THE HONOURABLE SRI JUSTICE K. LAKSHMAN
WRIT PETITION Nos.6783 & 6785 OF 2020
COMMON ORDER:
Since the issue raised in both the Writ Petitions is one
and the same, contentions of the parties are same, they are
being heard together and disposed of by this common order.
2. M/s.Sujana Trade India Private Limited filed
W.P.No.6783 of 2020 to declare the action of respondent No.3
in issuing letter dated 05.03.2020 directing respondent Nos.4 and 5 for freezing its bank accounts i.e., bearing No.50200035403261 with HDFC Bank and bearing No.510101000793220 with Corporation Bank as illegal and for a consequential direction to set aside the said letter dated 05.03.2020.
3. M/s.Suryodaya Enterprises filed W.P.No.6785 of 2020 to declare the action of respondent No.3 in issuing letter dated 05.03.2020 for freezing its bank account bearing No.30081250000546 with Syndicate Bank as illegal and to quash the said letter dated 05.03.2020.
Contentions of the petitioner in W.P.No.6783 of 2020:
4. The petitioner is a company carrying business of steel trading. It is also carrying business of traders, suppliers of products and commodities and material in any form or shape manufactured, semi-manufactures, raw materials, etc. During the course of its business, M/s.Omni Enterprises 2 KL,J W.P.Nos.6783 & 6785_2020 (respondent No.6 herein) has issued a purchase order dated 09.12.2019 for supply of TMT steel bars. As per the said purchase order, M/s.Omni Enterprises has paid an amount of Rs.47 lakhs (Rs.24 lakhs + Rs.23 lakhs) through RTGS on 11.12.2019 in favour of the petitioner. In proof of the same, the petitioner has filed copy of the bank statement. The petitioner has transferred the said amount into the account of M/s.Suryodaya Enterprises (petitioner in W.P.No.6785 of 2020) on 12.12.2019 towards advance for purchase of steel. Due to non-submission of specification required by M/s.Omni Enterprises, the petitioner has not supplied the material. M/s.Suryodaya Enterprises also refunded the said advance amount to the petitioner on 10.02.2020. Respondent No.3 - Inspector of Police, ACB, has issued a notice dated 24.04.2020 to the petitioner to furnish details about receipt of the said amount from M/s.Omni Enterprises. The petitioner submitted a letter to respondent No.3 accepting receipt of said amount of Rs.47 lakhs towards advance for supply of steel. Respondent No.3 has summoned the petitioner to appear before him on 27.02.2020 for recording the statement for the purpose of investigation in a crime registered against M/s.Omni Enterprises. Accordingly, the petitioner has appeared before respondent No.3 on 27.02.2020 and 03.03.2020 for the purpose of recording statement as part of investigation. The petitioner has also furnished bank statement to respondent No.3 as sought by him.
3 KL,J
W.P.Nos.6783 & 6785_2020
5. Respondent No.3, vide letter dated 05.03.2020
addressed to respondent Nos.4 and 5 - HDFC Bank and Corporation Bank respectively, to freeze the above said accounts of the petitioner. Respondent No.3 freezed the above said accounts of the petitioner without following due process of law. Therefore, the petitioner has submitted a representation dated 07.03.2020 to respondent No.3 with a request to defreeze its accounts by specifically mentioning the difficulties faced by it. Despite receiving and acknowledging the said representation, respondent No.3 did not take any action. Due to the said illegal freezing of accounts, the business of the petitioner got affected and the petitioner is not in a position to conduct its business operations effectively. With the said contentions, the petitioner sought to set aside the notice of respondent No.3 dated 05.03.2020. It is the contention of the petitioner that it is nothing to do with the crime registered against M/s.Omni Enterprises and others. Even though neither the petitioner nor its Directors/employees are the accused in the said crime, respondent No.3 has freezed the accounts of the petitioner without following due process of law.
Contentions of the petitioner in W.P.No.6785 of 2020:
6. The petitioner is a partnership firm and it is in the business of iron and steel, steel makers, steel converters, etc. During the course of business, M/s.Omni Healthcare (respondent No.5 herein) requested the petitioner, vide letter 4 KL,J W.P.Nos.6783 & 6785_2020 dated 16.12.2019, to pay an amount of Rs.51,87,479/- which was due by M/s.Omni Healthcare to M/s.B.Braun Medical India Pvt. Limited. In the said letter, it is also specifically mentioned that the said payment be made by way of a banker cheque. The said outstanding amount shall be treated as a short term unsecured loan in the books of accounts of the petitioner and shall attract interest @ 12% per annum. Pursuant to the said letter, the petitioner has paid a demand draft for Rs.51,87,479/- vide demand draft No.738508 dated 17.12.2019 drawn on Syndicate Bank (respondent No.4 herein) in favour of M/s.B.Braun Medical India Pvt. Limited. M/s.Omni Healthcare has made payment of Rs.49,05,000/- out of Rs.52,11,079/- to the petitioner through its Proprietor on 05.02.2020. M/s.Omni Healthcare has paid the balance amount of Rs.3,06,079/- to the petitioner through banks cheque on 28.02.2020 by deducting TDS.
7. Respondent No.3 has called the petitioner to appear before him on 04.03.2020 for the purpose of investigation. Accordingly, the petitioner has appeared and submitted relevant details pertaining to transaction between the petitioner and M/s.Omni Healthcare. Without considering the same, respondent No.3, vide letter dated 05.03.2020, freezed the overdraft account of the petitioner.
8. Respondent No.3 without following due procedure laid down under law more particularly under Section 102 of Cr.P.C., seized the account of the petitioners. Due to freezing 5 KL,J W.P.Nos.6783 & 6785_2020 of the account of the petitioner, its business got affected and it is unable to conduct business effectively. The petitioner has already paid an amount of Rs.51,87,479/- to M/s.B.Braun Medical India Pvt. Limited on behalf of M/s.Omni Healthcare, which was due by it. Without considering the same, respondent No.3 has illegally freezed the account of the petitioner. Therefore, the petitioner has submitted a representation dated 06.03.2020 to respondent No.3 with a request to defreeze its account by considering the fact that it has cooperated with the Investigating Officer and will cooperate in future also. Despite receiving and acknowledging the said representation, respondent No.3 did not take any action so far.
Contentions of the respondents:
9. Respondent No.3, Inspector of Police, ACB, has filed counter in both the Writ Petitions. In the counter, respondent No.3 specifically contended that Crime No.13/RCO-CIU-ACB- 2019 was registered on 30.12.2019 against K.Srihari Babu, Proprietor of M/s.Omni Enterprises, and others for the offences under the provisions of the Prevention of Corruption Act and also Indian Penal Code. During the course of investigation, the Investigating Officer came to know about transfer of certain amounts into the accounts of the petitioners and the business transactions among the petitioners, M/s.Omni Healthcare and M/s.Omni Enterprises. There was flow of funds from the accounts of the said 6 KL,J W.P.Nos.6783 & 6785_2020 M/s.Omni Healthcare and M/s.Omni Enterprises to the account of M/s.Sujana Trade India Private Limited (petitioner in W.P.No.6783 of 2020) and thereafter to the account of M/s.Suryodaya Enterprises (petitioner in W.P.No.6785 of 2020). The said transfers created an amount of suspicion and it is under investigation by the ACB. Entire business activities and transactions of the petitioners are required to be scrutinized. The documents filed by the petitioners including purchase order, demand draft and correspondence in both the Writ Petitions would reveal that the said transactions are among M/s.Omni Healthcare, M/s.Omni Enterprises and the petitioners. It is further stated that, as part of investigation, considering the aspect that there are serious allegations against M/s.Omni Healthcare, M/s.Omni Enterprises and other accused in two crimes registered against them, respondent No.3 freezed the accounts of the petitioners. Respondent No.3 has followed the procedure laid down under law more particularly under Section 102 of Cr.P.C. The accounts of the petitioners, M/s.Omni Healthcare and M/s.Omni Enterprises have to be scrutinized thoroughly during the course of investigation. It is further stated that during the course of investigation, if the Investigating Officer comes to a conclusion that the accounts have to be defreezed, he will issue necessary instructions to the banks of the petitioners, but the same will happen only after completion of investigation.
7 KL,J
W.P.Nos.6783 & 6785_2020
10. Sri V.Ravi Kiran Rao, learned Senior Counsel appearing for ACB, would submit that after completion of investigation, respondent No.3 will file final reports in Crime Nos.13 of 2019 and 4 of 2020. Thereafter, the petitioners can as well file appropriate applications before the Court below seeking de- freezement of their accounts. Instead of doing so, the petitioners have filed the present Writ Petitions. He would further submit that in view of the pendency of the crimes, the accounts of the petitioners cannot be defreezed. He has placed reliance of the principle laid down by the Hon'ble Apex Court in State of Maharashtra v. Tapas D.Neogy1 and also a common order of this Court dated 29.01.2020 in W.P.Nos.534 and 549 of 2020. With the said submissions, learned Senior Counsel sought to dismiss both the Writ Petitions.
11. The said M/s.Omni Healthcare and M/s.Omni Enterprises have also filed their counters. In the counters, the Proprietors of both concerns have supported the case of the petitioners. They have stated that due to freezing of the accounts of the petitioners, they are not in a position to conduct their business and they are also not in a position to pay school fee and minimum necessities for their survival. They have relied on the principle laid down by the Hon'ble Apex Court in Coimbatore District Central Coop. Bank v.
1
(1999) 7 SCC 685
8 KL,J
W.P.Nos.6783 & 6785_2020
Employees Assn.2. With the said submissions, the said Proprietary concerns sought to allow the Writ Petitions. Reply of the petitioners:
12. The petitioners have also filed reply to the counter filed by respondent No.3. In the reply, it is contended that the petitioners are not accused in any crime and there are no crime pending against them. Respondent No.3 has not followed the procedure laid down under law while seizing the accounts of the petitioners. Respondent No.3 failed to appreciate that the petitioners appeared before him, gave their statements, submitted bank statements, etc., and thus they have cooperated with the Investigating Officer in concluding the investigation. Without following the procedure, respondent No.3 has freezed the accounts of the petitioners vide letters dated 05.03.2020. Finding of the Court:
13. The above stated facts would reveal that Mr.K.Srihari Babu, Proprietor of M/s.Omni Enterprises (respondent No.6 in W.P.No.6783 of 2020) is an accused in Crime No.13/RCO- CIU-ACB/2019, pending on the file of Central Investigating Unit, ACB, Hyderabad, for the offences under the provisions of the Prevention of Corruption Act and also Indian Penal Code. His wife Smt.K.Sujatha, Proprietor of M/s.Omni Healthcare (respondent No.5 in W.P.No.6785 of 2020) is also an accused in the said crime. There are three more crimes 2 (2007) 4 SCC 669 9 KL,J W.P.Nos.6783 & 6785_2020 i.e., Crime Nos.10/2019, 4/2020 and 8/2020 registered with regard to ESI scam. Crime No.13/2019 is pending with respondent No.3 and investigation is going on. During the course of investigation, respondent No.3 has freezed the accounts of the petitioners on the ground that there are financial transactions between the said Proprietary concerns and the petitioners and there is flow of funds from their accounts. The details of the same are specifically mentioned in the notice. The petitioners have not disputed the said fact.
14. While admitting the said facts of flow of funds and financial transaction, the petitioners would contend that the said transactions are during the course of their business and they are not involved in any crime and the amount was already returned. Respondent No.3 has not followed the procedure laid down under the provisions of Cr.P.C., more particularly, Section 102 of Cr.P.C.
15. A perusal of the counter filed by respondent No.3 would reveal that the investigation is pending in Crime No.13/2019. Prima facie, there are serious allegations against all the accused including K.Srihari Babu and Smt.K.Sujatha. Admittedly, investigation is pending. During the course of investigation, respondent No.3, after coming to conclusion that there is flow of funds and there are financial transactions, issued notices dated 05.03.2020 freezing the accounts of the petitioners. After completion of investigation, the petitioners can as well file appropriate applications before 10 KL,J W.P.Nos.6783 & 6785_2020 the Court below seeking de-freezement of their accounts. Instead of doing so, the petitioners have come up with the present Writ Petitions.
16. The Hon'ble Apex Court in Tapas D.Neogy's case (supra) categorically held that Police Officer is having power to freeze the accounts of accused or any of his relations and others on suspicion with regard to transactions between them by invoking power under Section 102(1) of Cr.P.C. It is also held that if the circumstances exist creating suspicion of commission of any offence in relation to the bank account, Section 102(1) is attracted empowering the Police Officer investigating the offence to seize the bank account and issue order prohibiting the account from being operated upon. Similar principle was laid down by the Madras High Court in B.Ranganathan v. State3. By referring to the said principle in the above said two cases, learned single Judge of this Court in a common order dated 29.01.2020 in W.P.Nos.534 and 549 of 2020, with regard to very same crime i.e., ESI scam dismissed the Writ Petitions filed by the petitioners therein seeking de-freezement of their accounts. In the said common order, it was specifically held that the Police Officer is having power to freeze the accounts on the ground of existence of suspicion of commission of offence in relation to the bank account.
3
2003 Crl.L.J 2779
11 KL,J
W.P.Nos.6783 & 6785_2020
17. In view of the above, it is relevant to mention that Section 102 of Cr.P.C., which deals with power of Police Officer to seize certain property. As per Section 102(3) of Cr.P.C., every police officer acting under sub- section (1) shall forthwith report the seizure to the Magistrate having jurisdiction. There is a specific contention in the counter filed by respondent No.3 that the said procedure laid down under Section 102 of Cr.P.C., has been followed.
18. At the cost of repetition, it is relevant to note that the investigation is pending in Crime No.13 of 2019. After completion of investigation, and on filing of final report, the petitioners can as well file appropriate applications before the Court below seeking de-freezement of their accounts. Even during the pendency of investigation also, the petitioners can as well file the said application before the Court below reiterating the grounds mentioned in the present Writ Petitions. Instead of availing the said remedy, the petitioners have filed the present Writ Petitions.
19. It is relevant to note that it is specifically mentioned by the petitioner in W.P.No.6783 of 2020 that it is undertaking to keep total amount of Rs.47,00,000/- received from K.Srihari Babu in a separate account which respondent No.3 is at liberty to freeze or attach or not as convenient to respondent No.3. An amount of Rs.42,00,000/- is available in their account with Corporation Bank and an amount of Rs.5,00,000/- is available in their account with HDFC Bank.
12 KL,J
W.P.Nos.6783 & 6785_2020
In both the accounts, the said amount of Rs.47,00,000/- which was received by K.Srihari Babu is available with the above said accounts of the petitioners. Thus, the petitioners can as well approach the Court below by way of filing appropriate applications reiterating the said contentions. Conclusion:
20. In view of the said discussion, the principle laid down by the Hon'ble Apex Court and this Court in the judgments referred supra, this Court is not inclined to set aside the notices dated 05.03.2020 issued by respondent No.3 freezing the accounts of the petitioners. The petitioners failed to make out any case to grant relief in their favour, as such, both the Writ Petitions are liable to be dismissed.
21. Accordingly, both the Writ Petitions are dismissed. However, liberty is granted to the petitioners to file appropriate applications before the Court below seeking de-freezement of their accounts. No costs. Miscellaneous petitions pending, if any, shall stand closed.
__________________ K. LAKSHMAN, J Date: 01.06.2021 TJMR