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Contents
What Is The Legal Basis for Freezing Bank Accounts?
Section 106 of BNSS (2023) – Seizure of Property
Under Section 106 of BNSS, police can seize or attach any property, including bank accounts, if they believe it’s linked to a cognizable offence. This section replaces Section 102 of the CrPC.
- Police must record reasons in writing.
- A report must be sent to the Magistrate without delay.
- Magistrate oversight is mandatory.
What Are The Common Reasons Police Freeze Bank Accounts?
- Suspected Financial Crimes. If police suspect that your bank account is used for fraud, online scams, or cybercrime, they can freeze it under Section 106 of BNSS.
- Case Law: Vishal Chawla v. Union of India (2023) – The Delhi High Court upheld freezing of accounts linked to ongoing cyber fraud investigations.
- Money Laundering and Terror Funding. Authorities may act under the Prevention of Money Laundering Act (PMLA), 2002, alongside the BNS if the funds are linked to organised crime or terror activities.
- Case Law: K.K. Bhaskaran v. Enforcement Directorate (2020) – The court supported action under PMLA when bank accounts showed layered transactions.
- Non-Compliance with KYC Regulations. Banks may freeze accounts if you fail to update Know Your Customer (KYC) details. This is an administrative freeze, not under BNSS or BNS, but still legally valid under RBI guidelines.
- Suspicious Transactions. Large or inconsistent transactions may trigger action. If the bank alerts the police, they may freeze the account while verifying the source of funds.
- Orders from Magistrate or Enforcement Agencies. The Enforcement Directorate, Income Tax Department, or courts can order your account to be frozen during investigations under BNS or special laws.
- Case Law: Vikram Singh v. Union of India (2022) – The court ruled that authorities must show a link between the account and the offence, arbitrary freezing violates rights.
What You Can Do To Unfreeze Your Bank Account?
- Know the Reason for the Freeze
Ask your bank for written communication or reference details. They may not disclose full information if ordered by law enforcement, but they must share what’s legally allowed. - Check if BNSS Procedure Was Followed
Under Section 106(3) BNSS, police must report the seizure to a magistrate immediately. Failure to do so may make the action illegal.
Case Law: Vikram Singh v. Union of India – Court held freezing without timely magistrate notice violates procedural rights. - Apply for Release Under Section 108 of BNSS
Section 108 BNSS lets you apply to the magistrate for the return or release of seized property, including bank accounts, if the freeze is unjustified. - Approach the High Court Under Article 226
If the freeze affects your right to livelihood (Article 21) or right to trade (Article 19(1)(g)), you can file a writ petition in the High Court.
Case Law: Kaushal Kishore v. State of U.P. (2021) – The Supreme Court ruled that any action affecting constitutional rights can be challenged via writs. - Submit KYC or Missing Documents
If the issue is administrative (e.g., incomplete KYC), submit the necessary documents. The bank will usually lift the freeze within 1–2 days. - Hire a Criminal or Cyber Law Expert
A qualified expert can help you respond to notices, file court applications, or challenge illegal freezes under BNSS or BNS.
How to Avoid Future Account Freezes
- Update KYC Regularly
- Avoid technical freezes by keeping your documents up to date.
- Avoid Suspicious Transactions. Don’t transfer large sums suddenly. Notify the bank if needed.
- Monitor Your Account Frequently. Set up alerts and check your balance and transactions regularly.
- Keep Accounts Active. Make regular transactions to avoid dormancy flags.
- Separate Personal and Business Accounts. Mixing the two may attract attention during audits or investigations.
- Respond to Bank Notices Immediately. Ignoring bank messages could lead to preemptive freezes.
- Understand Bank’s Rules. Know limits, prohibited activities, and RBI regulations.
Conclusion
Freezing of bank accounts is legally allowed under Section 106 of BNSS if connected to a cognizable offence. But authorities must follow due process and act within the law. If your account is frozen without cause or due procedure, courts can and do grant relief. Contact No. +91 – 8569843472
