Bombay High Court Rules Police Cannot Freeze Assets Unconnected to Alleged Offence Under Section 102 CrPC

The Bombay High Court has held that investigating agencies cannot freeze bank accounts or seize assets under Section 102 of the Code of Criminal Procedure, 1973, unless there is a direct and identifiable connection between the property and the alleged offence. The Court clarified that the provision is intended to assist criminal investigation and evidence collection, not to secure disputed claims or provide financial protection to complainants.

Justice N.J. Jamadar observed that permitting seizure of unrelated assets would undermine the fundamental principle of presumption of innocence.

The Court stressed that police authorities act as investigators, not adjudicators, and therefore cannot freeze property merely because an accused person may eventually owe money to a complainant. The case arose from allegations involving transfer of shares and stocks under a commercial arrangement that later turned contentious. The complainant alleged cheating and criminal breach of trust after the accused allegedly failed to return certain shares whose value had substantially increased. During investigation, the police froze several bank accounts and mutual fund investments belonging to the accused under Section 102 CrPC.

The High Court examined leading Supreme Court judgments, including State of Maharashtra v. Tapas D. Neogy and Nevada Properties Pvt. Ltd. v. State of Maharashtra, and reiterated that freezing powers can only be exercised where the property itself is suspected to be directly linked to the offence. In the present matter, the Court found that the prosecution had failed to establish a prima facie nexus between the frozen bank accounts, mutual funds, and the alleged criminal acts.

The Bench also noted that the dispute substantially arose out of a commercial transaction and that the complainant had already pursued civil remedies. It cautioned that indefinite freezing of unrelated assets would effectively amount to attachment before judgment without satisfying safeguards available under civil law.

Accordingly, the Court upheld the de-freezing of the accounts and mutual fund units. It further struck down the Magistrate’s direction requiring a bank guarantee of ₹6.55 crore, holding that such a condition was excessively burdensome, and instead directed the accused to furnish an indemnity bond.