The Kerala High Court has reaffirmed that prolonged investigative inaction cannot justify the indefinite freezing of an accused’s bank accounts, especially where no rival claims exist and the accused holds pre-arrest bail. This ruling underscores the necessity of proportionality and timely justice in asset restraint measures under criminal proceedings.
Background & Facts
The Dispute
The petitioner, Firos, aged 46, is the accused in Crime No. 525 of 2019 registered by Manjeri Police Station, Malappuram, alleging offences under Section 124A and Section 420 of the Indian Penal Code, Sections 4 and 20 of the Indian Telegraph Act, 1885, and Sections 3 and 6 of the Wireless Telegraphy Act, 1933. The FIR was registered on 10.11.2019. The petitioner was granted pre-arrest bail by this Court on 03.12.2020. Despite the lapse of nearly six years, the investigation remains incomplete and no final report has been filed.
Key Facts
- The petitioner holds eight bank accounts, details of which are listed in Annexure A9 application
- On 11.11.2019, seizure mahazar was prepared by the police, indicating asset attachment during investigation
- The petitioner possesses valid GST registration dated 18.04.2018 and IFTE & OS licenses, indicating legitimate business activity
- The investigation was transferred to the Cyber Crime Police, Malappuram, and later to the Central Bureau of Investigation (CBI)
- The CBI’s involvement is based only on an order under Section 6 of the Delhi Special Police Establishment Act, without any subsequent Central Government authorization
- The petitioner filed an application under Section 457 of the Code of Criminal Procedure seeking release of funds from his accounts, citing hardship due to prolonged freeze
Procedural History
- 10.11.2019: FIR registered at Manjeri Police Station
- 03.12.2020: Petitioner granted pre-arrest bail by the High Court
- 06.02.2023: Report submitted by the 2nd respondent before Judicial First Class Magistrate
- 27.03.2023: Another report submitted by the 2nd respondent
- 28.07.2025: Petitioner filed Annexure A9 application before Chief Judicial Magistrate, Manjeri, seeking lifting of bank account freeze
- 07.10.2025: Trial Court dismissed the application (Annexure A11), citing lack of cooperation and ongoing investigation
- 06.04.2026: Criminal Miscellaneous Case filed before Kerala High Court seeking setting aside of Annexure A11 order
Relief Sought
The petitioner sought: (1) setting aside of the Trial Court’s order dated 07.10.2025; (2) lifting of the freeze on his eight bank accounts; and (3) interim custody of the funds therein, pending conclusion of investigation.
The Legal Issue
The central question was whether the indefinite freezing of an accused’s bank accounts, without any rival claimant and amid an inordinate delay of nearly six years in completing investigation, is legally sustainable under Section 457 of the Code of Criminal Procedure, and whether the Trial Court erred in refusing to reconsider the release of funds.
Arguments Presented
For the Petitioner
The learned counsel argued that the prolonged delay of over six years without filing a chargesheet or final report renders the continued freezing of accounts arbitrary and violative of the petitioner’s right to livelihood under Article 21. Reliance was placed on Sunderbhai Ambalal Desai v. State of Gujarat to contend that investigative delay cannot justify perpetual restraint on property. The petitioner holds no criminal antecedents, has been on pre-arrest bail since 2020, and the accounts contain legitimate business proceeds evidenced by GST and license documents. No rival claimant has been identified.
For the Respondent
The Public Prosecutor submitted that the investigation had been transferred to the CBI, implying the need for continued asset freeze. The CBI’s Standing Counsel conceded that no Central Government order under Section 6 of the Delhi Special Police Establishment Act had been issued to validate the CBI’s jurisdiction, rendering the transfer legally defective. However, the State maintained that the freeze was necessary to preserve evidence and prevent dissipation.
The Court's Analysis
The Court observed that the investigation has remained dormant for nearly six years despite the petitioner being on pre-arrest bail since 2020. The absence of a final report, coupled with the lack of any Central Government authorization for CBI’s involvement, undermines the legitimacy of the investigation’s current status. The Trial Court’s refusal to consider the petitioner’s application was based on vague grounds of non-cooperation, without any specific evidence or record to substantiate the claim.
"The investigation in the crime is not complete despite the long delay of nearly six years. There are no rival claimants to the money lying in the petitioner's bank accounts."
The Court emphasized that Section 457 of the BNSS empowers the Court to release property held in custody if no claim is made by any other person. The freezing of accounts, while permissible at the initial stage, cannot be sustained indefinitely without judicial review. The Court further held that the inherent powers under Section 528 of the BNSS allow it to intervene where procedural injustice is evident. The Trial Court’s order was found to be mechanical and devoid of application of mind to the petitioner’s hardship and the unreasonableness of the delay.
The Verdict
The petition was allowed. The Kerala High Court set aside the Trial Court’s order dated 07.10.2025 and directed the Chief Judicial Magistrate, Manjeri, to reconsider the petitioner’s application under Section 457 of the BNSS for lifting the freeze on his eight bank accounts. The Trial Court must decide the application expeditiously, and in any case, within one month from the date of production of this order. The Court noted that there are no rival claimants to the funds and that the petitioner’s pre-arrest bail status and legitimate business documentation support the release of funds.
What This Means For Similar Cases
Investigative Delay Invalidates Asset Restraint
- Practitioners must challenge prolonged freezes on bank accounts where no chargesheet has been filed beyond three years, especially if the accused is on bail
- The burden shifts to the prosecution to justify continued restraint with concrete reasons, not mere assertions of ongoing investigation
- Sunderbhai Ambalal Desai now stands as binding precedent for applying proportionality in asset freezing cases
No Authorization, No Jurisdiction
- CBI investigations initiated solely by state police under Section 6 DSPE Act, without Central Government notification, are legally void
- Any asset freeze based on such unauthorized investigations is liable to be set aside
- Advocates should verify the validity of CBI’s jurisdiction before accepting investigative orders as grounds for restraint
Procedural Fairness Over Administrative Convenience
- Courts must not defer to investigative agencies’ convenience when fundamental rights to livelihood are at stake
- Applications under Section 457 BNSS must be decided on merits, not dismissed summarily
- Judges are now expected to actively monitor investigative timelines and intervene where delay becomes oppressive
