.

Source: Original reporting via The Karnataka High Court