Kochi: The Kerala High Court held that a bank account can be attached under Section 107 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023, solely on the orders of the jurisdictional Magistrate and that the police cannot unilaterally do so.

According to a LiveLaw report, Section 107 BNSS is a new provision which provides for the attachment of "proceeds of crime."

Justice V G Arun was considering a petition filed by Headstar Global Pvt. Ltd., whose account was frozen by Kalamassery Police after funds linked to a cheating case involving Spezia Organic Condiments Pvt. Ltd. were allegedly transferred into its account.

The petitioner argued that the transaction was part of regular business and that no offence had been committed by them. It was contended that the police had no authority under Sections 94 or 106 of BNSS to freeze the account, and that only a Magistrate can order attachment of alleged proceeds of crime under Section 107.

Power of 'seizure' under S.106 BNSS different from attachment under S.107 BNSS

Firstly, the Court noted that the police has the power to seize/freeze a bank account as per Section 102 CrPC, which holds that any police officer can seize any property, which is either stolen property or found under circumstances which create suspicion of the commission of any offence. Conversely, no police officer can seize any property, which is neither stolen, nor found under circumstances with create suspicion of commission of any offence. The court relied on precedents like State of Maharashtra v. Tapas D. Neogy [(1999) 7 SCC 685], M.T. Enrica Lexie v. Doramma [(2012) 6 SCC 760], Teesta Atul Setalvad v. State of Gujarat [(2018) 2 SCC 372], to understand the provision.

The Court noted that the CrPC earlier lacked a specific provision for seizure or attachment of proceeds of crime, except under Chapter VII-A relating to foreign jurisdictions. This gap has been addressed under BNSS, 2023, by retaining Section 102 as Section 106 and introducing Section 107, which now governs the attachment of properties derived from criminal activity.

The court held that, “Going by Section 107 of BNSS, a police officer investigating a crime has to approach the jurisdictional Magistrate seeking attachment of any property believed to be derived directly or indirectly from criminal activity or the commission of an offence. The Magistrate may thereupon order attachment after hearing all parties concerned or issue an interim order for attachment, if issuing notice to the owner will defeat the purpose of attachment and seizure. After confirming that the attached property is the proceeds of crime, the Magistrate can direct the District Magistrate to distribute the property among those affected by the crime. Thus Section 107 confers the jurisdictional Magistrates with explicit authority to act swiftly in cases involving proceeds of crime.”

Thus, Section 107 gives Magistrates the explicit authority to act in such cases, ensuring procedural safeguards, LiveLaw reported.

The Court clarified the distinction between “seizure” under Section 106 and “attachment” under Section 107. While seizure by police secures evidence for investigation, attachment is by Magistrate for legal procedure. The court observed that “the logic behind this distinction being that the purpose of seizure is more to secure the evidence during an investigation, whereas attachment is intended to secure the proceeds of crime by preventing its disposal and thus ensuring its availability for legal procedure such as forfeiture and distribution to the victim/s.”

Applying these principles to the case at hand, the Court observed that the police's action to freeze the petitioner's account was not backed by any allegation that the funds were directly linked to a criminal offence committed by the petitioner. Even if the funds were proceeds of crime, such attachment should have been made only through the procedure under Section 107 BNSS.

Quashing the Magistrate's earlier rejection of the company's plea, the Court ordered the lifting of the debit freeze and clarified that the police are at liberty to approach the Magistrate if they seek attachment of the account.

(With LiveLaw inputs)