Recently, the Delhi High Court stepped in to address a serious procedural lapse by investigating agencies that had frozen a jeweller’s accounts without alleging, or establishing, any criminal complicity. The Court examined whether law enforcement authorities can paralyse legitimate business operations merely because disputed funds passed through an account, flagging the unchecked invocation of powers under the Bharatiya Nagarik Suraksha Sanhita (BNSS).
The controversy began when Malabar Gold and Diamond Limited approached the Court after its bank accounts were put on hold following complaints against one of its customers, Dallas E-com Infotech Pvt. Ltd. Counsel for the petitioners argued that despite transactions exceeding Rs 14 crore being conducted through proper KYC-compliant banking channels, no FIR, complaint, summons, or notice had ever been issued against the company. Yet, based solely on communications from investigating agencies probing alleged cyber fraud by the customer, banks froze multiple accounts, crippling day-to-day business operations, including payment of employee salaries.
Justice Purushaindra Kumar Kaurav undertook a detailed examination of the statutory framework under Sections 106 and 107 of the BNSS and drew a clear distinction between seizure for evidentiary purposes and attachment of proceeds of crime. Citing consistent judicial precedent, the Court held that police authorities have no power to debit-freeze or attach bank accounts under Section 106 of the BNSS and that any such coercive action can only be taken under Section 107 of the BNSS, strictly with the approval of a competent Magistrate.
The Court noted that “merely because certain offences may have been committed by the Customer, cannot, by itself, constitute a lawful basis for a unilateral freezing or withholding of the petitioners’ bank accounts.” Finding no material to show the petitioner’s involvement or complicity, the Court concluded that the continued freezing was arbitrary, disproportionate, and violative of the right to livelihood.
Consequently, the petition was disposed of with directions to immediately defreeze the bank accounts, while leaving it open to agencies to proceed in accordance with the law if concrete evidence emerges.
Case Title: Malabar Gold And Diamond Limited & Ors Vs. Union Of India & Ors.
Case No.: W.P.(C) 4198/2025
Coram: Hon’ble Justice Purushaindra Kumar Kaurav
Advocate for the Petitioner: Sr. Adv. Abhimanyu Bhandari, Adv. Surabhi Khattar, Adv. Shivansh Vishwakarma Adv. Sriharsh Raj,
Advocate for the Respondent: CGSC. P S Singh, Adv. Minakshi Singh, Adv. Ashutosh Bharti, SC Rajiv Kapur, AOR Akshit Kapur, Adv. Amol Sharma
Read Judgment @Latestlaws.com
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