Debit Freeze of Bank Account under Section 94 of BNSS Held
Illegal Without Magistrate’s Order - M/s Tirupati Trading v. The State of West
Bengal & Ors.
Introduction
In Kirti Deora,
Proprietor of M/s Tirupati Trading v. The State of West Bengal & Ors. (WPA
1785 of 2025), the Calcutta High Court delivered a significant judgment on
13 February 2026 concerning the legality of debit freezing of a bank account by
police authorities under the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS).
The case dealt with the interplay between police powers under BNSS and the
special provisions of the CGST Act, 2017, while also addressing the issue of
territorial jurisdiction under Article 226(2) of the Constitution of India. The
Court ultimately quashed the debit freeze order, holding it to be without
authority of law.
Background
of the Case
The petitioner, Kirti
Deora, proprietor of M/s Tirupati Trading, filed a writ petition challenging
the arbitrary debit freezing of her bank account maintained with ICICI Bank,
Kankurgachi Branch. The freeze was effected pursuant to a notice dated January
6, 2025 issued by the Officer-in-Charge of Police Station Itanagar, Papumpare,
Arunachal Pradesh. The police authorities directed the bank to debit freeze
Account No. 104905500535 in connection with an investigation allegedly
initiated upon a complaint by CGST authorities in Arunachal Pradesh.
The petitioner contended
that the action was illegal, arbitrary, and beyond the scope of Section 94 of
the BNSS, 2023. She further argued that since the CGST Act is a special
statute, any attachment or freezing of bank accounts must strictly comply with Section
83 of the CGST Act, 2017.
Preliminary
Objection on Territorial Jurisdiction
The CGST authorities
raised a preliminary objection contending that the Calcutta High Court lacked
territorial jurisdiction. It was argued that the investigation was being
conducted in Arunachal Pradesh, the police authorities were situated there, and
proceedings under the CGST Act were also ongoing in that State. Hence, the
appropriate forum was the Gauhati High Court.
In support of this
contention, reliance was placed on the Supreme Court decisions in Kusum
Ingots & Alloys Ltd. v. Union of India, State of Goa v. Summit
Online Trade Solutions Pvt. Ltd., and Venkata Sai Ram Traders v. CUS CEx
ST Settlement Commission Chennai. These judgments emphasize that a High
Court can exercise jurisdiction only when a material and integral part of the
cause of action arises within its territorial limits.
Petitioner’s
Stand on Cause of Action
The petitioner, however,
clarified that the writ petition was not directed against the CGST proceedings
or the police investigation as such. The challenge was confined solely to the
debit freezing of her bank account, which was located within the territorial
jurisdiction of the Calcutta High Court.
Relying upon the Supreme
Court decision in Nawal Kishore Sharma v. Union of India, the petitioner
argued that a writ petition is maintainable where the legal right of the
petitioner has been infringed within the territorial limits of the Court. Since
the freezing of the bank account directly affected her rights within Kolkata,
the cause of action had clearly arisen within the jurisdiction of the Calcutta
High Court.
Court’s
Analysis on Territorial Jurisdiction
The Court examined
Article 226(2) of the Constitution and reiterated the principle that
territorial jurisdiction depends on whether the facts pleaded constitute a
material, essential, or integral part of the cause of action. The Court quoted
extensively from Kusum Ingots and State of Goa to emphasize that only those
facts having a nexus with the relief sought can confer jurisdiction.
Upon a meaningful reading
of the pleadings, the Court observed that the main grievance of the petitioner
was the freezing of her bank account at the Kankurgachi Branch of ICICI Bank,
which fell within the territorial limits of the Calcutta High Court. Since the
relief sought was quashing of the debit freeze and not interference with the
investigation or CGST proceedings, the Court held that a substantial part of
the cause of action had arisen within its jurisdiction. Accordingly, the
preliminary objection was rejected.
Scope of
Police Powers under Section 94 of BNSS
On merits, the Court
examined Section 94 of the BNSS, which deals with summons to produce documents
or other things. The Court noted that the provision empowers a police officer
or court to require production of documents or electronic communications necessary
for investigation. However, a bare reading of Section 94 revealed that it does
not confer any power upon police authorities to debit freeze a bank account.
The Court emphasized that
statutory powers must be strictly construed, particularly when they affect
property rights or financial transactions. In the absence of explicit statutory
authority, the action of debit freezing could not be justified under Section 94
of BNSS.
Distinction
between Seizure and Attachment under BNSS
The Court further
examined Sections 106 and 107 of the BNSS. Section 106 provides for seizure of
property by a police officer, subject to reporting to the jurisdictional
Magistrate. Section 107, on the other hand, deals with attachment of property
and requires prior approval and judicial intervention by a Magistrate.
Relying on a coordinate
bench decision in Tamasha Samanta v. Union of India, which in turn considered
decisions of the Kerala High Court and Bombay High Court, the Court clarified
that seizure and attachment are distinct concepts. Seizure may be exercised by
police subject to reporting, but attachment can only be effected upon an order
of the Magistrate.
The logic behind this
distinction lies in the purpose: seizure is primarily evidentiary, whereas
attachment is meant to secure alleged proceeds of crime. Therefore, debit
freezing of a bank account — which effectively restricts access to funds —
amounts to attachment and cannot be done without judicial sanction.
Absence of
Magistrate’s Order
In the present case,
there was no material on record to show that the Investigating Officer had
approached the jurisdictional Magistrate for an order of attachment under
Section 107. Nor was there evidence that any seizure had been reported under
Section 106. The police authorities had simply issued a notice directing the
bank to freeze the account.
The Court held that such
action could not be sustained in law. A bank account cannot be frozen
indefinitely without compliance with statutory safeguards and judicial
oversight. The absence of a Magistrate’s order rendered the debit freeze
illegal.
Final
Decision of the Court
Consequently, the
Calcutta High Court quashed that portion of the notice dated January 6, 2025
which directed debit freezing of the petitioner’s bank account. The bank was
directed to allow the petitioner to operate the account forthwith.
However, the Court
clarified that the order would not prevent the police authorities from taking
appropriate steps, including freezing of the bank account, strictly in
accordance with law and after complying with the statutory requirements under
the BNSS.
Significance
of the Judgment
This judgment reinforces
the principle that executive authorities must act strictly within the confines
of statutory powers. Police authorities cannot resort to debit freezing of bank
accounts without following due process prescribed under Sections 106 and 107 of
the BNSS.
The decision also
reiterates that territorial jurisdiction under Article 226(2) is determined by
the location where the cause of action substantially arises. Even if
investigation is conducted in another State, a writ petition may lie where the
legal injury has occurred.
For taxpayers and
businesses facing investigations under the CGST regime, this ruling underscores
the importance of procedural safeguards. Freezing of bank accounts has serious
business implications, and such measures must be backed by clear statutory authority
and judicial supervision.
Conclusion
The ruling in Kirti Deora
v. State of West Bengal stands as a crucial precedent on the limits of police
powers under the BNSS and the protection of financial rights of citizens. By
quashing the arbitrary debit freeze, the Calcutta High Court upheld the rule of
law and reaffirmed that even in the course of investigations, statutory
safeguards and constitutional principles cannot be bypassed
Disclaimer: All the Information is based on the notification, circular advisory and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
Press On Click Here To Download Order File
Click here
