M/S. Sujana Trade India Private ... vs The State Of Telanana
2021 Latest Caselaw 1484 Tel

      THE HONOURABLE SRI JUSTICE K. LAKSHMAN

          WRIT PETITION Nos.6783 & 6785 OF 2020

COMMON ORDER:

      Since the issue raised in both the Writ Petitions is one

and the same, contentions of the parties are same, they are

being heard together and disposed of by this common order.


2.    M/s.Sujana      Trade        India   Private    Limited     filed

W.P.No.6783 of 2020 to declare the action of respondent No.3

in issuing letter dated 05.03.2020 directing respondent Nos.4

and 5 for freezing its bank accounts i.e., bearing

No.50200035403261 with HDFC Bank and bearing

No.510101000793220 with Corporation Bank as illegal and

for a consequential direction to set aside the said letter dated

05.03.2020.

3. M/s.Suryodaya Enterprises filed W.P.No.6785 of 2020

to declare the action of respondent No.3 in issuing letter

dated 05.03.2020 for freezing its bank account bearing

No.30081250000546 with Syndicate Bank as illegal and to

quash the said letter dated 05.03.2020.

Contentions of the petitioner in W.P.No.6783 of 2020:

4. The petitioner is a company carrying business of steel

trading. It is also carrying business of traders, suppliers of

products and commodities and material in any form or shape

manufactured, semi-manufactures, raw materials, etc.

During the course of its business, M/s.Omni Enterprises 2 KL,J W.P.Nos.6783 & 6785_2020

(respondent No.6 herein) has issued a purchase order dated

09.12.2019 for supply of TMT steel bars. As per the said

purchase order, M/s.Omni Enterprises has paid an amount of

Rs.47 lakhs (Rs.24 lakhs + Rs.23 lakhs) through RTGS on

11.12.2019 in favour of the petitioner. In proof of the same,

the petitioner has filed copy of the bank statement. The

petitioner has transferred the said amount into the account of

M/s.Suryodaya Enterprises (petitioner in W.P.No.6785 of

2020) on 12.12.2019 towards advance for purchase of steel.

Due to non-submission of specification required by M/s.Omni

Enterprises, the petitioner has not supplied the material.

M/s.Suryodaya Enterprises also refunded the said advance

amount to the petitioner on 10.02.2020. Respondent No.3 -

Inspector of Police, ACB, has issued a notice dated

24.04.2020 to the petitioner to furnish details about receipt of

the said amount from M/s.Omni Enterprises. The petitioner

submitted a letter to respondent No.3 accepting receipt of said

amount of Rs.47 lakhs towards advance for supply of steel.

Respondent No.3 has summoned the petitioner to appear

before him on 27.02.2020 for recording the statement for the

purpose of investigation in a crime registered against

M/s.Omni Enterprises. Accordingly, the petitioner has

appeared before respondent No.3 on 27.02.2020 and

03.03.2020 for the purpose of recording statement as part of

investigation. The petitioner has also furnished bank

statement to respondent No.3 as sought by him.

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                                                          W.P.Nos.6783 & 6785_2020


5.     Respondent        No.3,        vide      letter   dated     05.03.2020

addressed to respondent Nos.4 and 5 - HDFC Bank and

Corporation Bank respectively, to freeze the above said

accounts of the petitioner. Respondent No.3 freezed the above

said accounts of the petitioner without following due process

of law. Therefore, the petitioner has submitted a

representation dated 07.03.2020 to respondent No.3 with a

request to defreeze its accounts by specifically mentioning the

difficulties faced by it. Despite receiving and acknowledging

the said representation, respondent No.3 did not take any

action. Due to the said illegal freezing of accounts, the

business of the petitioner got affected and the petitioner is not

in a position to conduct its business operations effectively.

With the said contentions, the petitioner sought to set aside

the notice of respondent No.3 dated 05.03.2020. It is the

contention of the petitioner that it is nothing to do with the

crime registered against M/s.Omni Enterprises and others.

Even though neither the petitioner nor its

Directors/employees are the accused in the said crime,

respondent No.3 has freezed the accounts of the petitioner

without following due process of law.

Contentions of the petitioner in W.P.No.6785 of 2020:

6. The petitioner is a partnership firm and it is in the

business of iron and steel, steel makers, steel converters, etc.

During the course of business, M/s.Omni Healthcare

(respondent No.5 herein) requested the petitioner, vide letter 4 KL,J W.P.Nos.6783 & 6785_2020

dated 16.12.2019, to pay an amount of Rs.51,87,479/- which

was due by M/s.Omni Healthcare to M/s.B.Braun Medical

India Pvt. Limited. In the said letter, it is also specifically

mentioned that the said payment be made by way of a banker

cheque. The said outstanding amount shall be treated as a

short term unsecured loan in the books of accounts of the

petitioner and shall attract interest @ 12% per annum.

Pursuant to the said letter, the petitioner has paid a demand

draft for Rs.51,87,479/- vide demand draft No.738508 dated

17.12.2019 drawn on Syndicate Bank (respondent No.4

herein) in favour of M/s.B.Braun Medical India Pvt. Limited.

M/s.Omni Healthcare has made payment of Rs.49,05,000/-

out of Rs.52,11,079/- to the petitioner through its Proprietor

on 05.02.2020. M/s.Omni Healthcare has paid the balance

amount of Rs.3,06,079/- to the petitioner through banks

cheque on 28.02.2020 by deducting TDS.

7. Respondent No.3 has called the petitioner to appear

before him on 04.03.2020 for the purpose of investigation.

Accordingly, the petitioner has appeared and submitted

relevant details pertaining to transaction between the

petitioner and M/s.Omni Healthcare. Without considering

the same, respondent No.3, vide letter dated 05.03.2020,

freezed the overdraft account of the petitioner.

8. Respondent No.3 without following due procedure laid

down under law more particularly under Section 102 of

Cr.P.C., seized the account of the petitioners. Due to freezing 5 KL,J W.P.Nos.6783 & 6785_2020

of the account of the petitioner, its business got affected and

it is unable to conduct business effectively. The petitioner

has already paid an amount of Rs.51,87,479/- to

M/s.B.Braun Medical India Pvt. Limited on behalf of

M/s.Omni Healthcare, which was due by it. Without

considering the same, respondent No.3 has illegally freezed

the account of the petitioner. Therefore, the petitioner has

submitted a representation dated 06.03.2020 to respondent

No.3 with a request to defreeze its account by considering the

fact that it has cooperated with the Investigating Officer and

will cooperate in future also. Despite receiving and

acknowledging the said representation, respondent No.3 did

not take any action so far.

Contentions of the respondents:

9. Respondent No.3, Inspector of Police, ACB, has filed

counter in both the Writ Petitions. In the counter, respondent

No.3 specifically contended that Crime No.13/RCO-CIU-ACB-

2019 was registered on 30.12.2019 against K.Srihari Babu,

Proprietor of M/s.Omni Enterprises, and others for the

offences under the provisions of the Prevention of Corruption

Act and also Indian Penal Code. During the course of

investigation, the Investigating Officer came to know about

transfer of certain amounts into the accounts of the

petitioners and the business transactions among the

petitioners, M/s.Omni Healthcare and M/s.Omni Enterprises.

There was flow of funds from the accounts of the said 6 KL,J W.P.Nos.6783 & 6785_2020

M/s.Omni Healthcare and M/s.Omni Enterprises to the

account of M/s.Sujana Trade India Private Limited (petitioner

in W.P.No.6783 of 2020) and thereafter to the account of

M/s.Suryodaya Enterprises (petitioner in W.P.No.6785 of

2020). The said transfers created an amount of suspicion

and it is under investigation by the ACB. Entire business

activities and transactions of the petitioners are required to

be scrutinized. The documents filed by the petitioners

including purchase order, demand draft and correspondence

in both the Writ Petitions would reveal that the said

transactions are among M/s.Omni Healthcare, M/s.Omni

Enterprises and the petitioners. It is further stated that, as

part of investigation, considering the aspect that there are

serious allegations against M/s.Omni Healthcare, M/s.Omni

Enterprises and other accused in two crimes registered

against them, respondent No.3 freezed the accounts of the

petitioners. Respondent No.3 has followed the procedure laid

down under law more particularly under Section 102 of

Cr.P.C. The accounts of the petitioners, M/s.Omni

Healthcare and M/s.Omni Enterprises have to be scrutinized

thoroughly during the course of investigation. It is further

stated that during the course of investigation, if the

Investigating Officer comes to a conclusion that the accounts

have to be defreezed, he will issue necessary instructions to

the banks of the petitioners, but the same will happen only

after completion of investigation.

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                                                       W.P.Nos.6783 & 6785_2020

10. Sri V.Ravi Kiran Rao, learned Senior Counsel appearing

for ACB, would submit that after completion of investigation,

respondent No.3 will file final reports in Crime Nos.13 of 2019

and 4 of 2020. Thereafter, the petitioners can as well file

appropriate applications before the Court below seeking de-

freezement of their accounts. Instead of doing so, the

petitioners have filed the present Writ Petitions. He would

further submit that in view of the pendency of the crimes, the

accounts of the petitioners cannot be defreezed. He has

placed reliance of the principle laid down by the Hon'ble Apex

Court in State of Maharashtra v. Tapas D.Neogy1 and also a

common order of this Court dated 29.01.2020 in W.P.Nos.534

and 549 of 2020. With the said submissions, learned Senior

Counsel sought to dismiss both the Writ Petitions.

11. The said M/s.Omni Healthcare and M/s.Omni

Enterprises have also filed their counters. In the counters,

the Proprietors of both concerns have supported the case of

the petitioners. They have stated that due to freezing of the

accounts of the petitioners, they are not in a position to

conduct their business and they are also not in a position to

pay school fee and minimum necessities for their survival.

They have relied on the principle laid down by the Hon'ble

Apex Court in Coimbatore District Central Coop. Bank v.

    (1999) 7 SCC 685
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                                                       W.P.Nos.6783 & 6785_2020

Employees Assn.2. With the said submissions, the said

Proprietary concerns sought to allow the Writ Petitions.

Reply of the petitioners:

12. The petitioners have also filed reply to the counter filed

by respondent No.3. In the reply, it is contended that the

petitioners are not accused in any crime and there are no

crime pending against them. Respondent No.3 has not

followed the procedure laid down under law while seizing the

accounts of the petitioners. Respondent No.3 failed to

appreciate that the petitioners appeared before him, gave

their statements, submitted bank statements, etc., and thus

they have cooperated with the Investigating Officer in

concluding the investigation. Without following the

procedure, respondent No.3 has freezed the accounts of the

petitioners vide letters dated 05.03.2020.

Finding of the Court:

13. The above stated facts would reveal that Mr.K.Srihari

Babu, Proprietor of M/s.Omni Enterprises (respondent No.6

in W.P.No.6783 of 2020) is an accused in Crime No.13/RCO-

CIU-ACB/2019, pending on the file of Central Investigating

Unit, ACB, Hyderabad, for the offences under the provisions

of the Prevention of Corruption Act and also Indian Penal

Code. His wife Smt.K.Sujatha, Proprietor of M/s.Omni

Healthcare (respondent No.5 in W.P.No.6785 of 2020) is also

an accused in the said crime. There are three more crimes

(2007) 4 SCC 669 9 KL,J W.P.Nos.6783 & 6785_2020

i.e., Crime Nos.10/2019, 4/2020 and 8/2020 registered with

regard to ESI scam. Crime No.13/2019 is pending with

respondent No.3 and investigation is going on. During the

course of investigation, respondent No.3 has freezed the

accounts of the petitioners on the ground that there are

financial transactions between the said Proprietary concerns

and the petitioners and there is flow of funds from their

accounts. The details of the same are specifically mentioned

in the notice. The petitioners have not disputed the said fact.

14. While admitting the said facts of flow of funds and

financial transaction, the petitioners would contend that the

said transactions are during the course of their business and

they are not involved in any crime and the amount was

already returned. Respondent No.3 has not followed the

procedure laid down under the provisions of Cr.P.C., more

particularly, Section 102 of Cr.P.C.

15. A perusal of the counter filed by respondent No.3 would

reveal that the investigation is pending in Crime No.13/2019.

Prima facie, there are serious allegations against all the

accused including K.Srihari Babu and Smt.K.Sujatha.

Admittedly, investigation is pending. During the course of

investigation, respondent No.3, after coming to conclusion

that there is flow of funds and there are financial

transactions, issued notices dated 05.03.2020 freezing the

accounts of the petitioners. After completion of investigation,

the petitioners can as well file appropriate applications before 10 KL,J W.P.Nos.6783 & 6785_2020

the Court below seeking de-freezement of their accounts.

Instead of doing so, the petitioners have come up with the

present Writ Petitions.

16. The Hon'ble Apex Court in Tapas D.Neogy's case

(supra) categorically held that Police Officer is having power to

freeze the accounts of accused or any of his relations and

others on suspicion with regard to transactions between them

by invoking power under Section 102(1) of Cr.P.C. It is also

held that if the circumstances exist creating suspicion of

commission of any offence in relation to the bank account,

Section 102(1) is attracted empowering the Police Officer

investigating the offence to seize the bank account and issue

order prohibiting the account from being operated upon.

Similar principle was laid down by the Madras High Court in

B.Ranganathan v. State3. By referring to the said principle

in the above said two cases, learned single Judge of this

Court in a common order dated 29.01.2020 in W.P.Nos.534

and 549 of 2020, with regard to very same crime i.e., ESI

scam dismissed the Writ Petitions filed by the petitioners

therein seeking de-freezement of their accounts. In the said

common order, it was specifically held that the Police Officer

is having power to freeze the accounts on the ground of

existence of suspicion of commission of offence in relation to

the bank account.

    2003 Crl.L.J 2779
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                                                 W.P.Nos.6783 & 6785_2020

17. In view of the above, it is relevant to mention that

Section 102 of Cr.P.C., which deals with power of Police

Officer to seize certain property. As per Section 102(3) of

Cr.P.C., every police officer acting under sub- section (1) shall

forthwith report the seizure to the Magistrate having

jurisdiction. There is a specific contention in the counter filed

by respondent No.3 that the said procedure laid down under

Section 102 of Cr.P.C., has been followed.

18. At the cost of repetition, it is relevant to note that the

investigation is pending in Crime No.13 of 2019. After

completion of investigation, and on filing of final report, the

petitioners can as well file appropriate applications before the

Court below seeking de-freezement of their accounts. Even

during the pendency of investigation also, the petitioners can

as well file the said application before the Court below

reiterating the grounds mentioned in the present Writ

Petitions. Instead of availing the said remedy, the petitioners

have filed the present Writ Petitions.

19. It is relevant to note that it is specifically mentioned by

the petitioner in W.P.No.6783 of 2020 that it is undertaking

to keep total amount of Rs.47,00,000/- received from

K.Srihari Babu in a separate account which respondent No.3

is at liberty to freeze or attach or not as convenient to

respondent No.3. An amount of Rs.42,00,000/- is available

in their account with Corporation Bank and an amount of

Rs.5,00,000/- is available in their account with HDFC Bank.

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                                                 W.P.Nos.6783 & 6785_2020

In both the accounts, the said amount of Rs.47,00,000/-

which was received by K.Srihari Babu is available with the

above said accounts of the petitioners. Thus, the petitioners

can as well approach the Court below by way of filing

appropriate applications reiterating the said contentions.

Conclusion:

20. In view of the said discussion, the principle laid down by

the Hon'ble Apex Court and this Court in the judgments

referred supra, this Court is not inclined to set aside the

notices dated 05.03.2020 issued by respondent No.3 freezing

the accounts of the petitioners. The petitioners failed to make

out any case to grant relief in their favour, as such, both the

Writ Petitions are liable to be dismissed.

21. Accordingly, both the Writ Petitions are dismissed.

However, liberty is granted to the petitioners to file

appropriate applications before the Court below seeking

de-freezement of their accounts. No costs. Miscellaneous

petitions pending, if any, shall stand closed.

__________________ K. LAKSHMAN, J Date: 01.06.2021 TJMR