Disproportionate Administrative Action In Cyber Financial Fraud Investigations: An Analysis Of Blanket Bank Account Freezes Vs. Disputed Amount Liens Under Section 106 BNSS
Adv Aditya Nanhoriya, National Forensic Sciences University Under Ministry of Home Affairs
Introduction
As digital payments have surged in India, the instances of cyber financial fraud have also skyrocketed, from phishing and unified payments interface (UPI) scams to investment and “digital arrest” scams. In order to catch up, the enforcement authorities have opted for speed. Complaints filed on the National Cybercrime Reporting Portal and channelled through the Citizen Financial Cyber Fraud Reporting and Management System enables banks to be alerted within hours, and the proceeds of fraud can be stopped before they're layered through mule accounts. The purpose is legitimate: there is no realistic way to recover money from victims other than quick intervention.
The methods employed, however, have begun to garner the interest of the courts. In many instances, investigators do not limit their investigation to the amount of money it is alleged has been misappropriated. They direct banks to place a freeze on the account, which occurs often based on one discredited credit. The effects are suffered by those who have no connection with the offence, such as salaried employees, small traders or pensioners, who are deprived of their own money for 'months' without an order, or any clear path to redemption. The option—one that provides the same protection without the same collateral damage—is to have a lien only on the disputed amount.
This paper looks at that contrast through the lens of Section 106 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), which gives a police officer the right to impound property which it suspects is stolen or is linked to a crime. The central issue is whether the use of a blanket freeze is proportionate to the use of another less onerous but equally effective measure of this power. In the paper it is concluded that it is not and that the constitutional protections contained in Article 19(1)(g), 21 and 300A would limit the action to the disputed amount.
The method of the study is doctrinal, based on the interpretation of the statutory text, the constitutional principles of proportionality and the judgments of the High Court on account freezes. It does so by establishing the legal backdrop, highlighting the similarities and differences of the two practices, utilising the proportionality test, examining the jurisprudence and concluding with proposed reforms.
