The Karnataka High Court has quashed three Sessions Court orders directing the release of gold and silver and defreezing of bank accounts linked to wealthtech startup Jar. 

A bench of Justice M Nagaprasanna, in an order pronounced on August 10, set aside the April 4 orders passed by the Principal City Civil and Sessions Judge, Bengaluru, in a case involving Jar Gold Retail. 

The HC ruled that police do not require prior permission from a Magistrate to debit-freeze a bank account as an investigative and preservative measure under Section 106 of the Bharatiya Nagarik Suraksha Sanhita (BNSS). 

However, police must report the action “forthwith” to the jurisdictional Magistrate, the court said. 

The HC distinguished such a freeze from attachment of property under Section 107 of the BNSS. While Section 106 allows police to preserve property during an investigation, attachment under Section 107 involves a judicial process and may ultimately lead to the forfeiture or restoration of alleged proceeds of crime. 

The court said requiring police to secure judicial approval before every debit freeze could undermine investigations, particularly in cybercrime cases where funds can be moved between accounts within seconds. 

The development was first reported by Bar and Bench. Inc42 has reached out to Jar for comments on the development. The story will be updated on receiving a response.

Beyond the question of bank-account freezes, the court also made observations on the regulatory treatment of digital gold. It said that the absence of direct regulatory supervision by the RBI and SEBI over digital gold does not put such transactions beyond the reach of criminal law.

Source link