M/S Galoti Overseas vs Punjab National Bank & Others

Jagmohan Bansal, J

The petitioner through instant petition under Articles 226/227 of the Constitution of India is seeking directions to de-freeze its Bank Account maintained with respondent No.1 - Punjab National Bank.

Learned counsel for the respondent-Bank has submitted notice dated 22.03.2023 from the Police Inspector, Daman which is taken on record. Registry is directed to tag the same at an appropriate place.

Learned counsel for the petitioner submits that respondent-Bank has frozen petitioner's account without notice. As per petitioner's information, the Bank has acted upon directions of Law Enforcement Agencies. It is not involved in any criminal activity. It is not named in any FIR relating to financial fraud, if any, committed by unknown persons. There is entry of Rs.10,000/- which has been credited in its account by unscrupulous ones. There is no order of Magistrate under Section 107 of Bharatiya Nagarik Suraksha Sanhita ('BNSS') with respect to its account. The petitioner shall not use suspicious amount.

Learned counsel for the respondents submit that Bank has acted upon directions of Law Enforcement Agencies. They have not received any order from Magistrate. They have no knowledge about involvement of petitioner in the commission of offence which prompted authorities to take impugned action. As per their information, there are suspicious entries in petitioner's account.

Heard the parties and perused the record.

Kerala High Court in Headstar Global Pvt. Ltd. Vs. State of Kerela, 2025 SCC OnLine Ker 3546 has held that freezing of Bank accounts must be proportionate, reasoned, and supported by material indicating the account holder's involvement in the alleged offence. Bank account under Section 106 of BNSS cannot be attached. The Supreme Court has dismissed SLP being SLP (Criminal) No.13433/2025 filed against aforesaid judgment.

Bombay High Court in Kartik Yogeshwar Chatur Vs. Union of India, 2025 SCC OnLine Bom 4778 has held that an Investigating Agency has no power to debit freeze or attach a Bank account under Section 106 of the BNSS, and that any such action can be taken only in accordance with Section 107 of the BNSS upon orders of the competent Magistrate.

Delhi High Court in Neelkanth Pharma Logistics (P) Ltd. Vs. Union of India, 2025 SCC OnLine Del 1055 has observed that freezing of an entire Bank account merely on account of a small and identifiable amount alleged to be proceeds of cyber fraud having been credited therein, is a disproportionate and arbitrary exercise of power, particularly when the account holder is neither an accused nor even a suspect in the offence under investigation. The Court emphasized that such blanket freezing, without recording or communicating any reasons, results in grave civil and financial consequences, including disruption of business operations, dishonour of cheques and severe hardship, and directly impinges upon the right to livelihood. Innocent and unwary account holders cannot be made to suffer merely because proceeds of crime may have temporarily passed through their accounts, unless investigation reveals their complicity or conscious receipt of such funds.

From the perusal of record and arguments of both sides, it is evident that no FIR has been registered against the petitioner. No order of attachment under Section 107 of BNSS has been passed by the Magistrate. The respondent has frozen account whereas a sum of Rs. 10,000/- has been marked suspicious. Claim of petitioner is genuine and deserves to be allowed. Accordingly, respondent-Bank is directed to de-freeze petitioner's account within 1 week. The petitioner is at liberty to operate its bank account subject to maintaining balance of Rs. 10,000/-. It is apt to notice that the Law Enforcement Agencies have not pointed out any amount, however, directed to freeze account.

As conceded by petitioner, the disputed amount shall not be utilized by it. It will remain frozen. It is made clear that this order shall not legalize any act or omission of the petitioner, if at any stage, it is found involved in the commission of any offence or violation of provision of any law in force.

The petition stands disposed of in above terms.

Pending Misc. application(s), if any, shall stand disposed of.