INDIA Law and Practice Contributed by: Vijayendra Pratap Singh, Asif Ahmed, Bhanu Jindal and Jitesh Lakra, AZB & Partners
The BNSS Under the BNSS, the police are also empowered to seize any movable property or evidence suspected to be involved in any fraudulent act. Additionally, under Section 497 of the BNSS (Section 451 of the Code of Criminal Procedure (CrPC)), the court may pass such orders as it thinks fit for proper custody of any prop - erty during the pendency of the criminal trial. Section 497 of the BNSS also introduces procedural requirements for handling property produced before the court or magistrate, including disposal, destruc - tion, confiscation or delivery. Where a claimant seeks to establish their proprietary rights in a criminal proceeding to recover property, they may make a claim before the court. The court may then order the release/restoration of the seized property, either during the pendency of the investiga - tion/trial or after its conclusion. Such release/restora - tion may be granted with or without conditions includ - ing execution of a bond, with or without securities, to the satisfaction of the court. New Provisions of Attachment and Forfeiture of Property Under the BNSS The powers for attachment and forfeiture of property available under the CrPC have been retained under Chapter VII (Sections 111–124) of the BNSS. However, in addition thereto, the newly introduced Section 107 of the BNSS also empowers the mag - istrate to attach property identified as “proceeds of crime” upon an application by an investigating officer giving reasons for believing that the property is derived or obtained from a criminal activity or commission of an offence. This is subject to the magistrate hearing the affected party. However, under Section 107 (5), the magistrate may also pass an ex parte interim order of attachment. If the magistrate ultimately finds the property to be proceeds of crime, it can direct pro rata distribution of such proceeds of crime to the victims of such crime. Where no claimants exist, the property stands forfeited to the government. The Kerala High Court recently distinguished the pow - ers of seizure under Section 106 BNSS from attach - ment under Section 107 BNSS, and held that seizure
under Section 106 may be carried out by the police with an ex post facto report to the magistrate, whereas attachment under Section 107 can be effected only pursuant to orders of the magistrate. The Bombay High Court, approving the Kerala High Court’s reason - ing, has held that investigating agencies cannot freeze bank accounts under Section 106 and that such freez - ing can only be ordered under Section 107. In light of the rise in digital arrest scams in India, the Supreme Court of India has taken suo motu cogni - sance of the issue, which is presently pending adju - dication along with a plea seeking uniform guidelines for freezing and de-freezing of bank accounts during cybercrime investigations. Notably, the power of attachment under the BNSS comes with even fewer procedural safeguards than those provided under the PMLA. The constitutional validity of Section 107 has been challenged before the Supreme Court of India and is presently pending adjudication. The PMLA As stated in 1.3 Claims Against Parties Who Assist or Facilitate Fraudulent Acts , the PMLA defines “pro - ceeds of crime” broadly to include property directly or indirectly obtained through fraudulent activities, as well as well as its equivalent value held in India where such property is taken or held outside India. Notably, where the proceeds of crime generated from fraud as recognised in a scheduled offence are mixed with other funds, their value may still be identified and sub - jected to seizure or attachment, recognising that the tainted property may no longer be available. The Directorate of Enforcement (ED) may attach or, where necessary, freeze properties derived directly or indirectly from the proceeds of crime. However, the Supreme Court of India recently clarified that mere use of a property in the commission of the predicate offence will not render said property a proceed of crime. Recently, in Davy Varghese and Another v Directorate of Enforcement [WP (Crl) No 1354 of 2025, decided on 16 December 2024], the Kerala High Court set aside the attachment of properties, observing that such
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