DELHI HIGH COURT SAYS FREEZING OF ACCOUNTS OF COMPANIES WHICH ARE NOT EVEN SUSPECT IS ARBITRARY AND BAD IN LAW WITHOUT DUE PERMISSION FROM COURT OF LAW

INTRODUCTION

Recently Delhi High Court stated that no police officer can freeze the company's account without prior approval from the competent court. 

FACTS AND BACKGROUND 

Company's bank accounts were frozen by banks based on the police communications in relation to some third-party who is alleged to be involved in some cyber fraud. This was being done without registering any FIR, any charges or allegations booked against the said company.

OBSERVATIONS OF COURT

It was observed that police cannot freeze the bank accounts based upon the prima facie view. In fact, no police officer can freeze the account without having any approval from competent court of law. It was further explained that as per Sec 106 BNSS, 2023, police is merely empowered to seize any property merely for evidentiary purposes but does not entitled to freeze/attach the bank accounts. However, it is only under Sec 107 BNSS, 2023, that the police is empowered to freeze an account that too without prior permission from competent court of law.  Court also emphasized that indiscriminate freezing of accounts of entities which are not suspects, no allegations against them are merely arbitrary and bad in law. This ruling underscored that actions done without judicial oversight and without any finding of complicity, results in breach Article 19(1)(g) i.e. right to carry in trade or business; and Article 21: right to life and personal liberty;

As a result of courts intervention, the accounts of company which were frozen was ordered to be de-freezed;

CONCLUSION 

This judgment acts as a safeguard by limiting the powers of police when exercised without due course of law, especially in relation to cyber frauds.