Introduction:

The case of Ashish Rawat v. Union of India and Others came before the Allahabad High Court, raising significant questions concerning the scope and interpretation of police powers under the Bharatiya Nagarik Suraksha Sanhita (BNSS), particularly Sections 106 and 107. The controversy primarily revolved around the freezing of bank accounts during the course of investigation into alleged cyber offences, and whether such action required prior notice to the account holders.

The petitioners approached the High Court seeking de-freezing of their bank accounts, contending that the accounts had been frozen arbitrarily without any prior notice, in some instances even based on oral directions. They argued that such actions violated principles of natural justice and caused undue hardship, as they were deprived of access to their own funds without being given an opportunity to be heard.

The central legal issues before the Court included whether the term “property” under Section 106 of BNSS includes an entire bank account or only the amount suspected to be connected with an offence, whether prior notice is mandatory before freezing such accounts, and whether Sections 106 and 107 operate independently or in conjunction with each other.

This case thus provided the Court with an opportunity to clarify the extent of police powers in seizing property during investigation, while balancing the rights of individuals against the necessity of effective law enforcement, especially in the context of rapidly evolving cyber crimes.

Petitioners’ Arguments:

The petitioners strongly challenged the legality of the freezing of their bank accounts, raising multiple contentions grounded in procedural fairness and statutory interpretation.

Firstly, they argued that freezing of bank accounts without prior notice was arbitrary and violative of principles of natural justice. It was contended that depriving an individual of access to their financial resources without any form of prior intimation or hearing amounts to an infringement of their rights and causes severe hardship, especially when such accounts are essential for day-to-day living.

Secondly, the petitioners submitted that Section 106 of BNSS should not be interpreted in a manner that allows unfettered discretion to the police. They argued that even if the provision does not explicitly mandate prior notice, such a requirement must be read into it to prevent misuse of power and to ensure fairness in administrative action.

Thirdly, the petitioners contended that the freezing of entire bank accounts was excessive and disproportionate. They argued that only the amount allegedly involved in the offence, or suspected to be linked to criminal activity, could be subject to seizure. Freezing the entire account, including legitimately earned funds, was unjust and beyond the scope of the provision.

Further, reliance was placed on the procedural safeguards provided under Section 107 of BNSS, which requires prior notice and an opportunity of hearing before attachment of property. The petitioners argued that similar safeguards should apply to actions under Section 106 as well, to ensure consistency and protection of individual rights.

Additionally, the petitioners highlighted the lack of transparency in the process. In many cases, they were not informed about the reasons for freezing their accounts or the authority under which such action was taken. This lack of communication, they argued, compounded their difficulties and prevented them from seeking timely legal remedies.

Respondents’ Arguments:

The respondents, representing the State and investigating agencies, defended the actions taken under Section 106 of BNSS, emphasizing the necessity of swift and effective measures during criminal investigations.

Firstly, it was argued that Section 106 is a self-contained provision that empowers police officers to seize property suspected to be connected with the commission of an offence. The language of the provision, according to the respondents, is clear and unambiguous, and does not require prior notice or judicial approval before such seizure.

Secondly, the respondents emphasized the purpose behind Section 106, which is to enable immediate action in order to preserve evidence and prevent its dissipation. This is particularly crucial in cases involving cyber crimes, where funds can be transferred or withdrawn rapidly, making recovery difficult if prompt action is not taken.

Thirdly, the respondents distinguished Section 106 from Section 107 of BNSS. They argued that while Section 107 provides for attachment of property through a more elaborate procedure involving prior notice and judicial intervention, Section 106 is designed for urgent situations where delay could frustrate the investigation.

It was further contended that requiring prior notice under Section 106 would defeat the very objective of the provision, as it would give suspects an opportunity to conceal or dissipate the property in question.

The respondents also submitted that adequate safeguards exist within the statutory framework. Once property is seized under Section 106, the police are required to report the seizure to the appropriate authorities, including the jurisdictional Magistrate. This ensures oversight and prevents arbitrary exercise of power.

Lastly, the respondents argued that the freezing of bank accounts was a necessary and proportionate response in the context of the alleged offences, and that the petitioners had the option to approach the appropriate forums for redressal if they were aggrieved.

Court’s Judgment:

The High Court delivered a comprehensive judgment addressing each of the issues raised, while providing clarity on the interpretation of Sections 106 and 107 of BNSS.

At the outset, the Court held that Section 106 of BNSS does not require prior notice to be served on the person whose property is being seized. The Court emphasized that the provision is clear, unambiguous, and self-contained, granting direct powers to the police to act in situations where property is suspected to be linked to an offence.

The Court observed that reading a requirement of prior notice into Section 106 would be contrary to the legislative intent and would undermine the effectiveness of the provision. It noted that the primary objective of Section 106 is to enable immediate action to preserve property and prevent its misuse or dissipation, particularly in cases of cyber crime.

In contrast, the Court highlighted that Section 107 of BNSS explicitly provides for prior notice and an opportunity of hearing before attachment of property. This distinction, the Court held, indicates that the legislature intentionally designed the two provisions to operate differently.

The Court further clarified that Sections 106 and 107 operate independently and at different stages. Section 106 is intended for immediate action during the course of investigation, whereas Section 107 is a precautionary measure involving judicial oversight. The applicability of one provision does not automatically invoke the other.

On the issue of the scope of “property” under Section 106, the Court held that it does not extend to the entire bank account of a person. Relying on precedents such as State of West Bengal v. Anil Kumar Dey and State of Maharashtra v. Tapas D. Neogy, the Court observed that only such property which is suspected to be stolen or linked to the commission of an offence can be seized.

Accordingly, the Court ruled that freezing an entire bank account is impermissible and disproportionate. Only the amount suspected to be connected with the offence can be placed under lien or seized, while the remaining funds must remain accessible to the account holder.

The Court also addressed the issue of procedural safeguards. It held that once the police exercise their power under Section 106, they are required to report the seizure to their superior officer and subsequently to the jurisdictional Magistrate. This ensures a degree of oversight and accountability.

Importantly, the Court made a significant observation regarding the role of banks. While prior notice may not be required before seizure, the Court held that banks must inform account holders about the freezing of their accounts after the action has been taken. This obligation arises from the relationship between banks and their customers, and is necessary to prevent undue hardship and enable individuals to seek appropriate legal remedies.

The Court thus struck a balance between the need for effective investigation and the protection of individual rights. It upheld the power of the police to act swiftly under Section 106, while ensuring that such power is exercised in a limited and proportionate manner.

In conclusion, the Court directed that only the amount suspected to be linked to the offence should be held under lien, and that the remaining portion of the bank accounts should be restored for normal operation. It also granted liberty to the petitioners to approach the jurisdictional Magistrate if they were aggrieved by the freezing of their accounts.