Pranab Kumar Ghosh vs Central Bureau Of Investigation ...
2022 Latest Caselaw 1254 Gua

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GAHC010016832022




                          THE GAUHATI HIGH COURT
   (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

                           Case No. : Crl.Rev.P./37/2022

           PRANAB KUMAR GHOSH
           SON OF LATE PRADYUT KUMAR GHOSH,
           R/O HOUSE NO. 5, BYE LANE NO.4 MANIK NAGAR, R.G. BARUAH ROAD,
           P.S. DISPUR, GUWAHATI, DIST. KAMRUP (M), ASSAM



           VERSUS

           CENTRAL BUREAU OF INVESTIGATION (CBI),
           REP. BY HEAD OF BRANCH, ACB, GUWAHATI.



For the petitioner :    Mr. K. Agarwal,
                        Senior Advocate.
                        Mr. A.K. Chaudhury,
                        Advocate.


For the respondent :    Mr. S.C. Keyal,

S.C., CBI.

:: BEFORE ::

                   HON'BLE MRS. JUSTICE RUMI KUMARI PHUKAN


Date of Hearing                : 30.03.2022.

Date of Judgment               : 07.04.2022.
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                             JUDGEMENT AND ORDER(CAV)

Heard Mr. K. Agarwal, learned counsel for the petitioner, assisted by Mr. A.K. Chaudhury, Advocate. Also heard Mr. S.C. Keyal, learned Standing Counsel, Central Bureau of Investigation (CBI).

2. A written complaint dated 15.07.2020 was lodged by the IDBI Bank Ltd. before the CBI, New Delhi alleging inter alia that one Pranab Kumar Ghosh, his wife Gita Rani Ghosh, son Pratul Kumar Ghosh, all are Promoters - Directors of M/s Ghosh Brothers Automobiles (a unit of Ghosh Brothers Electronic Pvt. Ltd.) amongst other named therein had committed cognizable offence by fraudulently availing credit facilities through the principal borrower, namely, M/s Ghosh Brothers Automobiles and that the promoters submitted forged and fabricated financial statements for the purpose of availing financial assistance from IDBI Bank and thereby not only defrauded the bank but also derived wrongful gain.

3. On the basis of aforesaid complaint, First Information Report (FIR) dated 31.05.2021 was registered under Sections 120B, 409, 420, 467, 468, 471 and 477A of the IPC read with 13(1) (d) of the Prevention of Corruption Act, 1988 against the accused persons. Subsequently, on the basis of the petition dated 14.06.2021 filed by the Investigating Officer, CBI before the court of Special Judge, Assam, Guwahati praying for search warrants in the office premises of M/s Ghosh Brothers Automobiles at Kolkata and Guwahati amongst others, the said prayer of the CBI was allowed by the learned Special Judge, CBI.

4. In course of the search operations, on 22.06.2021 in the office as well as residential premises of the petitioner, his wife and son, seized several numbers of documents, cheque books, pass books etc. of Ghosh Brothers and also seized 17 nos. of bank accounts held by the business entities of the petitioner in ICICI Bank and Bank of India and freezed by the CBI. Being aggrieved by the freezing of the bank accounts, the petitioner filed an application on 12.08.2021 before the learned Special Judge, CBI, Assam, Guwahati for defreezing the said accounts. However, by order dated 07.12.2021 in Misc. Case (CBI) No.14 of 2021, the court of Special Judge, CBI, Assam, Additional Court No.3, Guwahati declined to defreeze the bank accounts of the petitioner, Ghosh Brothers Motors Pvt. Ltd., the Contour Hotel, Ghosh Page No.# 3/13

Brothers Auto Sales Pvt. Ltd. and Ghosh Brothers Electronics Pvt. Ltd.

5. Challenging the aforesaid impugned order dated 07.12.2021, the present petition under Sections 397/401 CrPC has been preferred by the petitioner, Pranab Kumar Ghosh.

6. It is contended in the present petition that the petitioner in his individual capacity, Ghosh Brothers Motors Pvt. Ltd. and other group of companies, maintained various accounts in the ICICI Bank, Beltola Branch, Guwahati and day-to-day business transactions in the aforesaid accounts are done for business purposes. The petitioner came to know as a matter of surprise from the banker that the accounts have been freezed by the officials of CBI, ACB, Guwahati and he was not informed about the reasons of freezing nor the banker furnished any information in this regard. Only after pursuance with the bank authority, bank officials of ICICI Bank informed through e-mails, that on receipt of instructions from the CBI, in connection with the aforesaid case, the accounts were freezed (total 17 nos. of bank accounts), which stood in the name of the petitioner Pranab Kumar Ghosh, Ghosh Brothers Motors Pvt. Ltd., Ghosh Brothers Auto Sales Pvt. Ltd., Ghosh Brothers Electronics, the Contour Hotel etc.

7. Grievances raised by the petitioner is discussed as below.

(i) According to the petitioner, there is no irregularity whatsoever in the aforementioned bank accounts which were freezed by the investigating agency (CBI) and there is no diversion of funds as has been alleged. Furthermore, in connection with the bank accounts of M/s. Ghosh Brothers Pvt. Ltd., the CBI has already filed charge sheet vide C.R. Case No.605/2019 which is pending before the Special Judge, Assam and trial court has not issued any order regarding freezing of those accounts of M/s. Ghosh Brothers. It is also stated that so far as regard the two personal bank accounts, one is savings accounts another is fixed deposit account of ICICI Bank, Beltola Branch and there is no any diversion of funds and only the Director's remuneration, expenses, reimbursement, payment and advances for the expenses to parties are deposited in the aforesaid two accounts.

(ii) It is contended that around 58 number of employees were working in respective files under M/s Gosh Brothers Auto Sales Pvt. Ltd., Dibrugarh and the company has to Page No.# 4/13

pay a total salary of Rs.6,32,308/- every month to the employees and there is also other expenditure associated with the operation of the company, which is around Rs.9,11,876/- for the month June, 2021. Thus, the company has to incur substantial amount as salary and other expenses every month.

(iii) Similarly, 142 number of employees are working in M/s Gosh Brothers Motors Pvt. Ltd., Betkuchi, Guwahati and another 17 number of employees are working in the Contour Hotel, which run under M/s Ghosh Brothers Motors Pvt. Ltd. and for operation of the affairs of the company, the company has to bear around Rs.27,40,572/- in the month June, 2021 and in all subsequent months.

(iv) It is stated that due to the arbitrary act of freezing of bank accounts, there was financial constraints to pay the salary of their employees and to bear the expenses in running the businesses of the companies as well as their families had to suffer acute financial difficulties during the COVID-19 pandemic. Under the above circumstances, the petitioner company would be unable to pay the salary of the employees in the immediate future and there is an imminent necessity of defreezing of the bank accounts. Moreover, because of financial constraints, arising out of freezing of bank accounts, in question, the co-promoters and directors would be left with no other alternative than to shutdown the companies and terminate the services of all the employees. The details of expenses and the financial liabilities and the relevant documents was laid before the learned trial court, but the same was not considered.

(v) It is further contended that the petitioner/director have issued several number of cheques on behalf of the aforesaid companies to various entities for purchasing of vehicles, motor parts and other accessories but due to the freezing of bank accounts, cheques were dishonoured by the banks and the parties are going to initiate cases against the petitioner.

(vi) That apart, companies are under the obligation to pay the money for ESIC, Employees Provident Fund and other tax dues on behalf of companies, electric bills to APDCL etc., but due to the freezing of the bank accounts, petitioner companies are unable to comply with the aforesaid mandatory provisions and to pay the bills etc. Page No.# 5/13

They are also compelled to stop all the business transactions and there is every chance of imminent shutdown of the companies etc.

(vii) It is alleged that there is no compliance of mandatory requirement under Section 102 (1) CrPC and more particularly there is total violation of Section 102 (3) CrPC as the CBI has not informed the court regarding the freezing of the bank accounts, which is mandatory requirement and for violation of the legal provision, the freezing of bank accounts is totally illegal and cannot be sustained. The CBI did serve any notice about freezing of the abovementioned bank accounts either to the petitioner or to the other companies as mentioned above, nor even any verbal information was given to them.

(viii) The fact that the respondent CBI seized the documents and freezed the bank accounts in utter disregard to the procedure as prescribed under Section 102 CrPC is discernible from the affairs which is on record. It is contended that only after filing of the application by the petitioner on 12.08.2021, the respondent authority filed the petition dated 17.08.2021 before the court praying for taking on record the freezing of bank accounts, whereas the court allowed the prayer of the respondent for search on 14.06.2021 and pursuant to such order, search was conducted on 22.06.2021 and whereas result of search and seizure was apprised to the court only on 17.08.2021.

(ix) Petitioner stated that there is no direct link with the alleged commission of offence for which the CBI officials are investigating and the property seized/freezed, nor the investigating agency has shown any prima facie materials in this regard.

(x) There is no remote link or nexus between the frozen accounts and the alleged offence inasmuch as it was alleged that the fraud was committed since 2010-2012 whereas there are bank deposits, which were made prior to the year 2010 and after 2012.

(xi) The FIR itself reflects that the earlier complaint was lodged before the CBI, Kolkata on 18.09.2019 and thereafter on 27.09.2019 was returned by the CBI with endorsement that there is no incriminating material to establish dishonest intention on the part of borrower/petitioner only thereafter the instant complaint was filed on the basis of purported letter advising to file a revised complaint.

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(xii) It is stated that alleged commission of offence relates to repayment of bank loan and realization of unsecured debt of IDBI Bank for which appropriate forum is Debts Recovery Tribunal for adjudication of such dispute. There is no earthly reason for the bank to initiate criminal case of cognizable offence. Further, it is stated that allegation in the FIR against the petitioner is that the various loans that was granted to various units of M/s Ghosh Brothers comprise Automobile (as mentioned in the FIR) in different places in Assam and Tura in Meghalaya from November 2005 to 2010, in different periods were not repaid and accounts were downgraded to NPA and the IDBI Bank has already filed a OA No.340/2016 before the Debts Recovery Tribunal, Guwahati for recovery of loans. But now present complaint was filed on 15.07.2020 suppressing the aforesaid vital facts.

8. In view of the aforesaid, the petitioner contends that the impugned order passed by the learned Special Judge, Assam suffers from apparent illegality, irregularity for not considering the all entirety of the matter which was placed before the court.

9. Resisting the contention raised by the petitioner's side, the respondent CBI filed the affidavit-in-opposition contending inter alia that there are fund transfer in group companies from the Cash Credit Account No.136655100000028 of Ghosh Brothers Automobiles (a unit of Ghosh Brothers Electronic Pvt. Ltd.) and hence as a reflex action after conducting the search, the accounts mentioned in para 9 of the petition have been freezed. It is submitted that the information of the accounts in the ICICI Bank and Bank of India are provided by Sri Pratul Kumar Ghosh and before and after freezing he was informed verbally at CBI office. It is further submitted in the complaint given by the IDBI Bank mentioned that there are diversion of funds but had mentioned some group companies are Ghosh Brothers Auto Pvt. Ltd., Ghosh Brothers Auto Sales Pvt. Ltd., Ghosh Brothers Construction, Ghosh Brother Hospitality Pvt. Ltd., Ghosh Brothers Motor Pvt. Ltd., Ghosh Brothers Automobiles, Ghosh Brothers Car Pvt. Ltd., Ghosh Brothers Electronics. Further, it is also mentioned in the complaint that funds are transferred to individuals namely Gita Rani, P. Ghosh, Pra, Pras, Prasenjit, Prasenjit Deb, Prasenjit Ghosh, Pratul Kumar Ghosh. Hence, investigation is going on in this regard and freezing of the business accounts and the personal accounts by the investigating agency were logical and reasonable.

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The respondent side contended that the act of freezing the accounts are not arbitrary act. It was logical as per procedure. However, the deponent admitted that there could be financial difficulties as a result of the freezing of the accounts but the act of freezing the accounts are necessary to bring in notice of the Hon'ble Court the amount in possession of the firms and the promoter/directors of the company/firm involved in the instant case. Further, respondent has submitted that the investigating officer had not violated any procedure and that the provisions of 102(3) was also complied by submitting a petition in the trial court. The petitioner's son Sri Pratul Kumar Ghosh and the petitioner was informed about the freezing of the Bank Accounts and they too informed the IO that bank has informed them about the freezing of accounts.

However, it is admitted that the direct link with the commission of offence can be revealed on completion of the investigation through documentary evidence and the investigation of the case is going on in this regard. There being prima facie material in the complaint given by the IDBI Bank, the case is registered by the CBI. It is however, submitted that pre-condition for exercise of Section 102(1) CrPC in the instant case are fulfilled as the complaint given by the IDBI clearly states that there is a diversion of fund, and hence the accounts were freezed. All the facts and circumstances for direct link of commission of the crime, if exists, will be revealed during the course of investigation, which the respondent is legally bound to do.

The respondent further states that it has objection in de-freezing of the accounts, reason being the investigation is still continued and, at this stage if the said accounts are defreezed, it will affect the investigation of the case. The matter is also in the Debts Recovery Tribunal (DRT), Guwahati and judgment was passed by DRT, Guwahati on 19.09.2019. Besides it, the impugned order is tenable in the eye of law.

10. As against the affidavit-in-opposition, petitioner's side has also filed affidavit-in-reply stating inter alia that investigation of the R.C. 5 (A)/2021 (GHW) Case was made over to Sri Biju Sarmah, Inspector and he is investigating the said case who issued the direction to the concerned banks for freezing of the accounts in question. In view of above, Sri Sanjay Sharma, DySP, CBI is not competent to swear the aforesaid affidavit-in-opposition. It also states that the allegations of fund transfer could have been verified by the respondent by Page No.# 8/13

resorting to the provisions of Section 18 of the Prevention of Corruption Act, 1988 and there was no necessity of freezing the accounts in question. Sri Pratul Kr. Ghosh was also not given the information by the respondent with regard to freezing of the accounts either before or after freezing. It is further stated that there was no diversion of funds, as alleged, inasmuch as, the petitioner and the group companies have maintained absolute transparency with regard to the fund/business transaction of the entities in question. The freezing of accounts by the investigating agency were neither logical nor reasonable and as such the accounts may be defreezed by this Hon'ble Court.

It is further submitted by the petitioner that the respondent has not elicited as to how the freezing of the accounts was not arbitrary and logical as per procedure despite the fact that the respondent has admitted that the freezing of the accounts have caused financial difficulties to the petitioner and the group entities. It is also submitted that the amounts in possession of the firms and the promoters/directors of the companies/firm could have been brought to the notice of the Hon'ble Court by producing the statement of accounts and for that purpose it was not necessary to freeze the accounts.

Further contention of the petitioner is that admittedly, no materials have been placed by the respondent with regard to the purported information given to him (petitioner) and his son about freezing of the bank accounts. That apart, though the request for freezing of accounts was sent to the ICICI Bank by the investigating officer on 25.06.2021 but the Hon'ble Court was belatedly informed regarding freezing of bank accounts only on 17.08.2021 and not forthwith as required by the mandate of Section 102(3) CrPC. The order dated 12.08.2021 (Annexure-12 to the revision petition) would clearly show that the application for defreezing the accounts was filed and moved on 12.08.2021 itself and the investigating officer furnished the information with regard to freezing of accounts on 17.08.2021 and as such the submission of the respondent in this regard is neither true and correct nor based on materials on record.

11. I have heard the submission of the learned counsel for both the parties and gave due consideration to the entirety of the matter including the documents annexed.

12. Primarily, the learned counsel for the petitioner has challenged the vital illegality that Page No.# 9/13

has been crept in conducting search and seizure for non-complying the mandate of law under Section 102 CrPC. It has been submitted that such seizure has been made without any information to the petitioner and the impact of which not only affect the rights of the petitioner but has also jeopardized the entire establishment and the livelihood of the employees as stated in the grounds mentioned above. It has been vehemently argued that in view of their admission in the affidavit that the investigation is still going on to establish or to find out the direct link of commission of the crime with the accounts seized, whereas the law provides that the police officer can seize such accounts if the articles seized as the direct link with the commission of the offence for which the police officer investigating into.

13. In support of his contention, the petitioner has referred certain decisions, which is as under:

(i) 1988 Cr.L.J 241, Ms. Swaran Sabhawal -vs- Commissioner of Police;

(ii) (1999) 7 SCC 685, State of Maharashtra -vs- Tapas D. Neogy;

(iii) 2003 Cr.L.J 294, R. Chandrasekhar -vs- Inspector of Police, Salem and Another;

(iv) 2003 Cr.L.J 2779, B. Ranganathan -vs- State & Ors.;

(v) 2008 Cr.L.J 148, Dr. Shashikant D. Karnik -vs- State of Maharashtra;

(vi) 2012 Cr.L.J 3487, Smt. Lathifa Abubakkar -vs- the State of Karnataka & Ors.;

(vii) Crl. O.P. No.15983 of 2013 dated 20.12.2013 [Uma Maheswari -vs- the State, represented by the Inspector of Police, Central Crime Branch, Chennai & Another;

(viii) Criminal Writ Petition No.2434 of 2018 dated 30.07.2019 [Manish Khandelwal & Others -vs- the State of Maharashtra & Others]; and

(ix) Crl. M.C. 4206/2018 & Crl. M.A.- 30311/2018 dated 29.11.2019 [Muktaben M.

Mashru -vs- State of NCT of Delhi & Another].

14. Learned Standing Counsel, CBI has however urged before this Court in view of the serious allegation against the petitioner, search and seizure made by the investigating authority which was made with permission of the court and due intimation to the petitioner is not at all illegal. There no any violation of the provision of Section 102 CrPC as has been Page No.# 10/13

challenged by the petitioner and the learned trial court has rightly rejected the prayer.

15. I have considered the rival submission of both the parties and gone through the record and the case diary that has been produced.

16. The crux of the matter lies whether the investigating officer can freeze the bank accounts in the given backgrounds of the case and whether the investigating officer can issue prohibitory order to the bank in respect of operation of the bank accounts?

17. To trace the background of the case, we have to consider the allegations in the FIR as foundation of a case lies in the FIR. From the long detail FIR in the present case, it is seen that the informant bank has alleged that the borrower (petitioner) has committed fraud at different dates between 2010 to 2012 onwards and they have availed cash credit facilities but they have failed to honour the liabilities and the accounts was downgraded to NPA on 2014. It is also stated that the loan were secured by the borrower by depositing primary, collateral security and personal guarantee. It has also been alleged in the FIR that the company have submitted forged financial statement to the bank during financial year 2010 to 2012 to avail more financial assistance than its eligibility. Several other irregularities were mentioned in detail in the FIR. It is also stated in the FIR that the original loan and security documents have been submitted to Hon'ble Debts Recovery Tribunal, Guwahati in connection with O.A. No.340/2016.

18. In view of above, it is to be noted that if all the original loan documents were furnished to the DRT, Guwahati, then what would be the basis of the investigation in the present case when already documents were produced before the DRT by the same informant (IDBI Bank) for recovery of Rs.80,90,14,054.02/- (Rupees Eighty Crorers Ninety Lakh Fourteen Thousand Fifty Four and paise two) which was availed by the petitioner company (seven in numbers) for the period of 2006 onwards to 2017 and the accounts of the company turned into NPA (as revealed from the judgment and order in O.A. No.340/2016). Now, the present FIR also alleged about NPA with effect from 2010 onwards that was also included in the earlier case filed by the informant bank. That is one aspect of the matter.

19. Turning to the another aspect as to whether there was compliance of the procedure as mandated under Section 102 CrPC ? We have to look into the procedure that has been Page No.# 11/13

prescribed under said section of law.

The provision of Section 102 of Code of Criminal Procedure is reproduced below:

"102. Power of police officer to seize certain property - (1) Any police officer may seize any property which may be alleged or suspected to have been stolen, or which may be found under circumstances which create suspicion of the commission of any offence.

(2) Such police officer, if subordinate to the officer in charge of a police station, shall forthwith report the seizure to that officer.

(3) Every police officer acting under sub-section (1) shall forthwith report the seizure to the Magistrate having jurisdiction and where the property seized is such that it cannot be conveniently transported to the court, he may give custody thereof to any person on his executing a bond undertaking to produce the property before the court as and when required and to give effect to the further orders of the court as to the disposal of the same."

20. The Hon'ble Supreme Court in State of Maharashtra vs. Tapas D Neogy (supra), it has been held that bank account of accused or any of his relations is property within the meaning of Section 102 CrPC and the police officer in course of investigation can seize or prohibit the operation of the said account if such assets have direct link with the commission of the offence which the police officer is investigating into. It has been held that the police officer has the power under the said provision to seize any property, which may be found under circumstances creating suspicion of commission of any offence. It is held that only under provision of Section 102 CrPC the police officer has been conferred the power of search and seizure and also can issue prohibitory order to the bank not to allow the account holder to operate the account. Summarizing the laws on the entire aspect, Hon'ble Supreme Court held in para 12 of the judgment that there is no justification to give any narrow interpretation to the provisions of Section 102 CrPC and police officer can seize or prohibit the operation of bank account, if such assets have direct link with the commission of the offence for which the police officer investigating into.

21. Similarly, in the subsequent decisions that has been referred and relied by the petitioner Page No.# 12/13

has consistently held that non-compliance of the mandatory provision under Section 102 CrPC is fatal to the prosecution and search and seizure is bad in law and liable to be revoked. Further, it has been elaborately discussed and held in all the cases referred above that the phrase "shall" employed in Section 102(3) CrPC held to be mandatory in nature and violation of it goes to the root of the matter and for violation of the mandatory provision would entail the consequences of giving direction to defreeze the bank accounts.

22. Turning to the case in hand, it would be found that save and except certain doubt about the fund transfer fraudulently, the fact that there is a direct link of the funds with commission of the offence is not yet made out which reveals from the affidavit filed by the respondent where they have disclosed that the aforesaid aspect is still under investigation as to whether the fund has a direct link with the offence. So, the prime requirement for seizure and freezing of accounts appears to be missing to authorize such seizure of large number of accounts of the petitioner's establishments, with further direction to Bank not to allow the petitioner to operate the Bank accounts.

23. So far as the other compliance of the provision of Section 102 CrPC, it reveals that there is no evidence to show that the petitioner was served any notice about such search and seizure by the investigating officer and their assertion that they have been verbally informed is of no substance as the petitioner came to know all about the seizure of accounts after several days of seizure from the bank on the query made by them when they are not allowed to operate the accounts. Case diary is silent on all about such compliance. Furthermore, there is another blatant violation of the provision of Section 102 (3) of the CrPC. Under the said provision, the matter of seizure is to be reported to the Magistrate having jurisdiction forthwith, but from the matters on record and even from the impugned order it reveals that I/O has informed the court about such seizure on 17.08.2021 only after filing of the petition by the petitioner for defreezing the account on 12.08.2021. It is evident that although the search and seizure was made on 22.06.2021 but same was not reported to the court forthwith/ or its own notion but only when the court sought for the information on the basis of the petition filed by the petitioner. The same reply of the I/O cannot be regarded as a mandatory compliance under Section 102(3) CrPC.

24. The learned trial court failed to appreciate the aforesaid aspect that prayer for search Page No.# 13/13

was allowed on 14.06.2021 and since then nothing was reported to the court by the I/O and at the time of hearing of the petition has accepted the version of the respondent without application of judicious mind to the matters on record. The learned trial court was persuaded by the submission of the respondent that there is allegation of transferring of funds by the petitioner and that petitioner has siphoned off huge loan amount of the bank. But nothing was visualized by the learned trial court as to whether there was a direct link with the assets of the petitioner with the commission of the offence. In view of the legal proposition as has been discussed above, the conditions of Section 102(3) CrPC is to be strictly followed by the I/O, but in the instant case, the mandate of law has not been followed.

25. The result of seizure of large number of accounts is manifold. In one hand, it has the effect of serious consequences in the entire business establishment of the petitioner, on the other hand, the financial difficulties faced by the employees under the establishment apart from the running of business of the petitioner cannot be denied.

As a corollary of all above, petition is allowed. Order of learned trial court dated 07.12.2021 is hereby set aside with direction to the Investigating Officer to defreeze the 15 bank accounts (as above) in ICICI Bank.

Return the case diary.

JUDGE

Comparing Assistant