Kerala High Court

Muhammed Rashid .P .P vs Federal Bank on 2 August, 2024

Author: V.G.Arun

Bench: V.G.Arun

                                                        2024:KER:63181
WP(C) NO. 25145 OF 2024

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                IN THE HIGH COURT OF KERALA AT ERNAKULAM

                                PRESENT

                   THE HONOURABLE MR.JUSTICE V.G.ARUN

        FRIDAY, THE 2ND DAY OF AUGUST 2024 / 11TH SRAVANA, 1946

                        WP(C) NO. 25145 OF 2024

PETITIONER/S:

            MUHAMMED RASHID .P .P
            AGED 28 YEARS
            S/O MUHAMMAD KOYA, PUTHUPARAMBIL HOUSE, KUTTIYIL
            PEEDIKA, PAYYOLI, KOZHIKODE DISTRICT, PIN - 673522


            BY ADV NAJAH EBRAHIM V.P.


RESPONDENT/S:

    1       FEDERAL BANK
            REPRESENTED BY ITS SENIOR MANAGER, SERVICE QUALITY
            DEPARTMENT, FEDERAL TOWERS. HEAD OFFICE, ALUVA,
            ERANAKULAM,, PIN - 683101

    2       SHO
            WHITEFIELD CEN POLICE STATION SINMGAYYANA PALYA,
            KRISHNARAJAPURAM , BANGALURU, KARNATAKA, PIN - 560048


            SRI. MOHAN JACOB GEORGE SC FOR FEDERAL BANK.


     THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
02.08.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
                                                               2024:KER:63181
WP(C) NO. 25145 OF 2024

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                                 JUDGMENT

The petitioner is aggrieved by the sudden freezing of his

account by the bank based on requisitions/intimation received

from the police. The police in turn has acted on the basis of Cyber

Crime Incident Reports filed by persons subjected to online

financial fraud/UPI fraud.

2. Learned counsel for the petitioner submitted that this

Court in Dr.Sajeer v. Reserve Bank of India [2024 (1) KLT

826] has addressed the plight of similarly situated persons, and

after elaborately dealing with the revolutionary change in money

transactions with the advent of Unified Payment Interface (UPI

for short), as also the positives and negatives of UPI transactions

in the context of Cyber crimes and Online fraud, the writ

petitions were disposed of with certain directions. The petitioner

is also seeking disposal of his case in similar manner.

3. Heard learned Counsel for the petitioner and the

Standing Counsel for the bank. The police authorities, at whose

instance the accounts are frozen, though served with notice

through e-mail, have not entered appearance.

4. For convenience, the directions in Dr.Sajeer's case 2024:KER:63181 WP(C) NO. 25145 OF 2024

(supra) is extracted hereunder:-

" a. The respondent Banks arrayed in these cases, are directed to confine the order of freeze against the accounts of the respective petitioners, only to the extent of the amounts mentioned in the order/requisition issued to them by the Police Authorities. This shall be done forthwith, so as to enable the petitioners to deal with their accounts, and transact therein, beyond that limit.

b. The respondent - Police Authorities concerned are hereby directed to inform the respective Banks as to whether freezing of accounts of the petitioners in these Writ Petitions will require to be continued even in the afore manner; and if so, for what further time, within a period of eight months from the date of receipt of a copy of this judgment.

c. On the Banks receiving the afore information/intimation from the Police Authorities, they will adhere with it and complete necessary action

- either continuing the freeze for such period as mentioned therein; or withdrawing it, as the case may be.

d. If, however, no information or intimation is received by their Banks in terms of directions (b) above, the petitioners or such among them, will be at full liberty to approach this Court again; for which purpose, 2024:KER:63181 WP(C) NO. 25145 OF 2024

all their contentions in these Writ Petitions are left open and reserved to them, to impel in future."

5. While I am in respectful agreement with the above

directions, I also consider it apposite to scrutinise the issue in the

context of the applicable provision and the precedents on the

point. The intimation from the police, in most of the cases, refers

to Section 102 of Cr.P.C., which, no doubt, is the applicable

provision. Hence, Section 102 is extracted hereunder for easy

reference. Here, it is essential to note that Section 106 of the

Bharatiya Nagarik Suraksha Sanhita, 2023, which is the

corresponding provision, is also identically worded.

"Section 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 2024:KER:63181 WP(C) NO. 25145 OF 2024

having jurisdiction and where the property seized is such that it cannot be, conveniently transported to the Court or where there is difficulty in securing proper accommodation for the custody of such property, or where the continued retention of the property in police custody may not be considered necessary for the purpose of investigation, 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.

Provided that where the property seized under Sub- Section (1) is subject to speedy and natural decay and if the person entitled to the possession of such property is unknown or absent and the value of such property is less than five hundred rupees, it may forthwith be sold by auction under the orders of the Superintendent of Police and the provisions of sections 457 and 458 shall, as nearly as may be practicable, apply to the net proceeds of such sale."

6. A reading of Section 102, makes it clear that the police

has the power to 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. The Apex Court in State of Maharashtra v. Tapas D 2024:KER:63181 WP(C) NO. 25145 OF 2024

Neogy [(1999) 7 SCC 685] has held that the bank account of the

accused or any of his relatives can be treated as "property" for the

purpose of Section 102 of the Code. Later, in Teesta Atul

Setalvad v. State of Gujarat [(2018) (2) SCC 372], the

Supreme Court also held that the Investigating Officer can issue

instruction to seize the suspected bank accounts, subject to his

submitting a report to the Magistrate concerned, as mandated in

sub-section (3) of Section 102. Thereafter, another issue arose

with respect to cases in which there was delay in reporting the

seizure to the Magistrate. This led to divergent views being

expressed by different High Courts. Some High Courts held that

delayed reporting to the Magistrate would, ipso facto, vitiate the

seizure order; certain other High Courts held that the delay in

reporting would constitute a mere irregularity and would not

vitiate the seizure order. The issue was set at rest by the Supreme

Court in Shento Varghese v. Julfikar Husen and others

[2024 SCC OnLine SC 895]. For that purpose, a comparative

analysis of the legislative history of Section 102 Cr.PC was

undertaken. After elaborate discussion, the Apex Court held in

Shento Varghese's case (supra) as under:-

2024:KER:63181 WP(C) NO. 25145 OF 2024

"22.From the discussion made above, it would emerge that the expression 'forthwith' means 'as soon as may be', 'with reasonable speed and expedition', 'with a sense of urgency', and 'without any unnecessary delay'.

In other words, it would mean as soon as possible, judged in the context of the object sought to be achieved or accomplished.

23. We are of the considered view that the said expression must receive a reasonable construction and in giving such construction, regard must be had to the nature of the act or thing to be performed and the prevailing circumstances of the case. When it is not the mandate of the law that the act should be done within a fixed time, it would mean that the act must be done within a reasonable time. It all depends upon the circumstances that may unfold in a given case and there cannot be a straight-jacket formula prescribed in this regard. In that sense, the interpretation of the word 'forthwith' would depend upon the terrain in which it travels and would take its colour depending upon the prevailing circumstances which can be variable.

24. Therefore, in deciding whether the police officer has properly discharged his obligation under Section 102(3) Cr. P.C., the Magistrate would have to, firstly, examine whether the seizure was reported forthwith. In doing so, it ought to have regard to the interpretation of the 2024:KER:63181 WP(C) NO. 25145 OF 2024

expression, 'forthwith' as discussed above. If it finds that the report was not sent forthwith, then it must examine whether there is any explanation offered in support of the delay. If the Magistrate finds that the delay has been properly explained, it would leave the matter at that. However, if it finds that there is no reasonable explanation for the delay or that the official has acted with deliberate disregard/wanton negligence, then it may direct for appropriate departmental action to be initiated against such erring official. We once again reiterate that the act of seizure would not get vitiated by virtue of such delay, as discussed in detail herein above."

7. Thus it is no longer open for any person to contend

that the delay in complying with Section 102 Cr.P.C would vitiate

the seizure as such. This gives rise to an ancillary question, as to

the impact of non-compliance of Section 102(3), by the failure on

the part of the police officer concerned to report the seizure of

bank account to the jurisdictional Magistrate. In my opinion, this

question has to be addressed in the light of Article 300A of the

Constitution of India, which stipulates that no person shall be

deprived of his property except by authority of law. The authority 2024:KER:63181 WP(C) NO. 25145 OF 2024

of law in the cases under consideration is conferred by Section

102 Cr.P.C. Therefore, abject violation of the procedure

prescribed therein will definitely affect the validity of the seizure.

While on the subject, it will be profitable to refer the well

considered judgment rendered by a learned single Judge of this

Court in Madhu K v. Sub Inspector of Police and others

[2020 (5) KLT 483]. Therein, the practice of certain police

officers of directing freezing of accounts without reporting to the

Magistrate concerned was deprecated. As rightly observed in the

judgment, the police officer acting under Section 102 Cr.P.C

cannot be permitted to arrogate to himself an unregulated and

unbridled power to freeze the bank account of a person on mere

surmise and conjuncture, since such unguarded power may bring

about drastic consequences affecting the right to privacy as well

as reputation of the account holder. The other relevant portion of

that judgment reads as under:-

"If it finds that the report was not sent forthwith, then it must examine whether there is any explanation offered in support of the delay. If the Magistrate finds that the delay has been properly explained, it would leave the matter at that. However, if it finds that there is no reasonable 2024:KER:63181 WP(C) NO. 25145 OF 2024

explanation for the delay or that the official has acted with deliberate disregard/wanton negligence, then it may direct for appropriate departmental action to be initiated against such erring official. We once again reiterate that the act of seizure would not get vitiated by virtue of such delay, as discussed in detail herein above."

The learned single Judge finally held that the breach of procedure

can be considered as irregular and not illegal.

8. The above discussion leads to the conclusion that,

while delay in forthwith reporting the seizure to the Magistrate

may only be an irregularity, total failure to report the seizure will

definitely have a negative impact on the validity of the seizure. In

such circumstances, account holders like the petitioner, most of

whom are not even made accused in the crimes registered, cannot

be made to wait indefinitely hoping that the police may act in tune

with Section 102 and report the seizure as mandated under Sub-

section (3) at some point of time. In that view of the matter, the

following direction is issued, in addition to the directions in