M/S. Jalan Chemical Industries ... vs The State Of Telangana And Another
2021 Latest Caselaw 2202 Tel

             HON'BLE SRI JUSTICE K. LAKSHMAN

             CRIMINAL PETITION No.4809 OF 2021
ORDER:

This Criminal Petition is filed under Section 482 of the

Code of Criminal Procedure, 1973 (for short 'Cr.P.C.') by the

petitioner/accused to quash the order dated 12.04.2021 passed

in Crl.M.P.No.186 of 2021 in Cr.No.698 of 2020 on the file of VII

Additional Junior Civil Judge-cum-VII Additional Metropolitan

Magistrate, L.B.Nagar, at Hyderabad. The petitioner is accused

in the above said crime.

2. Heard Sri S.Niranjan Reddy, learned Senior Counsel

representing Sri N.Naveen Kumar, learned counsel for the

petitioner and learned Public Prosecutor and perused the record.

Despite service, none appears for the 2nd respondent/defacto-

complainant.

3. FACTS OF THE CASE

i) On the complaint dated 23.12.2020 lodged by 2nd

respondent the Police, Cyber Crime Police, Station, has

registered a crime vide Cr.No.698 of 2020 for the offences under

Sections 417,419, 420 IPC and Sections 66-C and D of the

Information Technology Act, 2008 (for short, 'the Act').

ii) The account of the petitioner company was frozen by the

Investigating Officer in the present crime.

iii) The petitioner company has filed a petition under

Sections 451 and 457 of Cr.P.C. vide Crl.M.P.No.186 of 2021 in

Cr.No.698 of 2020 before the Court below seeking to defreeze the KL,J 2 Crlp_4809_2021

petitioner's account bearing No.57500000335009 with HDFC

bank, Stephen House Branch, Kolkata Branch and to permit the

petitioner company to operate the said account for the purpose

of business.

iv) The Court below vide impugned order dated

12.04.2021, dismissed the said application.

v) The allegations in the complaint lodged by the 2nd

respondent are that he took a loan of Rs.10,000/- from M.Pocket

Loan App and while sanctioning loan, they have taken his phone

data including contact details. Due to his personal problems, he

was unable to repay the loan. Now, he is receiving several calls

with regard to the loan harassing him mentally to transfer

Rs.33,000/- with high rate of interest. Some unknown persons

also contacting his family members and friends and talking in

abusive language about him. They are also sending multiple e-

mails through mail id:[email protected]@gmail.com, causing

mental trauma. Due to which he is unable to lead his personal

life peacefully.

vi) The 2nd respondent specifically mentioned about the

details of mail Id., through which he received calls using abusive

language and thereby causing mental trauma to him. The above

said allegations would reveal that it is a case of Loan App fraud.

4. CONTENTIONS OF THE PETITIONER

i) The petitioner company is a private limited company

incorporated under the provisions of the Companies Act, 1956 KL,J 3 Crlp_4809_2021

dealing the business of extending loans to individuals including

college students and young professionals for their daily needs.

ii) The petitioner company is registered as a Non-Banking

Financial Company (for short,' NBFC') and obtained requisite

license from the Reserve Bank of India and since then, the

petitioner is conducting its business duly and diligently

complying with the guidelines prescribed by the Reserve Bank of

India from time to time.

iii) The petitioner company has entered into a service

agreement with M/s Maybright Ventures Private Limited (the

MVPL) for providing technical and analytical services in the

conduct of business and in pursuance of the agreement, an App

was developed by the MVPL called 'mPokket' to extend loans and

execute necessary KYC documents and other requisite

paperwork in the form of loan agreements through electronic

mode.

iv) The petitioner company through 'mPokket' App provide

loans ranging Rs.500/0 to Rs.2,000/- to be repaid within 2 to 3

months.

v) The 2nd respondent, being a student and one of the

users of the 'mPokket' App, availed loan from the petitioner

company totaling to an amount of Rs.10,000/- by way of 9

different loans agreeing terms and conditions and executed

online loan agreements. Later he failed to repay the same in the

prescribed time in spite of providing waiver.

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vi) Since the petitioner company made requests for

repayment of loan, the 2nd respondent lodged a false complaint

against the petitioner company with a view to evade the loan.

vii) The Police, without examining the veracity of the

complaint and without even verifying whether the contents of

the complaint attract ingredients of the offences, proceeded in a

mechanical manner and registered the present crime for the

aforesaid offences.

viii) The Police issued notice under Section 102 of Cr.P.C. to

the petitioner's bank directing to debit freeze its account without

conducting any enquiry and without issuing any notice to the

petitioner. The petitioner came to know the same through e-mail

from his banker.

ix) The petitioner complied with furnishing

information/documents as sought by the Police.

x) Thereafter, the petitioner filed a petition vide

Crl.M.P.No.186 of 2021 before the Court below, to de-freeze its

account but the Court below without appreciating the reasons

cited by the petitioner in proper perspective, dismissed the said

petition vide order dated 12.04.2021.

xi) Aggrieved by the same, the petitioner has preferred

this Criminal Petition.

xii) The petitioner has to operate its bank accounts to run

its day-to-day legitimate business.

xiii) The Police de-frozen the petitioner's account without

any preliminary enquiry and at the initial stage of investigation.

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xiv) The Court below failed to consider that the de-frozen

of the petitioner's account by the Police under Section 102 of the

Cr.P.C. is illegal. It is settled law that a bank account can be

seized only in circumstances where it is reasonably suspected to

have direct links with the offences under investigation but the

Police failed to show any reasonable cause for suspecting the

petitioner's account.

xv) The Court below failed to appreciate that the Police

had not complied with the mandatory requirements under

Section 102 of Cr.P.C. of reporting the seizure of the bank

account to the jurisdictional Magistrate which itself would

render the seizure illegal.

xvi) With the said submissions, learned counsel for the

petitioner company sought to quash the order dated 12.04.2021

passed by the Court below impugned herein.

5. CONTENTIONS OF LEARNED PUBLIC PROSECUTOR.

i) First Information Report is not an encyclopedia. It is at

crime stage. The Investigating Officer has to investigate into the

allegations made by 2nd respondent. The allegations are serious.

It is a 'Loan App fraud'. Many Chinese companies, floated

companies in India, cheating innocent people and due to the

said harassment, hundreds of innocent victims committed

suicide. The Police have registered several cases in the entire

State of Telangana with regard to the very same Loan App issues

and harassment.

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ii) The Investigating Officer has to collect evidence,

investigate into the allegations and also has to analyze the bank

statements of the suspected companies to come to a conclusion

that the said amount was transferred into the accounts of the

said companies.

iii) The Investigating Officer, during the course of

investigation, issued a notice to the petitioner's bank directing to

debit freeze the petitioner's account under Section 102 Cr.P.C.

They have also requested the petitioner company to furnish

certain information/documents in the above said crime and got

de-frozen of the account of the petitioner company for the

purpose of analyzing the statements and also to come to a

conclusion with regard to the amount transferred into the said

account. There are several factual aspects to be investigated into

by the Investigating Officer.

iv) On the analysis of the entire evidence collected so far,

the Investigating Officer has shown the petitioner as an accused

in the present crime.

v) The Investigating Officer has seized the documents and

property from possession of the petitioner/accused in the said

crime since it is a suspect account. As part of investigation, the

said account was sought to hold for the purpose of investigation.

vi) The petitioner, instead of cooperating with the

Investigating Officer, filed the present petition to set aside the

order dated 12.04.2021 impugned herein.

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vii) Therefore, with the said submissions, learned Public

Prosecutor sought to dismiss the Criminal Petition.

FINDING AND ANALYSIS BY THE COURT

6. A perusal of the record would also reveal that the MVPL

is an accused in one of the above said crimes pertaining to Loan

App fraud cases. During the course of investigation, the

Investigating Officer sought certain information from the

petitioner. According to the learned counsel for the petitioner,

the Investigating Officer in Cr.No.698 of 2020 did not follow the

procedure laid down under Section 102 of the Cr.P.C. The said

facts were also considered by the Court below and the

application filed by the petitioner herein was dismissed vide

impugned order on the ground that the offences alleged against

the petitioner are serious in nature which are constantly causing

economic and social disaster in the country and investigation is

also at crucial and initial stage. If the account of the petitioner is

de-frozen, it would hamper investigation.

7. It is relevant to note that this Court in a common

judgment in W.P.Nos.13363 and 10565 of 2020 dated

03.12.2020, referring to various judgments of Apex Court and

this Court held that defect in intimation is curable and ground

of delay in intimation of seizure of property is per se not illegal.

8. As stated above, admittedly, the investigation is pending

in Cr.No.698 of 2020 against the petitioner company. There are

several cases registered in the entire State of Telangana with

regard to Loan App fraud. Several suicidal deaths were noticed.

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9. A perusal of the record would also further reveal that

due to the seriousness of the issue, Mr.Kalyan Dilip Sunkara

Advocate, has filed a Public Interest Litigation vide Writ Petition

(PIL) No.13 of 2021, wherein a Division Bench of this Court

directed the Director General of Police, Telangana, to file status

report on the Rampant Instant Sanction of Loans by Instant

loan Apps at the rate of 150% to 450% interest and constantly

harassing people to repay the loans. Notwithstanding the

constant harassment by these Instant Loan Apps at exorbitant

interest on whatsapp, many people across the Telangana State

have committed suicide. A report on the entire issue was sought

for by the Division Bench of this Court from the Director of

General of Police, Telangana. The Division Bench directed the

Director General of Police, Telangana State, to take immediate

and necessary prompt steps to nab the guilty parties and ensure

that such lending Apps are deleted/blocked.

10. It is also relevant to note that M/s.Save Them India

Foundation represented by its Chairman has filed a PIL before

the Hon'ble Apex Court wherein he has specifically explained the

threat to the Nation by the lending Apps, indirectly owned by the

Chinese and sought necessary action into this.

11. The Apex Court in several judgments examined the

scope and ambit of powers of High Court under Section - 482 of

Cr.P.C. In State of Haryana and Others vs. Bhajan Lal1, the

Apex Court cautioned that power of quashing should be

1992 Supp (1) SCC 335 KL,J 9 Crlp_4809_2021

exercised very sparingly and circumspection and that too in the

rarest of rear cases. While examining a complaint, quashing of

which is sought, Court cannot embark upon an enquiry as to

the reliability or genuineness or otherwise of the allegations

made in the FIR or in the complaint. The Apex Court in the said

judgment laid down certain guidelines/parameters for exercise

of powers under Section - 482 of Cr.P.C., which are as under:

"(1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.

(2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code.

(3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.

(4) Where the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.

(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.

(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the Act concerned (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or Act concerned, providing efficacious redress for the grievance of the aggrieved party.

(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the KL,J 10 Crlp_4809_2021

proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge."

12. In State of Telangana Vs. Managipet Alias Mangipet

Sarveshwar Reddy2, the Apex Court examined the scope of

enquiry to be conducted as per the guidelines issued by it in

Lalita Kumari (supra). The scope and ambit of preliminary

enquiry before lodging an FIR would depend upon the facts of

each case. There is no set format or manner in which a

preliminary inquiry is to be conducted. The objective of the same

is only to ensure that a criminal investigation process is not

initiated on a frivolous and untenable complaint. That is the test

laid down in Lalita Kumari (supra). Thus, the Apex Court held

that the preliminary enquiry warranted in Lalita Kumari (supra

is not required to be mandatorily conducted in all corruption

cases. It has been reiterated in multiple instances that the type

of preliminary enquiry to be conducted will depend on the facts

and circumstances of each case. There are no fixed parameters

on which such inquiry can be said to be conducted.

13. In Madhu K. Vs. Sub Inspector of Police3, the Kerala

High Court held that account cannot be frozen on mere surmise

and conjecture. Investigating Officer has to scrutinize the entries

and the nature of transactions before freezing the account.

14. In OPTO Circuit India Ltd. Vs. Axis bank4, the Apex

Court examined the scope and ambit of seizure and search etc., under

(2019) 19 SCC 87

2020(0) Supreme(Ker)568 4 2005(0) Supreme (SC) 48 KL,J 11 Crlp_4809_2021

Prevention of Money Laundering Act, 2002, and laid down certain

parameters for exercising power under Section 102 of Cr.P.C.

15. In Mathews Peter Vs. Asst. Police Inspector5, the Apex

Court had an occasion to deal with power of Investigating Officer to

seize the accounts/property and require attendance of an accused in

a criminal case.

16. In view of the above said law laid down by the Hon'ble

Apex Court and various High Courts, coming to the facts on

hand, the petitioner company is an accused in Cr.No.698 of

2020. It is at crime stage. The Investigating Officer has to

conduct investigation. As part of investigation, the Investigating

Officer has frozen the account of the petitioner company.

According to the Investigating Officer, the said accounts are

suspect accounts and Loan App transactions amounts were

transferred into the account of the petitioner company.

Therefore, the Investigating Officer has sought the petitioner

company in the above said crime to furnish certain information

and the reply was submitted by the petitioner company.

17. The petitioner has entered into an agreement with the

MVPL. The Investigating Officer is conducting investigation. The

petitioner has to cooperate with the Investigating Officer by

furnishing information and documents as sought by him in

concluding investigation. During the course of investigation, if

the Investigating Officer comes to a conclusion that the

petitioner company is nothing to do with the said crime and that

there is no nexus with the said crime and the petitioner

2001(0) Supreme (AP) 906 KL,J 12 Crlp_4809_2021

company and its transactions, he has to issue necessary

instructions to the bank defreezing the said account of the

petitioner herein. The Court below has considered all the said

aspects in the impugned order. Therefore, the impugned order,

dated 12.04.2021 is a reasoned order. According to this Court,

there is no error in it. The petitioner herein fails to establish any

grounds to interfere with the impugned order by invoking its

power under Section 482 of Cr.P.C. However considering the fact

that the petitioner has to pay salaries to its employees and its

activity comes to standstill, this Court inclines to pass certain

directions to the Investigating Officer in Cr.No.698 of 2020.

18. In the result, the Criminal Petition is accordingly

disposed of directing the Investigating Officer in Cr.No.698 of

2020 to complete investigation including the role played by the

petitioner in commission of offences in the said crime, as

expeditiously as possible, preferably within four weeks from the

date of receipt of a copy of this order. He is further directed to

consider information/documents furnished by the petitioner.

The petitioner shall cooperate with the Investigating Officer by

furnishing any further information and documents as sought by

him in concluding the investigation. If the Investigating Officer

comes to a conclusion that the petitioner company is nothing to

do with the said crime and that there is no nexus with the said

crime and the petitioner company and its transactions, he has to

issue necessary instructions to the bank to defreeze the said

account of the petitioner herein. If he comes to a conclusion that KL,J 13 Crlp_4809_2021

the petitioner company, its transactions have nexus with the

said crimes including Cr.No.698 of 2020, he shall follow the

procedure laid down under law.

19. As a sequel, miscellaneous petitions, if any, pending in

the Criminal Petition shall stand closed.

____________________ K. LAKSHMAN, J Date:26.07.2021.

vvr