APHC010065562026 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) [3521] TUESDAY,THE THIRTY FIRST DAY OF MARCH TWO THOUSAND AND TWENTY SIX PRESENT THE HONOURABLE DR JUSTICE Y. LAKSHMANA RAO WRIT PETITION NO: 3870/2026 Between: 1.M/S.MINERAL ON GROUND, C/O DNO. 1-8-702/33/1, VIDYANAGAR, NALLAKUNTA, HYDERABAD-520044. REP., BY ITS SOLE PROPRIETOR, MR. BAIRI KUMARA SWAMY. 2.MR. BAIRI KUMARA SWAMY,, S/O. BAIRI KRISHNA MURTHY, AGED ABOUT 56 YEARS, R/O. SRI BALAJI RESIDENCY, MOOSARAMBAGH, NEAR NOBLE DEGREE COLLEGE, INDIRA NAGAR, MALAKPET, HYDERABAD, TELANGANA. ...PETITIONER(S) AND 1.THE STATE OF ANDHRA PRADESH, REP., BY ITS PRINCIPAL SECRETARY, HOME DEPARTMENT, SECRETARIAT, AMARAVATI. 2.THE COMMISSIONER OF POLICE, VISAKHAPATNAM. 3.THE STATION HOUSE OFFICER, III TOWN POLICE STATION, VISAKHAPATNAM. 4.THE BRANCH MANAGER, ICICI BANK, A.U CAMPUS BRANCH, CHINNA WALTAIR, VISAKHAPATNAM. AP. 5.THE BRANCH MANAGER, ICICI BANK, GHATKESAR BRANCH, HYDERABAD, TELANGANA. 6.MR KOIII SIVA NAGA MURALI, S/O. SRI SUBRAHMANYESWARA RAO, AGED ABOUT 42 YEARS, R/0. D NO. 4-67-3/5, MIG 73, LAWSONS BAY COLONY, LOKAM STREET, VISKHAPATNAM-530017. 2 W.P.No.3870 of 2026 31.03.2026 Dr.YLR,J ...RESPONDENT(S): Counsel for the Petitioner(S): 1.PRUDVI RAJU MUDUNURI Counsel for the Respondent(S): 1.GP FOR HOME 2.KUNUKU RAJA SEKHAR The Court made the following: ORDER: The Writ Petition has been filed under Article 226 of the Constitution of India seeking the following relief:- “…to issue an appropriate Writ Order or direction more particularly one in the nature of Writ of Mandamus by declaring the impugned action of the Respondent No 3 in issuing the Impugned Order dt 12 09 2025 directing the Respondent No 4 Bank to freeze the Bank Accounts of the Petitioners as being illegal arbitrary unsustainable in law and quash and set aside the Impugned Order dt 12 09 2025 passed by the Respondent No 3 and consequently direct the Respondent No 4 Bank for immediate defreezing of the Bank Accounts of the Petitioners and Pass such other Order or Orders as may deem fit and proper in the circumstances of the case pending disposal of the above writ petition and to pass…” 2. Heard the learned Counsel for the Petitioners and the learned Assistant Government Pleader for Home. 3. Sri Prudvi Raju Mudunuri, learned Counsel for the Petitioners submits that the impugned order dated 12.09.2025 issued under Section 94 of ‘the BNSS’ by Respondent No.3 is wholly arbitrary, mechanical, and devoid of jurisdictional foundation. It is urged that the Investigating Officer, without recording any reasons or establishing a nexus between the alleged offence 3 W.P.No.3870 of 2026 31.03.2026 Dr.YLR,J and the Petitioners’ accounts, has directed the Respondent Bank to freeze the accounts, thereby paralysing the Petitioners’ business operations. 4. Learned Counsel for the Petitioners further submits that freezing of bank accounts constitutes a draconian measure, directly infringing upon the fundamental right guaranteed under Article 19(1)(g) of the Constitution of India. Such an order, passed without prior approval of the learned jurisdictional Magistrate as mandated under Section 107 of ‘the BNSS’, is ultra vires the statute and violative of the principles of natural justice. 5. It is submitted that the allegations of misappropriation and diversion of funds are demonstrably false, inasmuch as the accounts of M/s. Murali Krishna Agro Farms & Estates Pvt. Ltd., required joint signatures, including that of the de-facto complainant, thereby rendering unilateral diversion impossible. The findings of the Hon’ble NCLT, which categorically held that the complainant is not a director, further demolish the substratum of the criminal complaint. Learned Counsel for the Petitioners submits that the impugned order is bereft of particulars, merely reciting that the accounts are “involved in the offence” without disclosing material particulars or quantifying the alleged misappropriation. Such blanket directions, unsupported by evidence, have been consistently deprecated by constitutional Courts as impermissible in law. 6. It is further urged that the continuation of the freeze has resulted in grave prejudice to the Petitioners, with loan accounts being classified as NPAs, statutory payments being obstructed, and salaries of employees remaining 4 W.P.No.3870 of 2026 31.03.2026 Dr.YLR,J unpaid. The livelihood of the Petitioners and their employees stands imperilled, and such disproportionate hardship inflicted without lawful authority amounts to violation of the right to livelihood and commercial existence. 7. Learned Counsel for the Petitioners furthermore submits that criminal law cannot be permitted to be misused as a weapon to settle civil or corporate disputes. The complainant, having failed before the NCLT, has sought to misuse the criminal process to paralyse the Petitioners’ business. This Court has consistently held that such abuse of process warrants judicial intervention to prevent miscarriage of justice. It is contended that the Respondent Bank cannot legally freeze accounts merely on the basis of a police communication without a formal attachment order passed by the learned Magistrate under Section 107 of ‘the BNSS’. The procedural lapses committed by Respondent No.3 vitiate the entire process, rendering the impugned order unsustainable in law. 8. Learned Counsel for the Petitioners prays to set aside the impugned order dated 12.09.2025, direct the immediate de-freezing of the Petitioners’ accounts, and restore their right to carry on lawful business activities without unlawful interference. 9. Sri P.Ajay Babu, learned Assistant Government Pleader, opposing the Writ Petition, submits that the impugned order dated 12.09.2025 under Section 94 of ‘the BNSS’ was passed in due exercise of statutory powers vested in the Investigating Officer. It is urged that the freezing of accounts was 5 W.P.No.3870 of 2026 31.03.2026 Dr.YLR,J necessitated to preserve the alleged proceeds of crime and to ensure that the investigation is not frustrated by dissipation of funds. The plea that the order is mechanical is stoutly denied, as the officer acted upon credible allegations of criminal breach of trust, cheating, and forgery, duly registered in Crime No.136 of 2025. 10. Learned Assistant Government Pleader further submits that the Petitioners’ contention of violation of Section 107 of ‘the BNSS’ is misconceived. Section 94 of ‘the BNSS’ empowers the police to seek freezing of accounts during investigation, and the subsequent reporting to the learned Magistrate is a procedural requirement which does not vitiate the substantive act of freezing. The urgency of the matter, involving allegations of diversion of corporate funds, justified immediate action to prevent irreparable prejudice to the complainant and to safeguard the integrity of the investigation. 11. It is submitted that the Petitioners’ reliance on Article 19(1)(g) is misplaced, for the right to trade and business is not absolute and is subject to reasonable restrictions in the interest of preventing crime and protecting public order. The freezing of accounts is a temporary measure, proportionate to the gravity of allegations, and does not amount to deprivation of property but only regulation pending adjudication. The plea of hardship, though sympathetic, cannot override the paramount interest of justice and the need to secure evidence. 6 W.P.No.3870 of 2026 31.03.2026 Dr.YLR,J 12. Learned Assistant Government Pleader furthermore submits that the Petitioners’ attempt to portray the dispute as purely civil or corporate is untenable, as the allegations disclose a clear criminal angle involving misappropriation and falsification of accounts. The dismissal of the NCLT petition does not absolve the Petitioners of criminal liability, nor does it preclude investigation under penal law. Hence, the Writ Petition is devoid of merit and deserves to be dismissed. 13. Sri Kunuku Raja Sekhar, learned Counsel on behalf of the unofficial Respondents, submits that the Petitioners have indulged in systematic diversion of funds and manipulation of corporate records, thereby breaching fiduciary obligations and causing grave prejudice to the company and its stakeholders. The freezing of accounts is a necessary safeguard to prevent further misappropriation, and the Petitioners cannot seek equitable relief when their own conduct is tainted with fraud and dishonesty. The Writ Petition is but an attempt to thwart investigation and perpetuate wrongful gain and hence it is urged to dismiss the Writ Petition. 14. This Court has carefully considered the rival submissions advanced by the learned Counsel for the respective parties and has bestowed its anxious consideration upon the legal questions of considerable constitutional and statutory significance that arise for determination in the present proceedings. The Writ Petition has been filed invoking the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India, challenging the impugned 7 W.P.No.3870 of 2026 31.03.2026 Dr.YLR,J order dated 12.09.2025 issued by Respondent No.3 under Section 94 of ‘the ‘BNSS, directing Respondent No.4 Bank to freeze the bank accounts of the Petitioners. The core question that falls for adjudication is whether an Investigating Officer is clothed with unilateral authority to direct the freezing of bank accounts without approaching the learned jurisdictional Magistrate and without affording any pre-decisional notice or hearing to the account holders. Upon a thorough examination of the statutory framework, constitutional guarantees, and settled judicial precedents, this Court is firmly of the view that the impugned order cannot withstand judicial scrutiny and is liable to be quashed in its entirety. 15. In this regard it is apposite to refer to the judgments of the Hon’ble Apex Court and other High Courts, relied on by the learned Counsel for the Petitioners. The Hon’ble Apex Court in Shento Varghese v. Julfikar Husen1, at paragraph Nos.21 & 22 held as under: “21. In the background of the aforesaid discussion, therefore, the line of precedents which have taken the position that “seizure orders” are vitiated for delay in compliance with the reporting obligation are declared to be manifestly erroneous and are accordingly, overruled. The relevant question to be determined was not whether the duty of the police to report the seizure to the Magistrate is mandatory or directory. Instead, what ought to have been inquired into was whether the exercise of the seizure power was subjected to compliance of reporting obligation, as illustrated in Section 105-ECrPC. 22. Merely because we have held that non-reporting of the seizure forthwith by the police officer to the jurisdictional court would not vitiate the seizure order, it would not mean that there would be no consequence whatsoever as regards the police officer, upon whom the law has enjoined a duty to act in a certain way. Since there is 1 (2024) 7 SCC 23 8 W.P.No.3870 of 2026 31.03.2026 Dr.YLR,J an obligation cast on the officer to report the seizure forthwith, it becomes necessary to understand the meaning of the expression “forthwith” as used in Section 102(3)CrPC. For, without a clear understanding of the said expression, the Magistrate would not be in a position to determine whether the obligation cast on the police officer has been properly complied with. In this background, the expression “shall forthwith report the seizure to the Magistrate” occurring in sub-section (3) of Section 102 requires to be examined.” 16. Thus, in Shento Varghese supra, the Hon’ble Apex Court, while adverting to paragraphs 21 and 22 of the judgment, unequivocally held that the earlier line of authorities which proceeded on the premise that a delay in compliance with the statutory reporting obligation would per se vitiate a seizure order stood erroneously decided and were, therefore, expressly overruled. The Court clarified that the true test is not whether the obligation of the police to report the seizure to the learned Magistrate is to be characterised as mandatory or directory, but whether the exercise of the power of seizure itself was undertaken in consonance with the statutory requirement of reporting, as exemplified in Section 105- E of ‘the Cr.P.C.’ Further, the Hon’ble Court emphasised that although non- reporting of the seizure “forthwith” may not invalidate the seizure order, such omission is not without legal consequence for the police officer who is duty- bound to comply with the statutory mandate. For this purpose, the Court underscored the necessity of ascertaining the true import of the expression “forthwith” occurring in Section 102(3) of ‘the Cr.P.C.,’ observing that only upon a correct appreciation of this expression can the learned Magistrate determine whether the reporting obligation has been duly fulfilled in accordance with law. 9 W.P.No.3870 of 2026 31.03.2026 Dr.YLR,J 17. The High Court of Kerala in Headstar Global (P) Ltd. v. State of Kerala2, at paragraph Nos.12 & 13 held as under: “12. Going by Section 107 of BNSS, a police officer investigating a crime has to approach the jurisdictional Magistrate seeking attachment of any property believed to be derived directly or indirectly from criminal activity or the commission of an offence. The Magistrate may thereupon order attachment after hearing all parties concerned or issue an interim order for attachment, if issuing notice to the owner will defeat the purpose of attachment and seizure. After confirming that the attached property is the proceeds of crime, the Magistrate can direct the District Magistrate to distribute the property among those affected by the crime. Thus Section 107 confers the jurisdictional Magistrates with explicit authority to act swiftly in cases involving proceeds of crime. 13. Another aspect of importance is that, while Section 106 speaks of seizure, Section 107 deals with attachment, forfeiture and restoration. Seizure under Section 106 can be carried out by a police officer and an ex post facto report submitted to the Magistrate. On the other hand, attachment under Section 107 can be effected only upon the orders of the Magistrate. The logic behind this distinction being that the purpose of seizure is more to secure the evidence during an investigation, whereas attachment is intended to secure the proceeds of crime by preventing its disposal and thus ensuring its availability for legal procedure such as forfeiture and distribution to the victim/s.” 18. Therefore, the High Court of Kerala in Headstar Global (P) Ltd. supra, eloquently elucidated that Section 107 of ‘the BNSS’ vests the learned Jurisdictional Magistrate with the exclusive and plenary authority to order attachment of property believed to constitute the proceeds of crime, the police officer being mandated to approach the Magistrate for such attachment, which may be ordered after affording an opportunity of hearing to all concerned or, in exigent circumstances where issuance of notice would defeat the very object of attachment, by way of an interim order; and upon confirmation that the property indeed represents proceeds of crime, the Magistrate may further 2 2025 SCC OnLine Ker 3546 10 W.P.No.3870 of 2026 31.03.2026 Dr.YLR,J direct its distribution through the District Magistrate to those aggrieved. The Court further drew a sharp doctrinal distinction between Section 106, which contemplates mere seizure by the Investigating Officer followed by an ex post facto report to the Magistrate, and Section 107, which governs attachment, forfeiture, and restoration, and which can be invoked only upon a reasoned order of the Magistrate. The rationale for this demarcation, as underscored by the Court, lies in the differing purposes of the provisions: seizure under Section 106 serves primarily to secure evidence necessary for investigation, whereas attachment under Section 107 serves the higher statutory purpose of securing the alleged proceeds of crime by preventing their dissipation and ensuring their availability for forfeiture, restitution, and victim compensation, thus reinforcing the indispensable judicial oversight contemplated by the statutory scheme. 19. The High Court of Delhi in Malabar Gold & Diamond Ltd. v. Union of India3, at paragraph Nos.18 & 19 held as under: “18. Thus, 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. 19. In light of these provisions, it is also pertinent to note that any blanket or disproportionate freezing of bank accounts, particularly where the account holder is neither an accused nor even a suspect in the offence under investigation, is manifestly arbitrary, and in the teeth of the fundamental rights under Article 19(1)(g) 3 2026 SCC OnLine Del 297 11 W.P.No.3870 of 2026 31.03.2026 Dr.YLR,J and 21 and of the Constitution of India, which encompass the right to livelihood and freedom to carry on trade and business. Such indiscriminate debit freezing, without any finding of complicity, has the inevitable effect of paralysing the day-to-day business operations of an otherwise innocent entity, resulting in loss of commercial goodwill and financial consequences, thereby subjecting a non-complicit account holder to punitive consequences.” 20. Ergo, the High Court of Delhi in Malabar Gold & Diamond Ltd. supra, unequivocally reaffirmed that Section 106 of ‘the BNSS’ confers upon the police only a limited power of seizure for evidentiary purposes and does not, in any manner, authorise the attachment or debit- freezing of bank accounts, which are intrusive measures permissible solely under Section 107 of ‘the BNSS’ and only upon the issuance of a reasoned order by a competent Magistrate after strict adherence to the procedural safeguards contemplated by law. The Court further underscored that any blanket or disproportionate freezing of bank accounts, particularly in circumstances where the account holder is neither an accused nor even a suspect in the underlying criminal investigation, amounts to manifest arbitrariness and constitutes a direct infraction of the fundamental guarantees under Articles 19(1)(g) and 21 of the Constitution of India, which safeguard the right to livelihood and the freedom to carry on trade or business. Such indiscriminate and unbridled debit- freezing, bereft of any foundational finding of complicity, inevitably paralyses the day- to- day business operations of an otherwise innocent entity, erodes commercial goodwill, and inflicts severe financial prejudice, thereby subjecting 12 W.P.No.3870 of 2026 31.03.2026 Dr.YLR,J a non- complicit account holder to consequences that are punitive in effect though wholly unjustified in law. 21. Learned Assistant Government Pleader has relied on a decision of the Hon’ble Apex Court in State of Maharashtra v. Tapas D. Neogy4, wherein at paragraph Nos.6 & 12 held as under: “6. A plain reading of sub-section (1) of Section 102 indicates that the police officer has the power to seize any property which may be found under circumstances creating suspicion of the commission of any offence. The legislature having used the expression “any property” and “any offence” have made the applicability of the provisions wide enough to cover offences created under any Act. But the two preconditions for applicability of Section 102(1) are that it must be “property” and secondly, in respect of the said property there must have been suspicion of commission of any offence. In this view of the matter the two further questions that arise for consideration are whether the bank account of an accused or of his relation can be said to be “property” within the meaning of sub-section (1) of Section 102 CrPC and secondly, whether circumstances exist, creating suspicion of commission of any offence in relation to the same. Different High Courts in the country have taken divergent views in this regard. In the case of Swaran Sabharwal v. Commr. of Police [1988 Cri LJ 241 (Del) (DB)] a Division Bench of the Delhi High Court examined the question whether a bank account can be held to be “property” within the meaning of Section 102 CrPC. In the said case, proceeds realised by sale of official secrets were deposited by the accused in his wife's account. The Court in that case came to hold that it is not quite sure whether monies deposited in a bank account can be seized by means of a prohibitory order under the provisions of Section 102 but even assuming that a bank account is a “property” within the meaning of Section 102 of the Code of Criminal Procedure, the further consideration must be satisfied namely that the property has been found under circumstances which create the suspicion of the commission of an offence. But in that case it is not the discovery of the property that has created suspicion of commission of an offence but on the other hand the discovery of the bank account is a sequel to the discovery of commission of offence inasmuch as the police suspected that some of the proceeds realised by the sale of the official secrets have been passed on to the bank account of the wife of the accused. Therefore, the Court was of the opinion that the provisions of Section 102 cannot be invoked. In the case of Purbanchal Road Service v. State [1991 Cri LJ 2798 (Gau)] a learned 4 (1999) 7 SCC 685 13 W.P.No.3870 of 2026 31.03.2026 Dr.YLR,J Single Judge of the Gauhati High Court examined the provisions of Section 102 of the Criminal Procedure Code and the validity of an order by a police officer, prohibiting the Bank from paying amount to the accused from his account. The learned Judge came to the conclusion that the word “seize” used in Section 102 CrPC means actual taking possession in pursuance of a legal process and, therefore, in exercise of the said power, a bank cannot be prohibited not to pay any amount out of the account of the accused to the accused nor can the accused be prohibited from taking away any property from the locker, as such an order would not be a “seizure” within the meaning of Section 102 of the Criminal Procedure Code. The learned Single Judge agreed with the view taken by the Allahabad High Court in the case of Textile Traders Syndicate Ltd. v. State of U.P. [AIR 1960 All 405 : 1960 Cri LJ 871] In the Allahabad case on which the Gauhati High Court relied upon (Textile Traders [AIR 1960 All 405 : 1960 Cri LJ 871] ), what was decided by the Court is, once money passes on from the accused to some other person or to the bank, money itself becomes unidentifiable and, therefore, there cannot be any question of seizure of the same by the police officer. 12. Having considered the divergent views taken by different High Courts with regard to the power of seizure under Section 102 of the Code of Criminal Procedure, and whether the bank account can be held to be “property” within the meaning of the said Section 102(1), we see no justification to give any narrow interpretation to the provisions of the Criminal Procedure Code. It is well known that corruption in public offices has become so rampant that it has become difficult to cope up with the same. Then again the time consumed by the courts in concluding the trials is another factor which should be borne in mind in interpreting the provisions of Section 102 of the Criminal Procedure Code and the underlying object engrafted therein, inasmuch as if there can be no order of seizure of the bank account of the accused then the entire money deposited in a bank which is ultimately held in the trial to be the outcome of the illegal gratification, could be withdrawn by the accused and the courts would be powerless to get the said money which has any direct link with the commission of the offence committed by the accused as a public officer. We are, therefore, persuaded to take the view that the bank account of the accused or any of his relations is “property” within the meaning of Section 102 of the Criminal Procedure Code and a police officer in course of investigation can seize or prohibit the operation of the said account if such assets have direct links with the commission of the offence for which the police officer is investigating into. The contrary view expressed by the Karnataka, Gauhati and Allahabad High Courts, does not represent the correct law. It may also be seen that under the Prevention of Corruption Act, 1988, in the matter of imposition of fine under sub-section (2) of Section 13, the legislatures have provided that the courts in fixing the amount of fine shall take into consideration the amount or the value of the property which the accused person has obtained by committing the offence or where the conviction is for 14 W.P.No.3870 of 2026 31.03.2026 Dr.YLR,J an offence referred to in clause (e) of sub-section (1) of Section 13, the pecuniary resources or property for which the accused person is unable to account satisfactorily. The interpretation given by us in respect of the power of seizure under Section 102 of the Criminal Procedure Code is in accordance with the intention of the legislature engrafted in Section 16 of the Prevention of Corruption Act referred to above. In the aforesaid premises, we have no hesitation to come to the conclusion that the High Court of Bombay committed error in holding that the police officer could not have seized the bank account or could not have issued any direction to the bank officer, prohibiting the account of the accused from being operated upon. Though we have laid down the law, but so far as the present case is concerned, the order impugned has already been given effect to and the accused has been operating his account, and so, we do not interfere with the same.” 22. Ergo, in Tapas D. Neogy supra, the Hon’ble Apex Court decisively held that Section 102(1) of ‘the Cr.P.C.,’ by its wide legislative sweep, empowers the police to seize “any property,” which includes bank accounts of an accused or their relations when such accounts exhibit a direct and proximate nexus with the alleged offence. Rejecting the restrictive interpretations adopted by the Delhi, Gauhati, and Allahabad High Courts, the Hon’ble Supreme Court emphasized that excluding bank accounts from the purview of seizure would defeat the very object of Section 102 of ‘the Cr.P.C.,’ particularly in cases involving corruption and illicit monetary gains. The Court further harmonised this interpretation with the legislative intent underlying the Prevention of Corruption Act, 1988, which contemplates scrutiny of pecuniary resources derived through unlawful means. While affirming the legality of freezing bank accounts under Section 102 of ‘the Cr.P.C.,’ the Court, in the factual circumstances of that case, refrained from interfering as the impugned order had already been acted upon and the account was operational. 15 W.P.No.3870 of 2026 31.03.2026 Dr.YLR,J 23. At the threshold, it is necessary to appreciate the constitutional foundation upon which the challenge rests. Article 19(1)(g) of the Constitution of India guarantees to every citizen the fundamental right to practise any profession or to carry on any occupation, trade, or business. This right, though not absolute, can be curtailed only by a law imposing reasonable restrictions in the interest of the general public, as envisaged under Article 19(6) of the Constitution of India. The right to carry on business necessarily includes the right to access the financial instrumentalities essential to that business, including bank accounts through which commercial transactions are conducted. A blanket freezing of such accounts, without legal authority and without judicial oversight, strikes at the very root of this constitutionally protected right. The impugned order, having been passed without any statutory sanction traceable to a provision that authorises such unilateral executive action, constitutes a direct and impermissible infringement of the Petitioners’ fundamental right under Article 19(1)(g) of the Constitution of India. The argument of Respondent No.3 that such freezing constitutes a mere regulatory measure falls wholly wide of the mark, for the practical consequence of the impugned order has been to render the Petitioners’ business operations entirely non-functional, thereby transforming a purported regulation into a de-facto extinction of their commercial existence. 24. This Court must next advert to the statutory scheme under ‘the BNSS’ to appreciate the precise jurisdictional foundation, if any, upon which the 16 W.P.No.3870 of 2026 31.03.2026 Dr.YLR,J impugned order purports to rest. Section 94 of ‘the BNSS’ vests in a police officer the power to search for and seize certain documents and property during the course of an investigation. However, the existence of a general power of search and seizure under Section 94 of ‘the BNSS’ cannot, by any principle of statutory interpretation, be construed as conferring upon an Investigating Officer the unbridled authority to direct financial institutions to freeze the accounts of citizens without judicial intervention. The BNSS, recognising the grave consequences that attend the attachment of property alleged to constitute proceeds of crime, has enacted a distinct and comprehensive procedure under Section 107 of ‘the BNSS’. Section 107 of ‘the BNSS’ mandates that whenever an Investigating Officer forms a belief, upon material in his possession, that any property constitutes proceeds of a scheduled offence, he must apply to the learned jurisdictional Magistrate, who is then required to issue notice to the affected persons and afford them an opportunity of hearing before passing any order of attachment. The legislative intent underlying Section 107 of ‘the BNSS’ is unambiguous: it is the learned Magistrate, and not the Investigating Officer, who is entrusted with the power of attachment, and the interposition of judicial authority is a mandatory safeguard and not a mere procedural formality. The submission of the learned Assistant Government Pleader that Section 94 of ‘the BNSS’ independently empowers the police to freeze accounts is, with respect, misconceived and contrary to the plain text and legislative purpose of the statute. 17 W.P.No.3870 of 2026 31.03.2026 Dr.YLR,J 25. It is a well-established canon of statutory interpretation, affirmed by the Hon'ble Supreme Court of India in a long line of decisions, that two provisions of the same enactment must be read harmoniously so as to give full effect to the legislative intent and to avoid any surplusage or redundancy. Applying this principle, Sections 94 and 107 of ‘the BNSS’ must be read conjunctively. Section 94 of ‘the BNSS’, which confers general investigative powers, cannot be permitted to swallow up Section 107 of ‘the BNSS’, which specifically addresses the attachment of property and prescribes a procedure replete with judicial safeguards. To hold otherwise would be to render the entire scheme of Section 107 of ‘the BNSS’, including its requirements of judicial oversight, notice, and hearing, otiose and nugatory, which no Court of law can permit. The maxim generalia specialibus non derogant is instructive in this context: where a general provision and a special provision operate in the same field, the special provision must prevail. Section 107 of ‘the BNSS’, being the special provision governing attachment of property alleged to be proceeds of crime, must govern the field, and the Investigating Officer's action in bypassing it cannot be sustained. The impugned order is therefore ultra vires ‘the BNSS’ and stands vitiated at its very foundation. 26. Independently of the statutory infirmity discussed above, the impugned order is also constitutionally unsustainable for its flagrant violation of the principles of natural justice, which constitute an integral component of the rule of law and are embedded in Article 14 of the Constitution of India. The twin 18 W.P.No.3870 of 2026 31.03.2026 Dr.YLR,J pillars of natural justice, audi alteram partem (hear the other side) and nemo judex in causa sua (no person shall be a judge in his own cause), are not merely procedural niceties but substantive safeguards that protect citizens from arbitrary state action. The impugned order was passed without issuance of any notice to the Petitioners, without furnishing them an opportunity to place their case before the authority, and without any consideration of the representations that the Petitioners had already submitted to Respondent No.3 and Respondent No.4 Bank. The Petitioners were confronted with a fait accompli: their accounts were frozen without warning, without hearing, and without any indication of the material upon which Respondent No.3 had acted. This Court is of the considered opinion that before so drastic and crippling a measure as the freezing of bank accounts is resorted to, elementary fairness demands that the affected party be placed on notice and afforded a reasonable opportunity to respond. The omission to do so renders the impugned order a nullity in the eye of law. 27. Proceeding further, this Court finds the impugned order to be afflicted with a grave vice of non-application of mind, which independently renders it liable to be struck down. It is trite law, affirmed by constitutional Courts across the country, that every order affecting the rights of citizens must be supported by reasons, and the reasons must disclose a rational nexus between the material before the authority and the conclusion drawn therefrom. The impugned order does no more than recite a bare and bald conclusion that the 19 W.P.No.3870 of 2026 31.03.2026 Dr.YLR,J accounts in question are “involved in the offence,” without identifying the specific transactions alleged to be tainted, without quantifying the amount alleged to have been misappropriated, and without establishing any causal connection between the accounts sought to be frozen and the alleged criminal activity. An order of such a sweeping and drastic nature, cloaked in the language of statutory authority, cannot be permitted to stand when it is bereft of any reasoned foundation. Recording of reasons is not an empty formality, it is the guarantee that the power has been exercised judiciously and not capriciously. The mechanical manner in which the impugned order was passed reveals an utter abdication of the duty to apply mind, and such an order cannot survive constitutional scrutiny. 28. This Court is equally persuaded that the principle of proportionality, now firmly entrenched in Indian constitutional jurisprudence as a component of Articles 14 and 19 of the Constitution of India, has been egregiously violated in the present case. The doctrine of proportionality, drawn from constitutional law and affirmed by the Hon'ble Supreme Court in Modern Dental College & Research Centre v. State of M.P5 and K.S. Puttaswamy (Aadhaar-5J.) v. Union of India6, postulates that even where state action pursues a legitimate aim, the means employed must be proportionate to and commensurate with the object sought to be achieved, and must impair the fundamental rights of 5 (2016) 7 SCC 353 6 (2019) 1 SCC 1 20 W.P.No.3870 of 2026 31.03.2026 Dr.YLR,J citizens to the minimum extent necessary. The blanket and indiscriminate freezing of all bank accounts of the Petitioners, without identifying specific amounts or transactions alleged to be proceeds of crime, without restricting the freeze to the extent necessary to protect the alleged proceeds, and without judicial oversight, is a measure grossly disproportionate to the investigative purpose sought to be served. The consequence of this disproportionate action has been devastating, loan accounts have been classified as Non-Performing Assets, statutory obligations have been rendered impossible of discharge, and the salaries of employees stand unpaid. The investigation could well have been secured by far less invasive means, such as a targeted freeze limited to the amount in dispute or a partial restriction subject to learned Magisterial supervision. The failure to adopt such calibrated measures renders the impugned order doubly unsustainable. 29. This Court is also constrained to observe that the circumstances of the present case disclose a disconcerting pattern of misuse of the criminal process to resolve what is, in its essential character, a corporate and civil dispute. It is a well-settled principle, reiterated by the Hon’ble Supreme Court in numerous pronouncements, that criminal law cannot be employed as a coercive instrument to settle disputes that are civil in nature or as a weapon of oppression against business adversaries. The foundational premise of the FIR registered as Crime No.136 of 2025 is the alleged breach of fiduciary duty by the Petitioners in their capacity as directors of M/s. Murali Krishna Agro Farms 21 W.P.No.3870 of 2026 31.03.2026 Dr.YLR,J & Estates Pvt. Ltd. However, this very substratum is demolished by the finding of the Hon’ble National Company Law Tribunal, which categorically held that the de-facto complainant is not a director of the said company. This finding strikes at the root of the allegation of criminal breach of trust, for without the establishment of a relationship of fiduciary entrustment, the penal provisions invoked in the FIR cannot be attracted. Furthermore, the requirement of joint signatures for transactions in the accounts of the company renders the allegation of unilateral diversion of funds demonstrably improbable. This Court reiterates the long-standing judicial principle that where the allegations in a criminal complaint, taken at their face value, do not disclose the ingredients of the offence alleged, and where the primary motivation appears to be the coercion of a private party rather than the vindication of public law, it is the duty of constitutional courts to intervene to prevent the abuse of criminal process and to protect citizens from vexatious prosecution and coercive executive action. 30. A fortiori, this Court in Blue Sea Ventures LLP v. State of A.P7, while adjudicating a substantially similar challenge to unilateral debit- freezing directions issued under Sections 94 and 106 of ‘the BNSS’, emphatically reiterated that the power to immobilise bank accounts, being in the nature of attachment and not mere seizure, falls exclusively within the domain of judicial authority under Section 107 of ‘the BNSS’, and cannot be exercised by the 7 W.P.No.5034 of 2026 dated 31.03.2026 22 W.P.No.3870 of 2026 31.03.2026 Dr.YLR,J police through executive fiat. This Court, in the said judgment, underscored that any attempt by the Investigating Officer to bypass the mandatory requirement of obtaining a reasoned order from the learned Jurisdictional Magistrate constitutes a patent transgression of statutory limits, a colourable exercise of power, and an infringement of the fundamental guarantees under Articles 14, 19(1)(g), and 21 of the Constitution of India. The Court further held that such executive overreach, particularly when it results in the paralysing of business operations and extinguishment of livelihood, must invite the Court’s corrective intervention under Article 226, lest the constitutional safeguards against arbitrary State action be rendered illusory. The ratio in Blue Sea Ventures LLP supra thus fortifies the legal principle that unilateral debit- freezing, absent judicial oversight, is ultra vires, unconstitutional, and liable to be interdicted. 31. Having regard to the totality of the legal infirmities identified above, this Court holds that the impugned order dated 12.09.2025 issued by Respondent No.3 under Section 94 of ‘the BNSS’ is illegal, arbitrary, and unconstitutional. It is illegal because it has been passed in contravention of the mandatory procedure prescribed under Section 107 of ‘the BNSS’, which requires the intervention of the learned Jurisdictional Magistrate before any order of attachment of property alleged to be proceeds of crime is made. It is arbitrary because it has been issued without any reasoned basis, without establishing a nexus between the accounts and the alleged offence, and without any 23 W.P.No.3870 of 2026 31.03.2026 Dr.YLR,J consideration of the Petitioners’ representations, in direct violation of Article 14 of the Constitution of India. It is unconstitutional because it inflicts a disproportionate and unjustifiable restriction upon the Petitioners’ fundamental right to carry on business under Article 19(1)(g) of the Constitution of India, a restriction that is not saved by Article 19(6) of the Constitution of India for want of the requisite legal authority and proportionality. 32. This Court reaffirms the inviolable constitutional principle that the power of the State, however broad its investigative mandate, must be exercised within the boundaries prescribed by law, subject to judicial oversight, and in conformity with the fundamental rights of citizens. The police machinery, invested with coercive authority in the service of public order and criminal justice, cannot be permitted to operate as an instrument of private vengeance or commercial warfare. Every citizen, regardless of the allegations levelled against them, is entitled to the protection of law, the presumption of innocence, and the right to be heard before being deprived of access to the fruits of their lawful labour. These are not merely procedural guarantees, they are the constitutional bedrock upon which the rule of law rests. The impugned order, having been passed in manifest disregard of these fundamental precepts, cannot be sustained. The Petitioners’ right to carry on their lawful business activities stands fully restored. 24 W.P.No.3870 of 2026 31.03.2026 Dr.YLR,J 33. Accordingly, the impugned order is quashed. Respondent No.4 Bank is directed to forthwith de-freeze all bank accounts of the Petitioners, and to restore full operational access thereto without any further delay. 34. In conclusion, the Writ Petition is allowed. It is, however, made clear that this order shall not preclude Respondent No.3 from taking recourse to the procedure prescribed under Section 107 of ‘the BNSS’, should he have adequate material to demonstrate that the accounts or any portion thereof contain proceeds of crime, in which event the learned Jurisdictional Magistrate shall adjudicate the matter in accordance with law after affording due notice and hearing to all affected parties. There shall be no order as to costs. As a sequel thereto, miscellaneous petitions pending, if any, shall stand closed. ________________________ Dr.Y. LAKSHMANA RAO, J. Date: 31.03.2026 VTS