The Calcutta High Court has relied extensively on decades of Income Tax jurisprudence to explain the meaning of the expression “reason to believe” under Section 107 of the BNSS.
The bench of Justice Dr. Ajoy Kumar Mukherjee observed that attachment of property allegedly representing the proceeds of crime cannot be based merely on assumptions, apprehensions, suspicions, or the failure of an accused to respond to a show-cause notice. Instead, authorities must possess objective material that creates a rational and legally sustainable basis for forming a belief that the property constitutes proceeds of crime.
The dispute arose from a criminal complaint alleging misappropriation of more than ₹15 crore in cash and medicines worth approximately ₹93 lakh. The investigating agency alleged that certain accused persons had diverted the funds and acquired properties from the proceeds of the alleged criminal activity.
Invoking Section 107 of the BNSS, the investigating officer approached the Magistrate seeking attachment of various properties and bank deposits. Notices were issued to the accused persons, and after no response was filed within the stipulated period, the Magistrate proceeded to order attachment of the identified assets.
The order effectively directed the investigating agency to attach and retain control over the properties pending further proceedings.
However, the attachment order was challenged before the revisional court, which found serious legal infirmities in the process and ultimately set aside the order.
A central issue before the High Court was whether the investigating agency and the Magistrate had complied with the statutory requirement of possessing “reason to believe” that the attached properties represented proceeds of crime.
The revisional court had noted that the investigating officer merely “assumed” that the properties were acquired from criminal proceeds, while the Magistrate merely “apprehended” that they might be linked to the alleged offence.
The High Court endorsed this reasoning and observed that assumption and apprehension are fundamentally different from “reason to believe.”
According to the Court, assumptions involve accepting something as true without proof, while apprehension reflects suspicion or fear. Neither satisfies the statutory threshold required under Section 107 of the BNSS.
The Court stressed that attachment of property, which directly interferes with constitutional property rights, cannot be justified merely because an investigating officer suspects that a property may have been purchased from criminal proceeds.
The judgment contains an extensive discussion on the significance of Section 107 of the BNSS.
Justice Mukherjee noted that the provision marks a major shift in Indian criminal procedure. Traditionally, attachment of property under criminal law served as a procedural mechanism to preserve assets or secure the appearance of accused persons.
Section 107, however, transforms attachment into a substantive tool of economic deprivation by permitting attachment, liquidation and distribution of property even before investigation or trial reaches its conclusion.
The Court observed that unlike special statutes such as the Prevention of Money Laundering Act (PMLA), which apply only to scheduled offences, Section 107 extends to virtually every offence under the Bharatiya Nyaya Sanhita.
As a result, the provision confers exceptionally broad powers upon investigating agencies and courts, making strict adherence to procedural safeguards indispensable.
One of the most significant aspects of the ruling is the Court’s reliance on several landmark Income Tax judgments to explain the legal meaning of “reason to believe.”
The Court noted that although the phrase appears in various statutes, its interpretation has been developed over decades by constitutional courts, particularly in the context of reassessment proceedings under income tax law.
The Court relied upon a series of Supreme Court decisions, including: Calcutta Discount Company Ltd. v. Income Tax Officer (AIR 1961 SC 372), Sheo Nath Singh v. Appellate Assistant Commissioner of Income Tax (1972), Income Tax Officer v. Lakhmani Mewal Das (1976), and Phool Chand Bajrang Lal v. Income Tax Officer (1993).
Drawing from these authorities, the Court held that “reason to believe” requires: an honest and bona fide belief. Existence of objective and relevant material. A rational nexus between the material and the conclusion reached. Good faith application of mind. Absence of arbitrariness, conjecture or speculation.
The Court emphasized that the law requires “reason to believe,” not “reason to suspect.”
Merely because an allegation has been made or because the accused has failed to file a reply does not automatically create a legally sustainable belief that property represents proceeds of crime.
The Court also drew support from the Supreme Court’s decision in Arvind Kejriwal v. Enforcement Directorate (2024), where the apex court examined the phrase “reason to believe” in the context of arrest powers under the Prevention of Money Laundering Act.
Referring to that judgment, the High Court observed that suspicion represents a lower level of satisfaction, whereas “reason to believe” requires a conviction founded upon evidence.
The belief must emerge from objective material and cannot be formed selectively by considering only incriminating evidence while ignoring material favourable to the affected person.
The Court further noted that authorities cannot exercise attachment powers based on whims, assumptions or prosecutorial bias.
The judgment repeatedly highlights the constitutional implications of Section 107.
According to the Court, attachment proceedings directly affect property rights protected under Article 300A of the Constitution.
Since the provision permits attachment even before guilt is established, courts must ensure that procedural safeguards are rigorously followed.
The Court cautioned that indiscriminate use of attachment powers could create a structural imbalance between State authority and individual rights, potentially rendering the provision vulnerable to constitutional challenge.
Justice Mukherjee observed that the judiciary must function as a guardian against arbitrary deprivation of property and ensure that attachment orders are supported by legally sustainable reasons.
Recognising that Section 107 is a newly introduced provision, the High Court laid down an important framework for future cases.
Among the key principles identified by the Court are “Reason to believe” requires sufficient cause and excludes mere suspicion. The test is objective and based on what a reasonable person would conclude. A chain of probable reasoning must exist linking the material to the conclusion. Reasons should be based on tangible evidence such as recoveries, documents and witness statements. Investigating agencies must demonstrate a rational connection between the evidence and the property sought to be attached. Courts should scrutinise whether the belief has been formed in good faith. Recording reasons in writing is highly desirable and promotes transparency. Authorities must avoid relying on vague, remote or irrelevant material.
The Court indicated that these safeguards are necessary to prevent arbitrary attachment proceedings and unnecessary litigation challenging weak attachment orders.
Apart from the absence of legally sustainable reasons to believe, the Court found another major defect in the attachment proceedings.
Certain attached assets were leasehold properties. The revisional court had observed that no notice was served upon the lessor despite the fact that the lessor possessed an independent legal interest in the properties.
The High Court agreed that Section 107 contemplates notice not only to accused persons but also to others claiming rights over the property.
Failure to notify such interested parties rendered the attachment process legally vulnerable.
After analysing the statutory framework and the judicial principles governing “reason to believe,” the High Court concluded that the revisional court had committed no error in setting aside the attachment order.
The Court observed that the attachment was founded primarily on assumptions and on the inference that because the accused failed to reply to the notice, the allegations stood established.
Such reasoning, the Court held, falls far short of the statutory requirement contemplated under Section 107 of the BNSS.
At the same time, the Court clarified that the investigating agency would not be barred from initiating fresh attachment proceedings.
The investigating authorities have been granted liberty to make a fresh application within 30 days, provided the statutory requirements of Section 107 are strictly complied with and sufficient material is placed before the competent court.
The judgment is likely to become a leading authority on Section 107 of the BNSS and may significantly influence future attachment proceedings across India.
By borrowing principles developed through decades of Income Tax jurisprudence and integrating them into the criminal law framework, the Calcutta High Court has established that property attachment under BNSS is not a routine investigative step but a serious intrusion into constitutional rights requiring careful judicial scrutiny.
The ruling sends a clear message that attachment powers cannot be exercised on suspicion alone. Investigating agencies must demonstrate objective, tangible and legally sustainable grounds before seeking to deprive an individual of property under the newly enacted criminal procedure regime.
Membership Required to Access Case Details & Order Copy
To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.
Read More: Court Fees Law to Change From July 8, 2026 as Centre Notifies Jan Vishwas Act Amendments
