The Madhya Pradesh High Court has established a critical safeguard against arbitrary freezing of bank accounts by law enforcement agencies, affirming that procedural compliance under the Bharatiya Nagarik Suraksha Sanhita, 2023 is non-negotiable. This ruling reinforces the constitutional right to carry on trade or business under Article 19(1)(g) and the protection against arbitrary state action under Article 21.
Background & Facts
The Dispute
The petitioner, Abhay Kataria, operates a legitimate business involving cryptocurrency trading. His bank account with ICICI Bank, bearing account number 076505500518, was completely frozen without prior notice, inquiry, or judicial authorization. The freeze was initiated solely on the basis of an unverified email directive from a cyber crime cell alleging that funds credited to his account were linked to cyber fraud. The petitioner had no involvement in the alleged criminal activity and was never served with any notice or charge sheet.
Procedural History
The case was filed as a writ petition under Article 226 of the Constitution. The petitioner sought:
- Immediate unfreezing of his bank account
- Direction to the cyber police to issue a No Objection Certificate (NOC)
- Declaration that the freeze violated Section 106(3), Section 107, and Section 187 of BNSS, 2023, as well as Articles 14, 19(1)(g), and 21 of the Constitution
- Costs of litigation
Relief Sought
The petitioner sought restoration of access to his funds and a binding directive that no bank account may be frozen without compliance with statutory procedures and judicial oversight.
The Legal Issue
The central question was whether Section 102 of the Bharatiya Nagarik Suraksha Sanhita, 2023 permits law enforcement agencies to direct banks to freeze accounts without obtaining prior authorization from a Judicial Magistrate, and whether such action violates Article 19(1)(g) and Article 21 of the Constitution.
Arguments Presented
For the Petitioner
The petitioner relied on Malcolm Murayis & Ors. v. State Bank of India and Others (W.P. No. 1100 of 2024), where this Court held that freezing of accounts based solely on cyber police directives, without notice or magisterial sanction, is illegal. He argued that Section 102 BNSS requires a written order from a Judicial Magistrate before seizure or freezing of property. The absence of such an order rendered the freeze arbitrary and violative of Article 21. He further contended that the banks, as intermediaries, cannot act as de facto enforcement agents without judicial backing.
For the Respondent
The bank contended that it acted purely on instructions from the cyber crime cell and had no discretion to question the legality of the freeze. It submitted that it was bound by the directives issued by investigating agencies under the Information Technology Act and BNSS. The cyber police did not appear or file any written response, leaving the Court with no justification for the freeze.
The Court's Analysis
The Court examined the statutory framework under Section 102 BNSS, which mandates that any seizure of property by an investigating officer must be reported to a Judicial Magistrate without delay. The Court noted that Section 102 does not empower police to direct banks to freeze accounts ex parte. The absence of any magisterial order rendered the freeze procedurally invalid.
"The cyber crime cell’s email directive, however urgent, cannot substitute the requirement of judicial oversight under Section 102 BNSS. Banks are not empowered to act as instruments of extrajudicial seizure."
The Court distinguished between investigation and enforcement: while police may investigate, they cannot unilaterally deprive citizens of access to their funds. The Court emphasized that Article 19(1)(g) protects the right to carry on lawful business, including cryptocurrency trading, and that freezing an account without notice or hearing strikes at the very core of economic liberty.
The Court also noted the systemic failure of cyber crime cells across states to respond to court notices, indicating a pattern of procedural negligence. It held that the banks’ compliance with illegal directives does not absolve them of their duty to uphold constitutional rights.
The Verdict
The petitioner succeeded. The Court held that Section 102 BNSS requires judicial authorization before freezing bank accounts and that such action without it violates Article 21 and Article 19(1)(g). The account was ordered to be unfrozen, and the disputed amount was directed to be placed in a fixed deposit, accessible only upon magisterial order within three months.
What This Means For Similar Cases
Judicial Authorization Is Mandatory for Account Freezes
- Practitioners must challenge any account freeze initiated solely on police directive without a magistrate’s order under Section 102 BNSS
- Banks may be joined as respondents in writ petitions for failing to verify the legality of freeze orders
- Any freeze exceeding three months without judicial review becomes unlawful
Cyber Police Directives Lack Legal Force Without Magisterial Sanction
- Email notices from cyber cells are not equivalent to formal seizure orders under Section 102 BNSS
- Petitioners can invoke Malcolm Murayis as binding precedent in all High Courts
- The burden shifts to the state to prove compliance with Section 102 - failure renders the freeze void
Constitutional Rights Trump Investigative Convenience
- Economic rights under Article 19(1)(g) cannot be suspended on suspicion alone
- Courts will not tolerate procedural shortcuts that deprive citizens of access to funds
- Petitioners may seek damages for wrongful freeze if financial loss is demonstrable
