Manipur High Court
National Investigation Agency vs Salai Group Of Companies And Smart ... on 25 February, 2021
IN THE HIGH COURT OF MANIPUR
AT IMPHAL
Digitally
Yumk signed
Yumkham
by
CRIMINAL APPEAL NO. 12 OF 2020
ham Rother
Date: [Ref:- Order dated 02/11/2020 passed by the Special Court,
2021.02.25
Rother 11:06:51
+05'30'
NIA, Manipur in Cril. Misc Case No. 55 of 2020]
National Investigation Agency, Ministry of Home Affairs, Government
of India, New Delhi, represented by the Chief Investigation Officer
(CIO), National Investigation Agency, Branch Office, Guwahati,
Assam, Camp Office Imphal, Type VI, Quarter G-I, Lamphel Officer
Colony, Lamphelpat, P.O. & P.S. Lamphel, Imphal west District,
Manipur-795004.
... Appellant.
-Versus -
Salai Group of Companies and Smart Society, having its registered
office address at Sagolband Tera Loukrakpam Leikai, Imphal West
District, Manipur, as represented by Elangbam Brojendro Singh,
aged about 42 years, S/o Late Elangbam Bhubaneshwor Singh of
Keishamthong Elangbam Leikai, P.O. and P.S. Imphal West, Imphal
West District, Manipur, who is the Managing Director of Salai Group
of Companies and General Secretary of Smart Society.
.. .....Respondent
B E F O R E
HON'BLE MR. JUSTICE MV. MURALIDARAN
HON'BLE MR. JUSTICE AHANTHEM BIMOL SINGH
For the Appellant : Mr. Kh. Samarjit, Adv.
For the respondent : Mr. HS. Paonam, Sr. Adv.
Date of Hearing : 30.11.2020 & 09.12.2020
Date of Order : 25 .02.2021
Criminal Appeal No. 12 of 2020 Page 1
JUDGMENT & ORDER
(CAV)
(A. Bimol Singh, J)
[1] Heard Mr. Kh. Samarjit, learned counsel appearing for the
appellant and Mr. HS. Paonam, learned Senior counsel appearing for
the respondent.
[2] The present appeal has been filed challenging the order dated
02.11.2020 passed by the Special Judge (NIA), Manipur in Cril. Misc.
Case No. 55 of 2020. The limited issue to be addressed in the present
appeal is about the justness of the action of the investigating officer of
freezing the bank accounts and sealing of the main office buildings and
sub-offices of the respondent in connection with FIR No. 223(10) 2019
LPS re-registered as RC-12/2019/NIA/GUW and the correctness of the
approached of the special Judge (NIA), Manipur in allowing the request
for de-freezing the bank account and opening of the office buildings of
the respondent.
[3] The relevant fact for the purpose of deciding the issue involved in
the present appeal is that on 30.10.2019, the Officer-in-charge of
Lamphel Police Station registered a Suo Moto case bearing FIR No.
223(10) 2019 LPS, U/S 121/121-A/123/153(A)/505(B)/124(A) and
120(B) IPC against one Narengbam Samarjit Singh and Yambem Biren
Singh alleging that it has been reported in the daily newspaper of
Criminal Appeal No. 12 of 2020 Page 2
Manipur dated 30th Oct. 2019 and also in social media that the said
2(two) accused persons have announced in a press conference held in
London on 29.10.2019 for separation of the Sate of Manipur from India
and forming the Manipur State Council and that the said 2(two) accused
persons, who declared themselves as Defence Minister and the Chief
Minister respectively, announce that they have sought asylum in the
United Kingdom (U.K.) and will operate from there.
[4] After registration of the aforesaid FIR, the investigating authority
promptly filed an application dated 02.11.2019 before the Court of Chief
Judicial Magistrate(CJM), Imphal West, Manipur, praying for issuing
search warrant of the Salai Group of Companies and Smart Society, the
respondent herein.
[5] The said application was allowed by the Chief Judicial Magistrate
(CJM), Imphal West by an order dated 02.11.2019 passed in Cril. Misc.
Case No. 219 of 2018, allowing the applicant/ Investigating Officer (I.O)
to conduct search of the Salai Group of Private Companies Offices and
its sub offices with a direction to submit report of the action taken with all
or any seize documents. Pursuant to the said order of the Chief Judicial
Magistrate (CJM), Imphal West, dated 02.11.2019, search warrant dated
02.11.2018 was issued authorising the Investigating Officer(IO) of the
case to search premises of 16(sixteen) companies of Salai Groups and
directing to produce any incriminating documents forthwith before the
Court.
Criminal Appeal No. 12 of 2020 Page 3
On the same day of issuing the said search warrant, all the
offices and buildings of the Salai Group of Companies and Smart
Society were sealed and all the bank accounts open in the name of the
respondent/companies were also frozen by the investigating authority.
[6] By an order dated 19.11.2019 issued by the Ministry of Home
Affairs, Government of India, the Central Government directed the
National Investigation Agency to take up investigation of the aforesaid
FIR case. In compliance with the aforesaid order of the Central
Government dated 19.11.2019, the NIA took over the investigation of the
said case by re-registering the case as RC-12/2019/NIA/GUW dated
21.11.2019 arising out of Lamphel Police Station, Manipur, FIR No.
223(10) 2019 dated 30.10.2019. Thereafter, on an application filed by
the NIA, the Special Judge (NIA), Manipur passed an order dated
22.11.2019 in Cril. Misc. No. 157 of 2019 directing the CJM, Imphal
West to transfer all the judicial dockets FIR No. 223(1) 2019 of Lamphel
Police Station to the Court of Special Judge NIA and thereafter, the NIA
started investigation of the case in full swing.
[7] It will be pertinent to mention here that after the case had been
transferred from the Court of Chief Judicial Magistrate (CJM), Imphal
West to the Court of Special Judge (NIA), Manipur, the officer-in-charge
of Lamphel Police Station submitted to the Court of CJM, Imphal West, a
detailed report dated 28.09.2009 of the I.O. of the FIR case on
Criminal Appeal No. 12 of 2020 Page 4
28.11.2019. The containts of the said report had been reproduced by the
Special Judge (NIA) at Para 8 of the impugned order.
[8] During the pendency of the criminal case and before completion
of the investigation, "Salai Group of Companies and Smart Society"
represented by its Managing Director filed an application registered as
Cril. Misc. Case No. 55 of 2020 before the Court of Special Judge (NIA),
Manipur praying for allowing to open the office of the Salai Group of
Companies and all Units of Smart Society which was closed by the
investigating authority as well as opening of the bank accounts of Salai
Group of Companies and all Units of Smart Society which were frozen
by the investigating authority.
[9] The said application was allowed by the Ld. Special Judge(NIA),
Manipur by an order dated 02.11.2020 passed in Cril. Misc. Case No. 55
of 2020. The operative portion of the said order is an under:
"21. In the result of the foregoing
observations, I come to the conclusion that the
freezing of the Bank Accounts of the Salai Group
of Companies referred to above and sealing of the
Main Office building as well as its Sub-Offices of
Salai Group of Companies are illegal and cannot
be sustainable in the eye of law. Hence, the prayer
of the petitioner for de-freezing the said Bank
Accounts of Salai Group of Companies and
opening of the Main Office building as well as its
Sub-Offices of Salai Group of Companies are
allowed on the following conditions and modalities:
ORDER
"1. It is ordered and directed to open the main
office building and its Sub-Offices of the
Criminal Appeal No. 12 of 2020 Page 5
SALAI group of Company and SMART
Society before 4;00 p.m. of 04-11-2020.
The present I.O. of this case [NIA] is
directed for compliance of this order.
"2. It is also ordered and directed to de-freeze
all the Bank Accounts of SALAI group of
Company and SMART Society referred to
above which were freeze of their own or
from any authority concerned. The present
I.O. of this case [NIA] and concerned Bank
Authorities are directed for compliance of
this order.
"3. It is also ordered and directed to release
all the seized Bank Accounts of the Salai
Group of Company and Smart Society
referred to above, in order to enable to
operate financial transaction of the
Company during the pendency of case by
executing Zima Bonds on the following
modalities:
i) the I.O. of the case/ officials of NIA
is directed to submit the list of the
Bank Accounts of Salai Group of
company frozen in connection with
this case since there are difference
of Bank Account numbers made by
the petitioner in his application and
the „ANNEXURE B‟ of the I.O. of
FIR Case No. 223(10) 2019 LPS
reproduced above on or before
11:00 a.m. of 04.11.2020;
ii) the newly Board of Directors of the
Salai Group of Company and Smart
Society namely, (i) E. Brojendro
Singh, (ii) N. Bishwajit Singh, (iii)
AK. Deepanand, (iv) Ch. Shyamson
Singh, and (v) T. Tikendra Singh
shall execute Zima bond of every
Bank Account separately for the up-
Criminal Appeal No. 12 of 2020 Page 6
to-date balance amount found in
the Bank Accounts.
iii) in order to enable execution of the
said Zima Bonds, the petitioner has
to submit up-to-date Bank balance
statements of every Bank Account.
The Managers of the concerned
Banks are requested to co-operate
in issuing Bank statements of the
Bank Accounts of the petitioner‟s
company.
iv) taking into consideration the smooth
operation as well as for compliance
of the above conditions, the Bank
Accounts related with this case
which are to be unfrozen and to be
given on zima during the pendency
of the case, shall be operated by
two members of Board of Director of
the Salai Group of Company and
Smart Society. One of the signatory
should be the present petitioner, E.
Brojendro Singh, who is the present
Managing Director of the said
Company and another one should
be from amongst the 4 other
members of the Board of Directors
of the said Company, namely, (I) N.
Biswajit Singh, (ii) AK. Deepanand,
(iii) Ch. Shyamson Singh and (iv) T.
Tikendra Singh. The second
signatory amongst the above
named 4 members of Board of
Directors of the company should be
in rotation for different Bank
Accounts.
"4. It is also ordered and directed that the
zimadars i.e. (i) E. Brojendro Singh, (ii) N.
Bishwajit Singh, (iii) AK. Deepanand, (iv)
Ch. Shyamson Singh, and (v) T. Tikendra
Criminal Appeal No. 12 of 2020 Page 7
Singh shall produce the said Zima
amounts and Bank Account Book before
the Court as and when directed to do so.
"5. The I.O. of the case is however directed
to take photocopy of the released Bank
Account Books before handing over to
the petitioner/zimadars."
The present appeal has been filed by the appellant
challenging the aforesaid order.
[10] At the outset, Mr. Kh. Samarjit, learned counsel appearing for the
appellant draw our attention to Section 102 of the Cr.P.C. which reads
as under:
"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 [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
Criminal Appeal No. 12 of 2020 Page 8
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.]"
[11] By referring to Sub-Section (1) of Section 102 of Cr.P.C., it is
submitted that any police officer is empowered 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 offences. The learned counsel further submitted that the bank
account of the respondent is property within the meaning of section
102(1) of the Cr.P.C. and a police officer in the course of investigation
can seize or prohibit the operation of the said account.
In support of his contentions, the learned counsel has
placed reliance in the judgment of the Hon'ble Supreme Court in the
case of "State of Maharashtra Vs. Tapas D. Neogy" reported in (1999) 7
SCC 685, wherein the Apex Court has held in Para 12 of the judgment
that the bank account of the accused or any of his relations is "property"
within the meaning of Section 102 of the Cr.P.C. and a police officer in
course of investigation can seize or prohibit the operation of the said
account if such assets has direct links with the commission of the
offence for which the police officer is investigating into.
[12] The learned counsel for the appellant strenuously submitted that
on registration of FIR No. 223(10) 2019 LPS U/S 121/121-(A)/123/153-
A/505-(B)/124-A/120-(B) I.P.C., the investigating officer of the case
Criminal Appeal No. 12 of 2020 Page 9
sealed the office buildings and freezed the bank accounts of the
respondent in connection with the said FIR case for the purpose of
investigation.
[13] Mr. Kh. Samarjit, learned counsel for the appellant submitted that
during the course of investigation of the case, it was revealed that the
respondent through its finance micro division had collected money from
people at the rate of 3% interest without any legal authority and it was
also revealed that the 3(three) Vice-Chairman of the Salai Group of
Companies had ulitised the illegally collected money through micro
finance division of Smart Society in the other Salai Companies and thus
laundered the money illegally collected thereon.
[14] The learned counsel for the appellant vehemently submitted that
even though the accused Mr. Narengbam Samarjit had been removed
from the post of Chairman and Managing Director of Salai Group of
Companies and Smart Society, the said accused is still found to be
amajor share holder of the said Companies and as such there is every
possibility that the said accused can still influence the finances of the so
called Companies and reopening of Salai offices and de-
freezing/allowing to operate their bank accounts may lead to the
tempering with materials evidence and also influencing/threatening the
natural witnesses.
[15] It is also submitted by the learned counsel that the investigation is
at the critical stage and reopening of Salai offices and de-
Criminal Appeal No. 12 of 2020 Page 10
freezing/allowing to operate their bank accounts will lead to destructions
of evidences which will hamper the investigation.
[16] Mr. Kh. Samarjit, learned counsel for the appellant submitted that
the Special Court (NIA) allowed the opening of the office buildings and
de-freezing of the bank account of the respondent mainly on the ground
that the I.O. of the case submitted the report to the Chief Judicial
Magistrate(CJM), Imphal West (I.W.) about sealing of the offices and
freezing of the bank accounts of the respondent after 26(twenty six)
days and also after 7(seven) days of taking over the case by the NIA
and that such delay in submitting the report to the competent Court
violated the mandatory provisions of Section 102(3) of the Cr.P.C.
In this connection, the counsel for the appellant submitted
that Section 102(3) of the Cr.P.C. is not mandatory and non-compliance
with the provisions under Section 102(3) cannot vitiate the sealing of the
offices and freezing of the bank accounts of the respondent.
[17] In support of his submissions the learned counsel has relied on
the judgment dated 10.01.2007 rendered by a learned Single Judge of
Punjab and Haryana High Court in the case of "Narottam Singh Dhillon
& Anr. Vs. State of Punjab"reported in 2007 SCC Online P & H 20,
wherein the learned Single Judge, by referring to the observations made
by the Apex Court at Para 37 to 39 of the judgment rendered in
"Nasiruddin & Anr. Vs. Sita Ram Agarwal" reported in (2003) 2 SCC
577,had held that Section 102(3) Cr.P.C. cannot be termed as
Criminal Appeal No. 12 of 2020 Page 11
mandatory but would be directory in nature. The relevant portion of the
said judgment are as under:
"(10) Before proceedings further, it may be seen if the
provisions of Section 102(3) Cr.P.C. can be said to be
mandatory or directory in nature. It is well understood that non-
observance of a mandatory condition is fatal to the validity of
the action. However, non-observance would not matter if the
condition is found to be merely directory. In other words, it is
not every omission or defect which entails the drastic penalty
of invalidity. As per Prof. Wade, some conditions may be both
mandatory and directory as to substantial compliance, but
directory as to precise compliance. Giving example in this
regard, Prof. Wade observed that where a local authority was
empowered to assess coast protection charges on land owners
within six months but did so after twenty-three months, the
delay was so excessive that there was total non-compliance
with the condition and the assessments were void; but had the
axcess been a few ways only, they would probably have been
valid. It was observed in Re-Bowman (5) that the Court may
readily find reasons for overlooking trivial or unimportant
irregularities. It is a question of construction, to be settled by
looking at the whole scheme and purpose of the Act and by
weighing the importance of the condition, the prejudice to
private rights, and the claims of the public interest. It was
further observed that in any case judges faced with these
questions of construction may regard categories such as
mandatory and directory as presenting not so much as stark
choice of alternatives but a spectrum of possibilities in which
one compartment or description fades gradually into another.
Even it is possible for whole areas of statutory law to be
treated as merely directory. Requirements which are less
substantial, and more like matters of mere formality, may fall
on either side of the line. In short, it will depend upon the
provisions of the statute. Where the effect is penal scrupulous
observance of statutory conditions can normally be required.
The Hon‟ble Supreme Court in the case of Nasiruddin and
Others V. Sita Ram Agarwal, (6) held that it is well settled that
the real intention of the legislation must be gathered from the
language used. It may be true that the use of the expression
„shall or may‟ is not decisive for arriving at a finding as to
whether statute is directory or mandatory. But the intention of
the legislature must be found out from the scheme of the Act. It
is also equally well settled that when negative words are used
the courts will presume that the intention of the legislature was
that that the provisions are mandatory in character. Referring
to Sutherland, Statutory Construction, 3rd edition, Vol. 3 at p.
107, the Hon‟ble Supreme Court pointed out as under:-
Criminal Appeal No. 12 of 2020 Page 12
"Yet there is another aspect of the matter which cannot be
lost sight of. It is a well-settled principle that if an act
is required to be performed by a private person
within a specified time, the same would ordinarily
be mandatory but when a public functionary is
required to perform a public function within a time-
frame, the same will be held to be directory unless
the consequences therefor are specified..................
It is pointed out that a statutory direction to private
individuals should generally be considered as
mandatory and that the rule is just the opposite to
that which obtains with respect to public officers.
Again, at p. 109, it is pointed out that often the
question as to whether a mandatory or directory
construction should be given to a statutory provision
may be determined by an expression in the statute
itself of the result that shall follow noncompliance
with the provision.
At. p. 111 of the above noted edition, it is stated as
follows:-
As a corollary of the rule outlined above, the fact
that no consequences of noncompliance are stated
in the statute, has been considered as a factor
tending towards a directory construction. But this is
only an element to be considered and is by no
means conclusive."
(11) Applying the above-noted test to the contents of the
provisions of Section 102(3) Cr.P.C., it can be seen that after
laying down the requirement of reporting the seizure, the
section further itself provides for exception in cases where the
property seized is such that it cannot be conveniently
transported to the court etc............ The consequences of non-
reporting about the seized property have also not been
provided under the section. In addition, the requirement of
reporting in the manner, as stated, is on the part of a public
functionary and in view of the law laid down by the Hon‟ble
Supreme Court, as noticed above, the same is required to be
held to be directory unless the consequences thereof are
specified. Since the consequences therefore have not been
specified, it would be safe to say that requirement of Section
102(3) Cr.P.C. cannot be termed as mandatory but would be
directory in nature".
[18] Lastly, the counsel for the appellant submitted that under section
8 of the National Investigation Agency Act, 2008, it is provided that while
investigating any schedule offence the agency may also investigate any
Criminal Appeal No. 12 of 2020 Page 13
other offences which the accused is alleged to have committed if the
offence is connected with the schedule offence.
In view of the above, it is strenuously submitted by the
learned counsel that the Special Judge (NIA) failed to consider the
evolving investigation and its possible impact on the overall summing up
of the case by filing the charge sheet and erroneously concluded that
certain sections were not mentioned in the FIR for money laundering,
etc., which otherwise, could well be investigated by the NIA as provided
under Section 8 of the NIA Act, 2008.
The learned counsel for the appellant also submitted a
"Sealed Enveloped" alleged to be the revelation/evidences which have
come to light during the course of the investigation of the case.
[19] Mr. HS Paonam, learned senior counsel submitted that the FIR
has been registered by the OC of Lamphel Police Station Suo Moto,
against Mr. Narengbam Samarjit Singh and Yambem Biren Singh
alleging that the said 2(two) accused persons have announced in a
press conference held in London on 29.10.2019 for separation of the
State of Manipur from India and forming Manipur State Council and that
the said 2(two) accused persons, who declared themselves as Defence
Minister and Chief Minister respectively, announced that they have
sought asylum in the United Kingdom (U.K.) and will operate from there,
thereby committing offences under Section 121/121-(A)/123/153-
(A)/505(B)/124(A) and 120(B) IPC. In the said FIR, the present
Criminal Appeal No. 12 of 2020 Page 14
respondent has neither been named as an accuse nor has the Police
raised any allegations against the present respondent of committing any
offences whatsoever.
[20] It is submitted that the main objection raised by the NIA before the
Special Court (NIA) is that Mr. Narengbam Samarjit Singh, former
Managing Director of the respondent/Company, is still found to be the
major shareholder of the ShellCompanies of the respondent and as such
there is every possibility that he can still influence the finances of the
companies and therefore, reopening of the offices and de-freezing the
bank accounts of the respondent at the critical stage of the investigation
may lead to destructions of evidence which will hamper further
investigation in the matter.
[21] Mr. HS Paonam, learned senior counsel further submitted that the
present respondent is a company registered under the Companies Act
and as such it has a distinct legal entity other then the legal entity of Mr.
Narengbam Samarjit Singh, who is alleged to be still the major share
holder of the respondent/company.Accordingly, it has been submitted
that any offences alleged to have been committed by Mr. Narengbam
Samarjit Singh in his individual capacity cannot have any link with the
respondent company and the respondent company cannot be paralysed
or closed down indefinitely by issuing a direction under Section 102
Cr.P.C.only on the ground that one of the major share holders of the
company is alleged to be involved in committing some offences.
Criminal Appeal No. 12 of 2020 Page 15
In support of his contentions, the learned senior counsel
relied on the judgment rendered by a constitution bench of 5(five)
Judges of the Hon'ble Supreme Court in the case of "Electronics
Corporation of India Ltd. And Others Vs. Secretary, Revenue
Department, Govt. of Andra Pradesh And Others" reported in (1999) 4
SCC 458. The relevant portion of the judgment are as under:
"15. A clear distinction must be drawn between a
company and its shareholder, even though that shareholder
may be only one and that the Central or a State
Government. In the eye of the law, a company registered
under the Companies Act is a distinct legal entity other than
the legal entity or entities that hold its shares.
"16. In Western Coalfields Ltd. V. Special Area
Development Authority this Court reviewed earlier judgments
on the point. It held that even though the entire share capital
of the appellant before it had been subscribed by the
Government of India, it could not be predicated that the
appellant itself was owned by the Government of India.
Companies, it was said, which are incorporated under the
Companies Act, have a corporate personality of their own,
distinct from that of the Government of India. The lands and
the buildings in question in that matter were vested in and
owned by the appellant. The Government of India only
owned the share capital.
"17. In Rustom Cavasjee Cooper V. Union of India It
was held: (SCC p. 273, para 11)
"11. A Company registered under the
Companies Act is a legal person, separate and distinct
from its individual members. Property of the Company is
not the property of the shareholders. A shareholder has
merely an interest in the Company arising under its
Articles of Association, measured by a sum of money for
the purpose of liability, and by a share in the distributed
profit."
"18. In Heavy Engineering Mazdoor Union V. State of
Bihar this Court held that an incorporated company has a
separate existence and the law recognises it as a juristic
person, separate and distinct from its members."
Criminal Appeal No. 12 of 2020 Page 16
[22] The learned senior counsel for the respondent submitted that the
Salai Group of Companies was established in the State of Manipur in
2014 and since then many skilled and unskilled labourers were
employed and many educated and uneducated youths were deployed
and absorbed in the said company. Those individual working in the
companies have improved their financial status and could somewhat
sustained their living and all these employees of the company were put
up in various areas including food processing, edible oil and refinery,
banking services, construction works, solar energy solution, marketing of
the food processed products, general trading(import and export), etc.,
inside the State of Manipur. It is also submitted by the learned senior
counsel that the Smart Society and Salai Group of Companies had given
more than 500(five hundred) jobs to the unemployed youths of Manipur
and they were serving sincerely in different subsidiary offices of Salai
Group of Companies and Smart Society for the welfare of the company
without depending on Government jobs. The activities of the company
was highly appreciated by the Chief Minister of Manipur and that many
programmes of the company for further expansion and for absorption of
more youths in the company are in the pipe line, but unfortunately, it has
been delayed due to the present case.
The learned senior counsel further submitted that due to
the closure of the offices and freezing of the bank accounts of the
respondent in connection with the FIR, the company is in severe
Criminal Appeal No. 12 of 2020 Page 17
condition as no financial transaction can be carried out and the smooth
functioning of the company has also been gravely hindered. In view of
such difficult and severe condition faced by the company and after about
7(seven) months from the date of closing of the offices and freezing of
the bank accounts of the respondent, the Director of Salai Agro Products
Private Limited submitted an application dated 05.05.2020 to the
Superintendent of Police(NIA) requesting for unfreezing some bank
accounts of the company. However, the said application was rejected by
the Superintendent of Police (NIA) by an order dated 26.05.2020 on the
ground that during the course of investigation of the case, it is found that
funds were being collected by financial unit of the respondent without
Government authorisation and that the authorities believe that the funds
so collected was invested to other Salai Group of Companies and the
de-freezing of such accounts will hamper the investigation of the case.
[23] It has been contended on behalf of the respondent that the main
reasons or objection raised by the NIA in opening of the offices and de-
freezing of the bank accounts of the respondent are that:-
(1) One of the accused i,e, Mr. Narengbam Samarjit Singh
is still found to be a major shareholders of the company and
there is every possibility that he can still influence the finances of
the so called companies and tempering with material evidences;
and
Criminal Appeal No. 12 of 2020 Page 18
(2) The respondent through its micro finance division had
collected money from people at the rate of 3% interest without
any legal authority and that 3(three) Vice-Chairman of Salai
Group of Companies had utilised the illegally collected money
through micro finance division of Smart Society in other Salai
Companies and thus, laundered the money illegally collected
thereon.
[24] It is vehemently submitted by Mr. HS. Paonam, learned senior
counsel that on examination of the present FIR, the objections raised on
behalf of the NIA, the pleadings of the appellant made in their objections
dated 29.10.2020 filed in connection with Cril. Misc. Case No. 55 of
2020 and the ground raised by the appellant in the present appeal, no
statement or allegation has been made by the appellant that the assets
of the respondent including their offices and bank accounts have any
link with the offences alleged to have been committed by the accused
persons named in the FIR. It is also submitted that even after a
thorough investigation of more than 1(one) year from the sealing of the
offices and freezing of the bank accounts of the respondent, no
materials has been produced by the appellant to show that there is
suspicious of having direct link with the seized assets of the respondent
and the commission of the offences by the accused persons.
[25] After taking into consideration all the above facts by the Special
Court (NIA) including the "Sealed Enveloped" submitted by the appellant
Criminal Appeal No. 12 of 2020 Page 19
alleged to be the evidence which has come to light during the course of
the investigation of the case, the Special Judge (NIA) allowed the
opening of the offices and de-freezing of the bank accounts of the
respondent under the order impugned herein. The relevant portions of
the impugned order are reproduced hereunder for easy reference:-
"15. The main objections raised by the NIA are that N.
Samarjit it still found to be the principal majority shareholder
of the said Salai Group of company even though he is
alleged to be removed and as such, he can still influence the
finances of the so called company established at their
instances and may lead to the tampering with material
evidences and also influencing/threatening the natural
witnesses and the investigation is at a critical stage.
"16. The admitted facts are that the FIR Case No. 223
(10) 2019 LPS U/S 121/121-A/123/153 (A)/505(B)/124(A)
and 120(B) IPC was registered suo moto against one
Narengbam Samarjit Singh and Yambem Biren Singh on the
basis of the reports made in the local newspaper of Manipur
dated 30.10.2019 and also other medium of social media
that in a conference held in London on 29.10.2019 the said
Narengbam Samarjit Singh and Yambem Biren Singh
announced for separation of the State of Manipur from India,
forming the Manipur State Council and that Narengbam
Samarjit declared himself as External Affairs and Defence
Minister of Manipur State Council and Yambem Biren Singh
as Chief Minister of Manipur State Council and that they
sought asylum in the United Kingdom and will operate there.
It is also admitted fact that the said Narengbam
Samarjit Singh was working as the Chairman and Manging
Director of the Salai Group of company and due to the
registration of the FIR case, he was removed from being the
Chairman and Managing Director of the Salai Group of
company.
"17. Nevertheless, since the registration of the said
FIR case and handing over of the case to NIA, it is now
about one year has lapsed. On examination of all the
materials on record including the documents submitted by
the NIA in closed envelope but upto this stage of
investigation, I could not find any material to establish the
link with the Salai Group of company with the announcement
of said N. Samarjit Singh for separation of Manipur State
Criminal Appeal No. 12 of 2020 Page 20
from India and forming Manipur State Council and declaring
himself as External Affairs and defence Minister of the said
Manipur State Council from London where he is seeking
asylum. Furthermore, nobody is arrested till date in
connection with the above referred case.
Therefore, there is no possibility of influencing the
finances of the so called the Salai Group of company,
tampering with material evidences and also
influencing/threatening the natural witnesses by the said
Narengbam Samarjit.
"18. Another objection raised by the NIA is that the
SMART Society through its Micro Finance Division had
collected money from people at the rate of 3% interest
without any legal authority and that the three Vice Chairmen
of the Salai Group of companies had utilized the illegally
collected money through Micro Finance Division of SMART
Society in the other Salai Companies and thus, laundered
the money illegally collected thereon.
However, these allegations are not related at all
with the present case where the offences charged are under
sections 120 B, 121, 121 A, 123, 124(A), 153(A) & 505 (B)
IPC and 13 & UA/(P) Act against Narengbam Samarjit and
Yambem Biren.
On the other hand, the said Salai Group of
company are not in a position to function for the last about
1(one) year thereby resulting to possibility of vanishing the
company itself since it affects all its financial transaction
completely and also suffered about 500 of its employees
which automatically affect all the family members of the sad
500 employees.
"19. Over and above, the petitioner has also alledged
that on 02-11-2019 the main office building as well as its
Sub-Offices situated in different places of Imphal were
sealed by the I.O. of the case and since then those offices
could not be functioned."
[26] The learned senior counsel submitted that as there is no
allegation or material to show that there is suspicion of having any direct
link with the assets of the respondent and the commission of the
offences by the accused persons for which the authorities are
Criminal Appeal No. 12 of 2020 Page 21
investigating into, the investigating officer has acted beyond his power
and jurisdiction in sealing the offices and freezing the bank accounts of
the respondent and such acts of the investigating officer are illegal and
in contravention of the provisions under Section 102 of the Cr.P.C.
In support of his contentions, the learned senior counsel
has placed reliance inthe judgment of the Hon'ble Supreme Court in the
case of "M.T. Enrica Lexie And Another Vs. Doramma And Others"
reported in (2012) 6 SCC 760 and in Para No. 14 of the Judgment the
Apex Court has held as under:-
"14. The police officer in course of investigation can
seize any property under Section 102 if such property is
alleged to be stolen or is suspected to be stolen or is the
object of the crime under investigation or has direct link with
the commission of offence for which the police officer is
investigating into. A property not suspected of commission of
the offence which is being investigated into by the police
officer cannot be seized. Under Section 102 of the Code, the
police officer can seize such property which is covered by
Section 102(1) and no other."
[27] In the case of "Nevada Properties Private Limited through its
Director Vs. State of Maharashtra & Another" reported in (2019) SCC
Online SC 1247 a constitution bench of 3(three) Judges of the Apex
Court held that the power of police officer under Section 102 of the
Cr.P.C. to seize any property, which may be found under circumstances
that create suspicion of the commission of any offences, would not
include the power to attach, seize and sealed an immovable property.
The relevant Para 18 to 21 of the said judgment are as under:-
Criminal Appeal No. 12 of 2020 Page 22
"18. Having held and elucidated on the power of the
Criminal Court, we find good ground and reason to hold that
the expression „any property‟ appearing in Section 102 of the
Code would not include immovable property. We would
elucidate and explain.
"19. The first part of sub-section (1) of Section 102 of
the Code relates to the property which may be alleged or
suspected to have been stolen. Immovable property certainly
cannot be stolen and cannot fall in this part. The second part
relates to the property which may be found by a police officer
under circumstances which create suspicion of the
commission of any offence. We have already referred to the
judgments of the Delhi High Court in the case of P.K. Parmar
(supra), Ms. Swaran Sabharwal (supra), and Jagdish
Chander (supra), which have elucidated and in a restricted
and narrow manner defined the requirement for invoking the
second part. However, we have come across a decision of
this Court in Teesta Atul Setalvad V. State of Gujarat, on an
appeal from the judgment of the Gujarat High court and had
dealt with a situation when an act of freezing the accounts
was a sequel to the crime as the crime was detected earlier.
The Gujarat High Court took a somewhat contrary view, by
not interfering and directing defreezing, observation that
even if the action of the investigating agency at the inception
to seize may not be regular, the Court cannot be oblivious to
the collection of substantial material by the investigating
agency which justifies its action under Section 102 of the
Code. Further when the investigation had progressed to a
material point, de-freezing the bank accounts on the basis of
such arguments would paralyse the investigation which
would not be in the interest of the justice. After referring to
the factual matrix in Teesta Atul Setalvad (supra), this Court
observed that the Investigating Officer was in possession of
material pointing out to the circumstances that had created
suspicion of the commission of an offence, in particular the
one under investigation, and therefore exercise of power
under Section 102 of the Code would be in law legitimate as
it was exercised after following the procedure prescribed in
sub-sections (2) and (3) of the same provision.
"20. Section 102 postulates seizure of the property.
Immovable property cannot, in its strict sense, be seized,
though documents of title, etc. relating to immovable
property can be seized, taken into custody and produced.
Immovable property can be attached and also locked/sealed.
It could be argued that the word „seize‟ would include such
action of attachment and sealing. Seizure of immovable
property in this sense and manner would in law require
dispossession of the person in occupation/possession of the
immovable property, unless there are no claimants, which
Criminal Appeal No. 12 of 2020 Page 23
would be rare. Language of Section 102 of the Code does
not support the interpretation that the police officer has the
power to dispossess a person in occupation and take
possession of an immovable property in order to seize it. In
the absence of the Legislature conferring this express or
implied power under Section 102 of the Code to the police
officer, we would hesitate and not hold that this power
should be inferred and is implicit in the power to effect
seizure. Equally important, for the purpose of interpretation
is the scope and object of Section 102 of the Code, which is
to help and assist investigation and to enable the police
officer to collect and collate evidence to be produced to
prove the charge complained of and set up in the charge
sheet. The Section is a part of the provisions concerning
investigation undertaken by the police officer. After the
charge sheet is filed, the prosecution leads and produces
evidence to secure conviction. Section 102 is not, per se, an
enabling provision by which the police officer acts to seize
the property to do justice and to hand over the property to a
person whom the police officer feels is the rightful and true
owner. This is clear from the objective behind Section 102,
use of the words in the Section and the scope and ambit of
the power conferred on the Criminal Court vide Sections 451
to 459 of the Code. The expression „circumstances which
create suspicion of the commission of any offence‟ in
Section 102 does not refer to a firm opinion or an
adjudication/finding by a police officer to ascertain whether
or not „any property‟ is required to be seized. The word
„suspicion‟ is a weaker and broader expression than
„reasonable belief‟ or „satisfaction‟. The police officer is an
investigator and not an adjudicator or a decision maker. This
is the reason why the Ordinance was enacted to deal with
attachment of money and immovable properties in cases of
scheduled offences. In case and if we allow the police officer
to „seize‟ immovable property on a mere „suspicion of the
commission of any offence‟, it would mean and imply giving
a drastic and extreme power to dispossess etc. to the police
officer on a mere conjecture and surmise, that is, on
suspicion, which has hitherto not been exercised. We have
hardly come across any case where immovable property
was seized vide an attachment order that was treated as a
seizure order by police officer under Section 102 of the
Code. The reason is obvious. Disputes relating to title,
possession, etc., of immovable property are civil disputes
which have to be decided and adjudicated in Civil Courts.
We must discourage and stall any attempt to convert civil
disputes into criminal cases to put pressure on the other side
(See Binod Kumar V. State of Bihar). Thus, it will not be
proper to hold that Section 102 of the Code empowers a
police officer to seize immovable property, land, plots,
residential houses, streets or similar properties. Given the
Criminal Appeal No. 12 of 2020 Page 24
nature of criminal litigation, such seizure of an immovable
property by the police officer in the form of an attachment
and dispossession would not facilitate investigation to collect
evidence/material to be produced during inquiry and trial. As
far as possession of the immovable property is concerned,
specific provisions in the form of Section 145 and 146 of the
Code can be invoked as per and in accordance with the law.
Section 102 of the Code is not a general provision which
enables and authorises the police officer to seize immovable
property for being able to be produced in the Criminal Court
during trial. This, however, would not bar or prohibit the
police officer from seizing documents/papers of title relating
to immovable property, as it is distinct and different from
seizure of immovable property. Disputes and matters relating
to the physical and legal possession and title of the property
must be adjudicated upon by a Civil Court.
"21. In view of the aforesaid discussion, the Reference
is answered by holding that the power of a police officer
under Section 102 of the Code to seize any property, which
may be found under circumstances that create suspicion of
the commission of any offence, would not include the power
to attach, seize and seal an immovable property."
By placing reliance on the aforesaid judgment of the
Hon'ble Supreme Court, the learned senior counsel for the respondent
submitted that seizure and sealing of the offices of the respondent,
which are all immovable properties, by the investigating officer of the
case in connection with the FIR is illegal, without power and jurisdiction
and in contravention of the provisions of section 102 of the Cr.P.C.
[28] After giving our anxious consideration to the submissions
advanced by the counsel for the parties and after careful consideration
of all the material available on record and also the documents submitted
by the learned counsel for the appellant before this Court under Sealed
Cover, alleged to be the evidences which come to light during the
course of investigation of the case, we do not find any materials or
Criminal Appeal No. 12 of 2020 Page 25
circumstances which create suspicion of having any direct link with the
seized assets of the respondent and the commission of the alleged
offences for which the investigating officer is investigating into.
Accordingly, we have no hesitation to hold that the investigating officer
has acted illegally and in contravention of the provisions of section 102
Cr.P.C. in seizing/sealing of the offices and in freezing the bank
accounts of the respondent.
We are also in agreement with the submissions advanced
by Mr. HS. Paonam, learned senior counsel that the respondent
company cannot be paralised or closed down by issuing a direction
under section 102 Cr.P.C. indefinitely only for the reason that one of his
share holders are alleged to be involved in commission of some
offences.
[29] In view of the foregoing reason, we do not find any ground or
justification for interfering with the impugned order dated 02.11.2020
passed by the Court of Special Court (NIA), Manipur in Cril. Misc. Case
No. 55 of 2020 and accordingly, we dismissed the present appeal as
being devoid of merit, however, without any costs.
JUDGE JUDGE
FR/NFR
Lhaineichong
Criminal Appeal No. 12 of 2020 Page 26
