Kerala High Court: While Seizure U/S 106 BNSS Can Be Carried Out By Police, Attachment U/S 107 BNSS Can Be Effected Only Upon Orders Of Magistrate

The Court quashed the impugned Order directing the lifting of the debit freeze imposed over the bank account of Headstar Global Pvt. Limited (Petitioner). The Petitioner, a company engaged in the business of export/import of food grains, pulses, and sugar, was aggrieved by the rejection of its application to unfreeze the company's bank account.

A Single Bench of Justice VG Arun held, “Seizure under Section 106 can be carried out by a police officer and an ex post facto report submitted to the Magistrate. On the other hand, attachment under Section 107 can be effected only upon the orders of the Magistrate. 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.”

Advocate Babu S. Nair appeared for the Petitioner, while Advocate Sarathkumar T.S represented the Respondents.

Brief Facts

The Investigating Officer had issued a notice, directing the bank to debit freeze the Petitioner's account, which led the Petitioner to file an Application to the jurisdictional Magistrate to lift the debit freeze; that Petition was dismissed.

Court’s Reasoning

The High Court noted that the lacuna in the CrPC regarding attachment of proceeds of crime is cured by Section 107 of the BNSS, which allows a police officer, with approval, to apply to the Magistrate for attachment of property derived from criminal activity. The Magistrate may then issue a show-cause notice and, after considering explanations, pass an order of attachment.

“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,” the Court held.

“In the case at hand, the reason for directing the bank to debit freeze the petitioner's account, as stated in Annexure B notice is the transfer of some amount from the account of the accused to the account of the company Headstar Trading LLP and from there to the petitioner’s account. Even accepting that the Directors of the above mentioned three entities are known to each other or are related to each other, it may, at best, indicate that the money in the petitioner's account is proceeds of the crime committed by the accused. If so, the amount can be attached or the account frozen only by following the procedure prescribed in Section 107 of BNSS,” the Bench explained.

Consequently, the Court ordered, “For the aforementioned reasons, the CrlMC is allowed. The impugned order is quashed and the debit freeze imposed over the petitioner's bank account is directed to be lifted. The officer concerned can approach the jurisdictional Magistrate under Section 107 of BNSS, if so warranted.”

Accordingly, the High Court allowed the Petition.

Cause Title: Headstar Global Pvt. Limited v. State Of Kerala & Ors. (Neutral Citation: 2025:KER:39285)

Appearance:

Petitioner: Advocate Babu S. Nair

Respondents: Advocates Sarathkumar T.S, Jismemol James, Shyam Kumar M.P, Achankunju P.C, Rony V.P. and Vishnuja Vasudevan; Public Prosecutor M.P. Prasanth

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