In the instant matter, the petitioners are engaged in the business of buying and selling gold ornaments, gold bars, coins and precious stones and have been carrying on such business in compliance with applicable statutory and regulatory requirements. In July 2024, a company named Dallas E-com Infotech Private Limited (“the Customer”) approached the petitioners for the purchase of gold items. Prior to entering into any transactions, the petitioners undertook due diligence and complied with Know Your Customer (KYC) norms and the transactions were carried out through regular banking channels. Between August 2024 and March 2025, transactions aggregating to approximately ₹14,20,74,954.99/- were conducted with the Customer. Subsequently, complaints were lodged by third parties against the Customer alleging fraud. No complaint, FIR or proceeding was registered against the petitioners. Despite this, respondent authorities issued communications to respondent banks directing that the bank accounts of petitioner 1, Malabar Gold and Diamond Ltd., be put on hold/frozen….
Held, “It is fairly trite now that Section 106 of the BNSS empowers the police only to seize property for evidentiary purposes and does not confer any authority to attach or debit-freeze bank accounts. Attachment or freezing of bank accounts, being measures directed at securing alleged proceeds of crime, can be undertaken only under Section 107 of the BNSS and strictly upon orders of a competent Magistrate, after following the prescribed procedural safeguards….
Case Comment
Blanket freezing of accounts of persons who are neither accused nor suspects is arbitrary, disproportionate and violative of Articles 19(1)(g) and 21 of the Constitution of India. While deciding the legality of bank account freezing under BNSS (Bharatiya Nagarik Suraksha Sanhita, 2023) of a business entity’s bank accounts on the basis of transactions with a third party accused of cyber fraud, in the absence of any allegation or material indicating the account holder’s complicity, a Single-Judge Bench of Purushaindra Kumar Kaurav, J., allowed the writ petition and held that the freezing of the petitioners’ bank accounts, without Magistrate’s order under Section 107 BNSS, was unjustified and illegal.
Malabar Gold and Diamond Ltd. v. Union of India, 2026 SCC OnLine Del 297, Decided on 16-01-2026
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