Orissa High Court
Suresh Chandra Mohapatra vs The Branch Manager on 8 November, 2024
Author: S.K. Panigrahi
Bench: S.K. Panigrahi
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Designation: AR-CUM-SR. SECRETARY
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 18-Nov-2024 19:08:03
IN THE HIGH COURT OF ORISSA AT CUTTACK
W.P.(C) No.19475 of 2023
(In the matter of an application under Articles 226 and 227 of the
Constitution of India, 1950).
Suresh Chandra Mohapatra .... Petitioner(s)
-versus-
The Branch Manager, SBI, .... Opposite Party (s)
Dhenkanal & Anr.
Advocates appeared in the case through Hybrid Mode:
For Petitioner(s) : Mr.Prasanta Kumar Sahoo, Adv.
For Opposite Party (s) : Mr.Subrat KumarMohanty, Adv.
CORAM:
DR. JUSTICE S.K. PANIGRAHI
DATE OF HEARING:-29.08.2024
DATE OF JUDGMENT:-08.11.2024
Dr. S.K. Panigrahi, J.
1. In this Writ Petition, the Petitioner challenges the legality of the hold
placed on his account on the grounds of an ongoing investigation into
the theft of a cheque.
I. FACTUAL MATRIX OF THE CASE:
2. The brief facts of the case are as follows:
Designation: AR-CUM-SR. SECRETARY
Location: ORISSA HIGH COURT, CUTTACK
Date: 18-Nov-2024 19:08:03
(i) The petitioner deposited a cheque worth Rs. 9.75 lakhs, drawn by
Opposite Party No. 2, Dulei Kisan, into his account (Account No.
30663439610) at the State Bank of India (SBI) on 26.12.2022. This cheque
was credited to the petitioner's account on the same day.
(ii) Following the credit, Dulei Kisan reported the cheque as missing and
requested Opposite Party No. 1, the Branch Manager of SBI, to place a
hold on the funds, claiming that the cheque had been misplaced. A hold
was subsequently placed on the petitioner's account to safeguard Dulei
Kisan's interests.
(iii) On 31.12.2022, the Assistant Sub-Inspector (ASI) of Kamakhyanagar
Police Station requested that the petitioner's account remain frozen for
the amount of Rs. 9.75 lakhs, pending an investigation into a police case
filed by Dulei Kisan against the petitioner under various sections of the
Indian Penal Code (IPC) (P.S. Case No. 506 dated 31.12.2022).
(iv) The ASI of Kamakhyanagar Police Station later informed Opposite
Party No. 1 that preliminary investigations supported the claims made
in the FIR and suggested that the cheque amount might need to be
released to Dulei Kisan.
(v) The petitioner attempted to obtain information regarding Dulei Kisan's
account under the Right to Information Act, 2005. However, the bank
denied the request, stating that the petitioner was not entitled to such
information.
(vi) Aggrieved by the bank's actions, the petitioner filed a writ petition
challenging the legality of the hold placed on his account, sought relief
and the release of the funds being held.
Designation: AR-CUM-SR. SECRETARY
Location: ORISSA HIGH COURT, CUTTACK
Date: 18-Nov-2024 19:08:03
II. SUBMISSIONS ON BEHALF OF THE PETITIONER:
3. Learned counsel for the Petitioner earnestly made the following
submissions in support of his contentions:
(i) The petitioner submitted that, as per Sections 7 and 8 of the Negotiable
Instruments Act, he is the holder of the cheque in due course and thus
lacks legal basis, and infringes on his right to access his money.
(ii) He further submitted that the bank's act of freezing his account, despite
having validly deposited a negotiable instrument, is arbitrary, lacks
legal basis, and infringes on his right to access his money.
(iii) The petitioner contended that the denial of his RTI request for
information on the hold is unjustified, as he seeks legitimate
clarification on his account status and the basis of the hold.
(iv) He further contended that the deposited amount is his and cannot be
claimed by either the drawer (Dulei Kisan) or the bank, thus the freeze
infringes on his rights.
III. SUBMISSIONS ON BEHALF OF THE OPPOSITE PARTIES:
4. The Learned Counsel for the Opposite Parties earnestly made the
following submissions in support of his contentions:
(i) It is submitted that the hold on the petitioner's account is justified due
to the ongoing police investigation and seizure under Section 102(1) of
the Code of Criminal Procedure, 1973, thereby disputing the petitioner's
claim that the hold is arbitrary and illegal.
(ii) He further submitted that the petitioner's attempt to obtain information
about Dulei Kisan's account through the RTI Act was correctly denied
as he has no entitlement to such information.
Designation: AR-CUM-SR. SECRETARY
Location: ORISSA HIGH COURT, CUTTACK
Date: 18-Nov-2024 19:08:03
(iii) It is contended that since both the petitioner and Dulei Kisan have filed
separate FIRs, with associated police cases still under investigation, the
bank contends that it is improper to release the funds until completion
of the investigation and subsequent judicial determination by a
competent court.
(iv) He further contended that the petitioner is not entitled to seek
extraordinary relief under Articles 226 and 227 of the Constitution, as
the matter is sub-judice and lacks merit.
IV. COURT'S REASONING AND ANALYSIS:
5. Heard the learned counsel for both parties and perused the documents
submitted.
6. It is apparent, at the outset, that the petitioner's bank account remains
frozen due to a contested transaction arising from the alleged
misplacement of a cheque by Opposite Party No.2. The account,
containing a sum of ₹9.75 lakhs, has been subjected to this restrictive
measure to safeguard the ongoing investigation.
7. The pivotal question now before this Court is whether the petitioner's
account may lawfully remain frozen for an extended duration solely on
the grounds of an ongoing investigation. It is a well-established legal
principle that while freezing a bank account in connection with an
ongoing investigation, such an action must be for a limited, specified
period. The freeze cannot extend indefinitely solely due to the
investigation, as it would impose an undue restriction on the account
holder's rights. Courts have consistently held that freezing an account
indefinitely, absent concrete findings or specific timelines, is an
Designation: AR-CUM-SR. SECRETARY
Location: ORISSA HIGH COURT, CUTTACK
Date: 18-Nov-2024 19:08:03
excessive measure and infringes upon the individual's right to property
and economic activity under Article 300-A of the Constitution.
8. In Mohammad Enamul Haque v. Central Bureau of Investigation1, the
Kerala High Court examined a similar matter, where the appellant,
accused of participating in a cattle smuggling syndicate, was denied bail
due to his influential status and alleged role as the conspiracy's
mastermind. His frozen bank account reportedly contained bribe sums,
including Rs.12.80 crore linked to BSF officials. The Court addressed
whether the account could remain indefinitely frozen due to the
ongoing investigation and held as follows:
"Every investigating agency is governed by the laws of the
land, including the Code of Criminal Procedure. No agency
can arbitrarily freeze bank accounts under Section 102
Cr.P.C., or keep the accounts frozen indefinitely, because it
will have the ultimate effect of denying the Constitutional or
legal rights of the account holder. Such a step can be resorted
to by the investigating agencies only if it is found absolutely
necessary. Just because, a person is said to have paid bribe to
an accused, his bank accounts cannot be mechanically or
arbitrarily frozen. Arbitrariness in investigation, or
investigative excess, cannot be, in any circumstance, condoned
by the courts."
9. In a similar vein, the Madras High Court in Manikandan v. The State
Rep2 addressed the issue of bank account freezes imposed by
investigative authorities, highlighting the procedural safeguards
required. The court emphasized that indefinite freezes undermine the
account holder's rights and, therefore, any such action must be closely
2018 SCC OnLine Ker 22772
Designation: AR-CUM-SR. SECRETARY
Location: ORISSA HIGH COURT, CUTTACK
Date: 18-Nov-2024 19:08:03
monitored, limited in scope, and justified by a demonstrable necessity
tied to the investigation. It was held in para 8 which is as follows:
"Freezing of bank accounts by investigating authorities in a
mechanical fashion is an increasing problem faced by Indian
businesses and companies. Such actions are routinely
predicated on mere allegations or suspicions of tainted
amounts being credited by accused persons or suspects
involved in dubious financial dealings into the business or
personal accounts of a bonafide party. One does not need to be
an accused in the offence or even named in the First
Information Report for the accounts to be frozen during
investigation. This may have a crippling effect on the
operational aspects of a business and can cause grave financial
hardships and a party bearing the brunt of such actions, often
get into deep waters."
10. Applying the aforementioned judicial precedents to the facts at hand, it
is noted that the ASI issued directions to freeze the petitioner's bank
account on 31.12.2022, citing preliminary findings following the filing of
the FIR. Yet, nearly two years have elapsed with no substantive
progress in the investigation.
11. This prolonged stagnation prompts significant concerns. First, it is
perplexing as to why only a preliminary inquiry has been conducted
thus far, in a matter involving such substantial financial implications.
Moreover, given the sequence of events and the duration of inactivity,
there appears to be a discernible possibility of mala fides at play. Such
circumstances invite the Court's scrutiny, particularly as the prolonged
freeze of the petitioner's account without demonstrable cause or due
investigative diligence may constitute an abuse of procedural authority.
Designation: AR-CUM-SR. SECRETARY
Location: ORISSA HIGH COURT, CUTTACK
Date: 18-Nov-2024 19:08:03
12. It is essential that a bank account, which serves as a fundamental
resource for a person's daily financial needs and overall well-being,
should not be frozen for an unreasonable period during an
investigation. Prolonged restrictions on access to funds can severely
disrupt an individual's ability to meet routine expenses, such as
housing, healthcare, and other basic needs, thereby affecting their
livelihood and financial stability. Therefore, while investigative actions
may necessitate temporary account restrictions, these measures should
be strictly time-bound and proportionate, ensuring that they do not
impose undue hardship beyond what is reasonably necessary for the
investigation's objectives.
V. CONCLUSION:
13. In light of the above, the Investigating Authorities are directed to
complete the investigation within two months from the date of
presentation of this judgment/order. If any misconduct or malfeasance
by the Opposite Parties is established, stringent criminal action may be
initiated against the responsible individual(s).
14. Furthermore, if the investigation is not concluded within the stipulated
two-months timeframe, the bank shall be required to unfreeze the
Petitioner's account.
15. Accordingly, this Writ Petition is allowed.
(Dr.S.K. Panigrahi)
Judge
Orissa High Court, Cuttack,
Dated the 8th Nov. 2024/
