Bengaluru: The Karnataka High Court has ruled that police do not need to obtain prior permission from a magistrate to freeze a bank account suspected of holding proceeds of crime, particularly in cases involving rapidly moving electronic transactions.
Justice M. Nagaprasanna made the observation while hearing State of Karnataka v Jar Gold Retail Pvt Ltd, emphasising the need for swift action in cybercrime investigations.
Money can disappear within seconds
The Court noted that requiring police to approach a magistrate before freezing an account could allow suspected proceeds of crime to move through several accounts before judicial permission is obtained.
In cybercrime cases, money can pass through multiple so-called mule accounts within seconds, making immediate intervention crucial.
The Court observed that a victim’s money could otherwise become difficult or impossible to recover before the formal process is completed.
Section 106 provides immediate power
The Court highlighted Section 106 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), which permits police to seize property suspected to be connected with an offence.
According to the Court, such seizure is primarily a preservative measure intended to secure suspected tainted assets during an investigation.
A debit freeze, therefore, does not necessarily have to follow the procedure contemplated under Section 107 before police can act, the Court said.
Speed is crucial in cybercrime
The ruling underlines the growing challenge posed by digital financial fraud, where stolen money can rapidly move between accounts and jurisdictions.
The Court stressed that a debit freeze must be imposed as quickly as possible if it is to serve its purpose.
The observation is significant for victims of online financial fraud, as immediate freezing of suspicious accounts can potentially prevent stolen funds from being transferred further while the investigation proceeds.