HON'BLE SRI JUSTICE K. LAKSHMAN
CRIMINAL PETITION No.4809 OF 2021
ORDER:
This Criminal Petition is filed under Section 482 of the Code of Criminal Procedure, 1973 (for short 'Cr.P.C.') by the petitioner/accused to quash the order dated 12.04.2021 passed in Crl.M.P.No.186 of 2021 in Cr.No.698 of 2020 on the file of VII Additional Junior Civil Judge-cum-VII Additional Metropolitan Magistrate, L.B.Nagar, at Hyderabad. The petitioner is accused in the above said crime.
2. Heard Sri S.Niranjan Reddy, learned Senior Counsel representing Sri N.Naveen Kumar, learned counsel for the petitioner and learned Public Prosecutor and perused the record. Despite service, none appears for the 2nd respondent/defacto- complainant.
3. FACTS OF THE CASE
i) On the complaint dated 23.12.2020 lodged by 2nd respondent the Police, Cyber Crime Police, Station, has registered a crime vide Cr.No.698 of 2020 for the offences under Sections 417,419, 420 IPC and Sections 66-C and D of the Information Technology Act, 2008 (for short, 'the Act').
ii) The account of the petitioner company was frozen by the Investigating Officer in the present crime.
iii) The petitioner company has filed a petition under Sections 451 and 457 of Cr.P.C. vide Crl.M.P.No.186 of 2021 in Cr.No.698 of 2020 before the Court below seeking to defreeze the KL,J 2 Crlp_4809_2021 petitioner's account bearing No.57500000335009 with HDFC bank, Stephen House Branch, Kolkata Branch and to permit the petitioner company to operate the said account for the purpose of business.
iv) The Court below vide impugned order dated 12.04.2021, dismissed the said application.
v) The allegations in the complaint lodged by the 2nd respondent are that he took a loan of Rs.10,000/- from M.Pocket Loan App and while sanctioning loan, they have taken his phone data including contact details. Due to his personal problems, he was unable to repay the loan. Now, he is receiving several calls with regard to the loan harassing him mentally to transfer Rs.33,000/- with high rate of interest. Some unknown persons also contacting his family members and friends and talking in abusive language about him. They are also sending multiple e- mails through mail id:[email protected]@gmail.com, causing mental trauma. Due to which he is unable to lead his personal life peacefully.
vi) The 2nd respondent specifically mentioned about the details of mail Id., through which he received calls using abusive language and thereby causing mental trauma to him. The above said allegations would reveal that it is a case of Loan App fraud.
4. CONTENTIONS OF THE PETITIONER
i) The petitioner company is a private limited company incorporated under the provisions of the Companies Act, 1956 KL,J 3 Crlp_4809_2021 dealing the business of extending loans to individuals including college students and young professionals for their daily needs.
ii) The petitioner company is registered as a Non-Banking Financial Company (for short,' NBFC') and obtained requisite license from the Reserve Bank of India and since then, the petitioner is conducting its business duly and diligently complying with the guidelines prescribed by the Reserve Bank of India from time to time.
iii) The petitioner company has entered into a service agreement with M/s Maybright Ventures Private Limited (the MVPL) for providing technical and analytical services in the conduct of business and in pursuance of the agreement, an App was developed by the MVPL called 'mPokket' to extend loans and execute necessary KYC documents and other requisite paperwork in the form of loan agreements through electronic mode.
iv) The petitioner company through 'mPokket' App provide loans ranging Rs.500/0 to Rs.2,000/- to be repaid within 2 to 3 months.
v) The 2nd respondent, being a student and one of the users of the 'mPokket' App, availed loan from the petitioner company totaling to an amount of Rs.10,000/- by way of 9 different loans agreeing terms and conditions and executed online loan agreements. Later he failed to repay the same in the prescribed time in spite of providing waiver.
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vi) Since the petitioner company made requests for repayment of loan, the 2nd respondent lodged a false complaint against the petitioner company with a view to evade the loan.
vii) The Police, without examining the veracity of the complaint and without even verifying whether the contents of the complaint attract ingredients of the offences, proceeded in a mechanical manner and registered the present crime for the aforesaid offences.
viii) The Police issued notice under Section 102 of Cr.P.C. to the petitioner's bank directing to debit freeze its account without conducting any enquiry and without issuing any notice to the petitioner. The petitioner came to know the same through e-mail from his banker.
ix) The petitioner complied with furnishing information/documents as sought by the Police.
x) Thereafter, the petitioner filed a petition vide Crl.M.P.No.186 of 2021 before the Court below, to de-freeze its account but the Court below without appreciating the reasons cited by the petitioner in proper perspective, dismissed the said petition vide order dated 12.04.2021.
xi) Aggrieved by the same, the petitioner has preferred this Criminal Petition.
xii) The petitioner has to operate its bank accounts to run its day-to-day legitimate business.
xiii) The Police de-frozen the petitioner's account without any preliminary enquiry and at the initial stage of investigation.
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xiv) The Court below failed to consider that the de-frozen of the petitioner's account by the Police under Section 102 of the Cr.P.C. is illegal. It is settled law that a bank account can be seized only in circumstances where it is reasonably suspected to have direct links with the offences under investigation but the Police failed to show any reasonable cause for suspecting the petitioner's account.
xv) The Court below failed to appreciate that the Police had not complied with the mandatory requirements under Section 102 of Cr.P.C. of reporting the seizure of the bank account to the jurisdictional Magistrate which itself would render the seizure illegal.
xvi) With the said submissions, learned counsel for the petitioner company sought to quash the order dated 12.04.2021 passed by the Court below impugned herein.
5. CONTENTIONS OF LEARNED PUBLIC PROSECUTOR.
i) First Information Report is not an encyclopedia. It is at crime stage. The Investigating Officer has to investigate into the allegations made by 2nd respondent. The allegations are serious. It is a 'Loan App fraud'. Many Chinese companies, floated companies in India, cheating innocent people and due to the said harassment, hundreds of innocent victims committed suicide. The Police have registered several cases in the entire State of Telangana with regard to the very same Loan App issues and harassment.
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ii) The Investigating Officer has to collect evidence, investigate into the allegations and also has to analyze the bank statements of the suspected companies to come to a conclusion that the said amount was transferred into the accounts of the said companies.
iii) The Investigating Officer, during the course of investigation, issued a notice to the petitioner's bank directing to debit freeze the petitioner's account under Section 102 Cr.P.C. They have also requested the petitioner company to furnish certain information/documents in the above said crime and got de-frozen of the account of the petitioner company for the purpose of analyzing the statements and also to come to a conclusion with regard to the amount transferred into the said account. There are several factual aspects to be investigated into by the Investigating Officer.
iv) On the analysis of the entire evidence collected so far, the Investigating Officer has shown the petitioner as an accused in the present crime.
v) The Investigating Officer has seized the documents and property from possession of the petitioner/accused in the said crime since it is a suspect account. As part of investigation, the said account was sought to hold for the purpose of investigation.
vi) The petitioner, instead of cooperating with the Investigating Officer, filed the present petition to set aside the order dated 12.04.2021 impugned herein.
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vii) Therefore, with the said submissions, learned Public Prosecutor sought to dismiss the Criminal Petition.
FINDING AND ANALYSIS BY THE COURT
6. A perusal of the record would also reveal that the MVPL is an accused in one of the above said crimes pertaining to Loan App fraud cases. During the course of investigation, the Investigating Officer sought certain information from the petitioner. According to the learned counsel for the petitioner, the Investigating Officer in Cr.No.698 of 2020 did not follow the procedure laid down under Section 102 of the Cr.P.C. The said facts were also considered by the Court below and the application filed by the petitioner herein was dismissed vide impugned order on the ground that the offences alleged against the petitioner are serious in nature which are constantly causing economic and social disaster in the country and investigation is also at crucial and initial stage. If the account of the petitioner is de-frozen, it would hamper investigation.
7. It is relevant to note that this Court in a common judgment in W.P.Nos.13363 and 10565 of 2020 dated 03.12.2020, referring to various judgments of Apex Court and this Court held that defect in intimation is curable and ground of delay in intimation of seizure of property is per se not illegal.
8. As stated above, admittedly, the investigation is pending in Cr.No.698 of 2020 against the petitioner company. There are several cases registered in the entire State of Telangana with regard to Loan App fraud. Several suicidal deaths were noticed.
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9. A perusal of the record would also further reveal that due to the seriousness of the issue, Mr.Kalyan Dilip Sunkara Advocate, has filed a Public Interest Litigation vide Writ Petition (PIL) No.13 of 2021, wherein a Division Bench of this Court directed the Director General of Police, Telangana, to file status report on the Rampant Instant Sanction of Loans by Instant loan Apps at the rate of 150% to 450% interest and constantly harassing people to repay the loans. Notwithstanding the constant harassment by these Instant Loan Apps at exorbitant interest on whatsapp, many people across the Telangana State have committed suicide. A report on the entire issue was sought for by the Division Bench of this Court from the Director of General of Police, Telangana. The Division Bench directed the Director General of Police, Telangana State, to take immediate and necessary prompt steps to nab the guilty parties and ensure that such lending Apps are deleted/blocked.
10. It is also relevant to note that M/s.Save Them India Foundation represented by its Chairman has filed a PIL before the Hon'ble Apex Court wherein he has specifically explained the threat to the Nation by the lending Apps, indirectly owned by the Chinese and sought necessary action into this.
11. The Apex Court in several judgments examined the scope and ambit of powers of High Court under Section - 482 of Cr.P.C. In State of Haryana and Others vs. Bhajan Lal1, the Apex Court cautioned that power of quashing should be 1 1992 Supp (1) SCC 335 KL,J 9 Crlp_4809_2021 exercised very sparingly and circumspection and that too in the rarest of rear cases. While examining a complaint, quashing of which is sought, Court cannot embark upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or in the complaint. The Apex Court in the said judgment laid down certain guidelines/parameters for exercise of powers under Section - 482 of Cr.P.C., which are as under:
"(1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.
(2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code.
(3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.
(4) Where the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.
(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.
(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the Act concerned (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or Act concerned, providing efficacious redress for the grievance of the aggrieved party.
(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the KL,J 10 Crlp_4809_2021 proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge."
12. In State of Telangana Vs. Managipet Alias Mangipet Sarveshwar Reddy2, the Apex Court examined the scope of enquiry to be conducted as per the guidelines issued by it in Lalita Kumari (supra). The scope and ambit of preliminary enquiry before lodging an FIR would depend upon the facts of each case. There is no set format or manner in which a preliminary inquiry is to be conducted. The objective of the same is only to ensure that a criminal investigation process is not initiated on a frivolous and untenable complaint. That is the test laid down in Lalita Kumari (supra). Thus, the Apex Court held that the preliminary enquiry warranted in Lalita Kumari (supra is not required to be mandatorily conducted in all corruption cases. It has been reiterated in multiple instances that the type of preliminary enquiry to be conducted will depend on the facts and circumstances of each case. There are no fixed parameters on which such inquiry can be said to be conducted.
13. In Madhu K. Vs. Sub Inspector of Police3, the Kerala High Court held that account cannot be frozen on mere surmise and conjecture. Investigating Officer has to scrutinize the entries and the nature of transactions before freezing the account.
14. In OPTO Circuit India Ltd. Vs. Axis bank4, the Apex Court examined the scope and ambit of seizure and search etc., under 2 (2019) 19 SCC 87 3 2020(0) Supreme(Ker)568 4 2005(0) Supreme (SC) 48 KL,J 11 Crlp_4809_2021 Prevention of Money Laundering Act, 2002, and laid down certain parameters for exercising power under Section 102 of Cr.P.C.
15. In Mathews Peter Vs. Asst. Police Inspector5, the Apex Court had an occasion to deal with power of Investigating Officer to seize the accounts/property and require attendance of an accused in a criminal case.
16. In view of the above said law laid down by the Hon'ble Apex Court and various High Courts, coming to the facts on hand, the petitioner company is an accused in Cr.No.698 of 2020. It is at crime stage. The Investigating Officer has to conduct investigation. As part of investigation, the Investigating Officer has frozen the account of the petitioner company. According to the Investigating Officer, the said accounts are suspect accounts and Loan App transactions amounts were transferred into the account of the petitioner company. Therefore, the Investigating Officer has sought the petitioner company in the above said crime to furnish certain information and the reply was submitted by the petitioner company.
17. The petitioner has entered into an agreement with the MVPL. The Investigating Officer is conducting investigation. The petitioner has to cooperate with the Investigating Officer by furnishing information and documents as sought by him in concluding investigation. During the course of investigation, if the Investigating Officer comes to a conclusion that the petitioner company is nothing to do with the said crime and that there is no nexus with the said crime and the petitioner 5 2001(0) Supreme (AP) 906 KL,J 12 Crlp_4809_2021 company and its transactions, he has to issue necessary instructions to the bank defreezing the said account of the petitioner herein. The Court below has considered all the said aspects in the impugned order. Therefore, the impugned order, dated 12.04.2021 is a reasoned order. According to this Court, there is no error in it. The petitioner herein fails to establish any grounds to interfere with the impugned order by invoking its power under Section 482 of Cr.P.C. However considering the fact that the petitioner has to pay salaries to its employees and its activity comes to standstill, this Court inclines to pass certain directions to the Investigating Officer in Cr.No.698 of 2020.
18. In the result, the Criminal Petition is accordingly disposed of directing the Investigating Officer in Cr.No.698 of 2020 to complete investigation including the role played by the petitioner in commission of offences in the said crime, as expeditiously as possible, preferably within four weeks from the date of receipt of a copy of this order. He is further directed to consider information/documents furnished by the petitioner. The petitioner shall cooperate with the Investigating Officer by furnishing any further information and documents as sought by him in concluding the investigation. If the Investigating Officer comes to a conclusion that the petitioner company is nothing to do with the said crime and that there is no nexus with the said crime and the petitioner company and its transactions, he has to issue necessary instructions to the bank to defreeze the said account of the petitioner herein. If he comes to a conclusion that KL,J 13 Crlp_4809_2021 the petitioner company, its transactions have nexus with the said crimes including Cr.No.698 of 2020, he shall follow the procedure laid down under law.
19. As a sequel, miscellaneous petitions, if any, pending in the Criminal Petition shall stand closed.
____________________ K. LAKSHMAN, J Date:26.07.2021.
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