M/S Sage Cosmetic Llp v. Union Of India Throu. Regional Director Ministry Of Corporate And ORS
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 17482 OF 2025 M/s. Sage Cosmetic LLP ...
Petitioner
Versus
Union of India & Ors.
...
Respondents ****** Mr. Siddharth Samantaray i/by T. N. Tripathi for the Petitioner. Mr. Mohamedali M. Chunawala for Respondent No.1. Mr. O. Mohandas a/w Ms. Mukta Chorge i/by Little & Co. for Respondent No.2-RBI.
Ms. Nukshinaro i/by M. V. Kini & Co. for Respondent No.3-Axis Bank.
Mrs. Tanu N. Bhatia, AGP for Respondent Nos.4 and 6. Adv. Tanvir Kazi a/w Mr. Saurabh Gori for Respondent No.5. ****** CORAM : MANISH PITALE AND SHREERAM V. SHIRSAT, JJ.
DATE : 1st APRIL 2026 P.C. :
.
Heard learned counsel for the parties.
2.
The petitioner approached this Court being aggrieved by a notice dated 8th August 2025 issued by respondent No.4 i.e. the Senior Inspector of Police, Vartak Nagar Police Station, Thane (West), whereby a debit freeze was imposed on the account of the petitioner. The petitioner is also aggrieved by communication dated 17th December 2025 issued by the respondent No.3-bank, BIPIN DHARMENDER PRITHIANI Date: 2026.04.02 15:40:30 +0530 BIPIN DHARMENDER PRITHIANI informing that the account was placed under the debit freeze and
also adding a note in the communication that the account of the petitioner was declared Non-Performing Asset (NPA), as on 16th December 2025.
3.
On 24th December 2025, this Court considered the question of interim relief that could be granted in favour of the petitioner in the light of the specific contention raised in the writ petition. By consent of all the parties, a workable arrangement was made, which reads as follows:
"5.
After hearing the parties at some length, the following workable arrangement is arrived at between them and the following order is passed with their consent : :: ORDER ::
(i) Respondent No. 3 - Axis Bank Limited shall record a lien to the extent of Rs. 39,97,000/- in the Petitioner's Overdraft Account bearing No. 919030096478389 maintained with it.
(ii) Respondent No. 3 - Axis Bank Limited shall permit the Petitioner to use the Overdraft Account bearing No. 919030096478389.
(iii) Petitioner undertakes to make payment of the outstanding interest, if any to Axis Bank Limited within a period of 10 days from the date of de-freezing of Account No. 919030096478389 in respect of the following three facilities:
(a) SBB Overdraft facility bearing Account No. 919030096478389.
(b) SBB Secured Term loan bearing Account No. 922060051863358.
(c) SBB ECLGS Term bearing Account No.
920060049825087."
4.
Thereupon, in the said order dated 24th December 2025, this
Court also stayed the communication issued by the respondent No.3-bank, informing that the overdraft account of the petitioner was declared as NPA.
5.
The learned counsel appearing for respondent No.3-bank informs this Court that affidavit in reply on behalf of the said bank was e-filed. It appears that the same has not been shared with this Court by the Registry. In that light, the Registry is directed to ensure that the e-filed affidavit in reply on behalf of respondent No.3 is taken on record. For assisting this Court, a copy of the said affidavit in reply along with documents is tendered and the same is taken on record. The learned counsel for respondent No.3-bank submits that the classification of the said account of the petitioner as NPA had nothing to do with the impugned notice dated 8th August 2025 sent by the respondent No.4-Senior Inspector of Police. It was submitted that in any case, in the light of a recent development, the said aspect is rendered academic.
It is submitted that the said account of the petitioner is now regularized. As a matter of fact, the learned counsel appearing for the petitioner also confirmed the same and he tendered a copy of the email received recently on 30th March 2026 from the respondent No.3-bank, stating that the said account of the petitioner had been regularized and upgraded. In that light, the learned counsel for respondent No.3-bank submitted that the petition could be disposed of.
6.
The learned counsel for the petitioner submitted that the
grievance of the petitioner with regard to the impugned notice dated 8th August 2025 clearly survives and that the date from which the account of the petitioner was declared as NPA, is also a matter of controversy. It was submitted that the document at Exhibit 'F', being the notice issued by the respondent No.4-Senior Inspector of Police is unsustainable, as the direction for debit freeze of the account of the petitioner could not have been issued without first obtaining an order from the competent Magistrate under Section 107 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS). It was submitted that the respondent No.4 could also not rely upon Section 106 of the BNSS. In support of the said submission, reliance was placed on a judgment and order passed by a Division Bench of this Court in the case of Kartik Yogeshwar Chatur vs.
Union of India & Ors., 2025 SCC OnLine Bom 4778. Reliance was also placed on a judgment of the Telangana High Court in the case of K. Sathvik Reddy vs. Union of India & Ors., 2023 SCC OnLine TS 4377, to contend that such a direction for debit freezing the account could not have been issued even under Section 91 of the Code of Criminal Procedure Code, 1973 (Cr.P.C.)
7.
As regards declaration of the account of the petitioner as NPA, by inviting attention of this Court to the communication dated 17th December 2025 issued by the respondent No.3-bank at Exhibit 'G', it was submitted that even according to the said respondent, the account was declared NPA as a result of the notice
dated 8th August 2025 issued by the respondent No.4-Senior Inspector of Police.
8.
It was submitted that this was clearly in contradiction to the stand taken on behalf of the respondent No.3-bank in paragraph 5 of its reply affidavit, wherein it was asserted that the account of the petitioner was declared as NPA on 31st October 2025. In that regard, attention of this Court was invited to statement of account, indicating that amounts towards interest were debited even on 1st August 2025 onwards, indicating that respondent No.3-bank could not have claimed that the account was classified as NPA on 31st October 2025, under the relevant circular of Reserve Bank of India (RBI). In that light, it was submitted that this Court may consider allowing the writ petition. 9.
The learned AGP appearing on behalf of respondent Nos.4 and 6 i.e. the State Authorities, submitted that the authorities are entitled to proceed in accordance with law, in the light of the criminal proceedings initiated against the petitioner under Sections 318(4) and 3(5) of the Bharatiya Nyaya Sanhita, 2023 (BNS), pertaining to the offence of cheating.
10.
We have considered the rival submissions. A perusal of the notice dated 8th August 2025 issued by respondent No.4-Senior Inspector of Police at Exhibit 'F', shows that after referring to the pendency of the criminal proceedings against the petitioner, the said respondent has simply directed that there shall be a debit freeze on the aforesaid account of the petitioner. There is no
reference to any proceedings initiated before the competent Magistrate for obtaining an order to proceed with debit freeze of the said account. We find substance in the contention raised on behalf of the petitioner that the respondent No.4, if at all, could have proceeded for debit freeze of the account of the petitioner under Section 107 of the BNSS. A perusal of the same shows that it pertains to attachment, forfeiture or restoration of property and it stipulates that when a police officer making an investigation has any reason to believe that a property has been obtained, directly or indirectly, as a result of criminal activity or from commission of an offence, he can proceed for attachment of such property, only after approaching the Court or the competent Magistrate after obtaining approval of the Superintendent of Police or Commissioner of Police.
11.
We find that Section 107 of the BNSS provides for a detailed mechanism for issuance of a direction to debit freeze the account of any person. This entails the Court or the competent Magistrate issuing show cause notice to the affected party and thereupon, passing an appropriate order. It is evident that no such steps were taken prior to issuance of the impugned notice dated 8th August 2025 and that therefore, the said notice issued by respondent No.4, directing debit freeze of the account of the petitioner, is rendered unsustainable. In similar circumstances, this Court in the case of Kartik Yogeshwar Chatur vs. Union of India & Ors. (supra) held that the Authority could not find its source of power even in
Section 106 of the BNSS, which pertains to the power of the police officer to seize certain property and on that ground, a similar act undertaken by the investigating agency of debit freezing the account of the petitioner therein was set aside. In the said judgment, this Court left it open to the investigating agency to proceed in terms of Section 107 of the BNSS.
12.
In the case of K. Sathvik Reddy vs. Union of India & Ors. (supra), the Telangana High Court found that such a direction to debit freeze the account of a person could not be issued under Section 91 of the Cr.P.C., which pertains to summons issued to a person. Thus, we find that the source of power for a police officer carrying out an investigation for such a direction to debit freeze the account of a person is found in Section 107 of the BNSS. The said provision mandatorily requires a Court or a competent Magistrate to consider the matter and after issuing notice to the concerned person, pass an order that may lead to debit freezing of the account. In the present case, evidently no such steps were undertaken and therefore, the impugned notice dated 8th August 2025, deserves to be quashed and set aside.
13.
We find that the communication dated 17th December 2025 records that account of the petitioner was under debit freeze on account of the aforesaid notice dated 8th August 2025, issued by the respondent No.4-Senior Inspector of Police. Since, we have found the notice dated 8th August 2025 itself is unsustainable, consequently, the communication dated 17th December 2025
issued by the respondent No.3-bank also deserves to be quashed. 14.
As regards the controversy as to whether the amount was declared NPA from 31st October 2025 or 16th December 2025, in the light of the recent development of the said account of the petitioner having been regularized and upgraded, we are of the opinion that the said controversy is rendered academic. A copy of the email dated 30th March 2026 issued by the respondent No.3bank to the petitioner, stating that the account is regularized and upgraded, is taken on record and marked 'X'. We keep the aforesaid question, as regards the exact date of declaration of the account of the petitioner as NPA, open to be determined before the appropriate forum, in accordance with law. 15.
In the light of the recent development of the account of the petitioner being regularized and upgraded, prayer clauses (a) and (c) are rendered infructuous. The learned counsel for the petitioner, on instructions, submits that the petitioner is not pressing for relief in terms of prayer clause (b). 16.
In view of the above, the writ petition is allowed in terms of prayer clauses (b1) and (d).
17.
Consequently, the notice dated 8th August 2025 issued by respondent No.4 and the communication dated 17th December 2025 issued by respondent No.3, are quashed and set aside. 18.
As a consequence of the writ petition being allowed in above terms, the direction contained in paragraph 5(i) of the order dated
24th December 2025, stands vacated. Consequently, the respondent No.3-bank shall revoke the lien on the said account of the petitioner. The said direction shall be carried out within two weeks from today.
19.
It is made clear that the writ petition being allowed in above terms, will not come in the way of the respondents-Authorities in proceeding against the petitioner, strictly in accordance with law, including by invoking Section 107 of the BNSS. (SHREERAM V. SHIRSAT, J.) (MANISH PITALE, J.)