Introduction:

In the case Headstar Global Pvt. Ltd. v. State of Kerala & Ors., Crl.MC No. 3740 of 2025, the Kerala High Court recently examined the scope and limitations of police powers under the newly introduced Section 107 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023. The petitioner, Headstar Global Pvt. Ltd., challenged the unilateral action of Kalamassery Police in freezing its bank account, claiming that such action was taken without a judicial order and contrary to the procedural safeguards provided under Section 107 of the BNSS. The police had allegedly linked the petitioner’s bank account to proceeds of crime stemming from a cheating case involving another company, Spezia Organic Condiments Pvt. Ltd. The petitioner asserted that the transaction in question was a routine business transaction and that the police lacked authority under both the former Criminal Procedure Code (CrPC) and the new BNSS provisions to order such a freeze. This challenge brought to the fore the crucial distinction between “seizure” and “attachment,” and the role of judicial oversight in property-related actions during a criminal investigation. Justice V.G. Arun delivered a detailed and well-reasoned judgment that reinforced the importance of judicial approval before attaching assets allegedly linked to criminal activity, ensuring a check on executive overreach and safeguarding the rights of third-party entities not directly implicated in the crime.

Arguments of the Petitioner:

The petitioner, Headstar Global Pvt. Ltd., represented by Advocate Shri. Babu S. Nair, contended that the funds deposited into its account from Spezia Organic Condiments Pvt. Ltd. were part of an ordinary business transaction and bore no criminal character. There was no direct allegation or FIR naming Headstar Global in connection with any offence. The petitioner challenged the legality of the police action in freezing its bank account, arguing that it was done without jurisdiction and in blatant violation of the procedural safeguards enshrined under the BNSS, particularly Section 107. The company submitted that the powers of seizure vested in police officers under Section 106 of the BNSS (formerly Section 102 of CrPC) only allow the seizure of property that is stolen or found under suspicious circumstances. It pointed out that the provision does not empower the police to freeze a bank account unless the funds in it are clearly and directly connected to a crime, which was not the case here. More importantly, the petitioner emphasised that Section 107 BNSS has introduced a significant change in the procedural framework by mandating that the attachment of alleged “proceeds of crime” must be judicially sanctioned by a Magistrate. The police, therefore, had no authority to order such attachment independently. The petitioner also challenged the Magistrate’s earlier refusal to lift the freeze, contending that it was based on a misinterpretation of legal provisions and ignored the absence of any proven link between the account and criminal activity.

Arguments of the Respondents:

Represented by a panel of advocates including Shri Sarathkumar T.S., Smt. Jismemol James, Shri Shyam Kumar M.P., Shri Achankunju P.C., Shri Rony V.P., and Smt. Vishnuja Vasudevan, the State of Kerala and the Kalamassery Police argued that the freezing of the petitioner’s bank account was necessary to prevent the dissipation of funds that could be linked to a serious financial fraud. According to the police, preliminary investigation in a cheating case involving Spezia Organic Condiments Pvt. Ltd. revealed suspicious fund transfers into the petitioner’s account, warranting immediate action. The respondents claimed that Section 106 of the BNSS, which retains the essence of the earlier Section 102 CrPC, allows a police officer to seize any property suspected of being associated with a crime, including bank accounts. They asserted that the urgency of the situation justified the freeze, which was intended as a preventive measure to safeguard possible proceeds of crime. The State argued that waiting for a formal Magistrate’s order could result in the funds being withdrawn or transferred, thereby defeating the purpose of investigation and potentially causing loss to the victims. Additionally, the respondents attempted to draw a functional similarity between “seizure” and “attachment,” contending that both are aimed at preserving suspected criminal assets and that requiring prior judicial approval in all cases could hamper swift and effective law enforcement.

Court’s Judgment:

Justice V.G. Arun, delivering the judgment, systematically analysed the legal framework surrounding the freezing or attachment of bank accounts in the context of criminal investigations. The Court began by examining the evolution of law from the CrPC to the BNSS, particularly the retention of Section 102 CrPC as Section 106 BNSS, and the introduction of the new Section 107 BNSS dealing specifically with the attachment of proceeds of crime. The Court relied on notable precedents such as State of Maharashtra v. Tapas D. Neogy (1999), M.T. Enrica Lexie v. Doramma (2012), and Teesta Atul Setalvad v. State of Gujarat (2018) to highlight the historical application of police powers to seize bank accounts under suspicious circumstances. However, the Court observed that these precedents operated in the absence of a specific statutory provision dealing with proceeds of crime within domestic jurisdiction—an absence that the BNSS has now addressed. The Court then turned to Section 107 BNSS and elaborated on its scope. It held that this section creates a judicial mechanism for the attachment of any property suspected to be derived, directly or indirectly, from criminal activity. Importantly, the Court underscored that under Section 107, the investigating officer is required to seek an order from the jurisdictional Magistrate before any such attachment can be made. The Magistrate, in turn, may issue an interim attachment order if there is an imminent risk of the property being alienated, but even such interim action must emanate from a judicial determination. The Magistrate is also empowered, after hearing all parties and confirming the criminal origin of the asset, to authorise its distribution to affected victims through the District Magistrate. In doing so, the provision ensures procedural fairness and judicial oversight, while also streamlining asset recovery for victims.

The Court distinguished this process from Section 106 BNSS (earlier Section 102 CrPC), which allows for police seizure of property only where there is a direct and immediate suspicion of a crime. The Court observed: “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.” Applying this legal reasoning to the facts of the case, Justice Arun held that there was no concrete material to demonstrate that the petitioner had committed any offence or that the funds in its account were proceeds of crime. Even assuming that the funds were tainted, the proper procedure would have been for the police to move the Magistrate under Section 107 for attachment, rather than acting unilaterally. Consequently, the High Court found that the police overstepped their jurisdiction, and the Magistrate erred in rejecting the petitioner’s plea to lift the freeze without properly considering the statutory requirement of judicial authorisation. The Court quashed the earlier order of the Magistrate and directed the immediate lifting of the debit freeze on the petitioner’s account. However, it also clarified that the police were free to approach the Magistrate under Section 107 BNSS if they believed that attachment was necessary, thereby preserving their right to initiate appropriate legal action through proper channels. The judgment therefore struck a balance between the rights of the individual and the imperatives of criminal investigation, reaffirming the principle that due process must be followed even in the face of suspicion.