Telangana High Court
M/S. Hooghly Ship Breakers Ltd vs State Of Telangana And 2 Others on 3 September, 2025
THE HON'BLE SRI JUSTICE M. SATYANARAYANA MURTHY
Crl.P Nos.7351, 7364, 7423, 7424, 7485, 7486, 7490, 7492, 7510,
7511, 7512, 7516, 7518, 7520, 7552, 7549, 7493 & 7559 of 2018
COMMON ORDER:
1) All these petitions are filed by the 3rd parties in Crime
No.248 of 2013 pending on the file of Economic Offences Wing
(hereinafter referred as EOW),CID, Hyderabad.
2) The petitioners are the companies represented by the
authorized signatories Mr.Anil Agrawal and others whose
deposits were freezed by the Investigating Agency during
investigation in the said Crime No.248 of 2013 for the offences
punishable under Sections 406, 420, 447, 385, 467, 468, 469,
471, 120B r/w 34 of IPC.
3) All the petitions are filed for the relief of quashing the
order passed under Section 102 Cr.P.C freezing the bank
accounts/demat accounts of the companies and individuals by
the Investigating Officer.
4) In all the petitions, the accused and defacto
complainant are one and the same, and the relief claimed is also
the same. Therefore, I find it expedient to decide all the
petitions by common order.
5) The details of the reliefs claimed by different persons are
mentioned hereunder in a table:
Sl.
No Crl.P.Nos. Parties Relief
.
1. 7351 of 2018 M/S.Comfort To quash and set aside
Fincap Ltd the proceeding dated
Anil Agrawal 27.04.2017 for freezing
(Director) of the Demat accounts
bearing
Nos:1205370000016984
and 1205370000039858
2. 7364 of 2018 M/s. First To quash and set aside
Financial Services the proceedings dated
Ltd. 27.04.2017 for freezing
of the Demat accounts
bearing
No.1205370000039877
and 1205370000015830
3. 7423 of 2018 M/s.Comfort Quash and set aside the
Securities Ltd. proceedings dated
Anil Agrawal 27.04.2017 by 1st
(Director) respondent freezing of
demat accounts bearing
Nos.1205370000002103
, 1205370000039843,
1205370000020061,
1205370000023645 and
1203660000032911
4. 7424 of 2018 M/s. Comfort Quash and set aside the
Securities Ltd. proceedings of 1st
Anil Agrawal respondent dated
(Director) 04.04.2017 4882/C-
9/EOW/CID/TS/2016
ii.freezing of bank
account bearing
No.910020039136606
5. 7485 of 2018 MM/s. Comfort Quash and set aside the
Intech Ltd. proceedings dated
Anil Agrawal 27.04.2017 for freezing
(Director) of demat account viz:
Client ID No.10503314
6. 7486 of 2018 M/s.Comfort Quash and set aside the
Intech Ltd. proceedings dated
Anil Agrawal 27.04.2017 for freezing
(Director) of demat accounts by
1st respondent bearing
Nos.1205370000039862
, 1205370000001585
and 1203660000024288
7. 7490 of 2018 Anil agarwal and Quash and set aside the
Ankur Garwal proceedings dated
27.04.2017 for freezing
of demat accounts
bearing
No.1205370000000028,
1205370000000032 and
1205370000005805
8. 7492 of 2018 M/s. Comfort Quash and set aside the
Intech Ltd. order dated 02.02.2015
passed by 1st
respondent for freezing
of 23,66,000 shares
lying in the demat
account bearing
No.1205370000001585
9. 7510 of 2018 M/s.First Quash and set aside the
Financial Services order dated 02.02.2015
Ltd. for freezing of shares
Anil Agrawal is lying in demat account
closely connected bearing
No.12053700000158320
10 7511 of 2018 M/s. Syncom To quash and set aside
Formulations the proceedings dated
India Ltd 02.02.2015, for freezing
Anil Agrawal is of 511000 shares of the
share holder by petitioner lying in demat
SEBI account bearing
investigation No.1205370000015300
11. 7512 of 2018 M/s.Syncom Quash and set aside the
Formulations proceedings dated
India Ltd 27.04.2017 for freezing
(Mr.Vijay of demat account vide
S.Bankoda) Client ID.No.10503785
Anil Agrawal
Co.Comfort is
share holder
12 7516 of 2018 M/s. Comfort Quash and set aside the
Securities Ltd. proceedings dated
Anil Agrawal 27.04.2017 issued by 1st
(Director) respondent for freezing
of demat account vide
client ID:10503306
13 7518 of 2018 M/s.Comfort Quash and set aside the
Intech Limited proceedings dated
Anil Agrawal 27.04.2017 and freezing
(Director) of demat accounts viz:
client ID No.10503363
14. 7520 of 2018 M/s.Comfort To quash and set aside
Intech Limited the proceedings vide
Anil Agrawal 4882/C-9/EOW/
(Director) CID/TS/2016 dated
04.04.2017 in freezing
of bank accounts
bearing
No.318001010036897,
318001010036374 and
318001010036373
15 7552 of 2018 M/s. First To quash the
Financial Services proceedings of 1st
Ltd. respondent dated
Anil Agrawal is 27.04.2017 for freezing
closely connected of demat accounts viz.,
to SEBI Client ID.No.10503494
investigation
16 7549 of 2018 M/s.Padma To quash and set aside
Impex Private the order dated
Limited 02.02.2015 issued by
the 1st respondent in
freezing the shares lying
in the petitioner's demat
account.
17. 7493 of 2018 M/s. Comfort To set aside the
Intech Limited proceedings of the 1st
respondent dated
27.04.2017 for freezing
of demat accounts
bearing
No.1205370000039877
and 1205370000015830
18 7559 of 2018 M/s.Hoogly Ship To quash and set aside
Breakers Ltd the proceedings vide
4882/C-
9/EOW/CID/TS/2016,
dated 04.04.2017 issued
by 1st respondent for
freezing of demat
account bearing
No.016902000002872
6) As the reliefs claimed in all petitions filed under
Section 482 Cr.P.C and the grounds urged are one and the
same, the allegations made in Crl.P.No.7351 of 2018 are taken
into consideration for proper adjudication to avoid repetition of
contents in various petitions.
7) The 2nd respondent Mr.K.Ravikumar, Kuber Towers,
Himayatnagar, Hyderabad is the defacto complainant and the
3rd respondent in all the petitions is the company/bank with
whom the accounts were maintained by the petitioners both
demat and bank accounts and they were freezed by the
Investigating Agency in the above said crime.
8) The defacto complainant is carrying on business in
the name and style of M/s Liquors India Limited as well as in
the form of M/s. Ravi Kumar Distilleries Limited (RKDL). For
the purpose of generating necessary funds for expansion of their
business, the companies came up with public issue and for the
purpose of bringing public issue, M/s.Ravi Kumar Distilleries
Limited (RKDL), the defacto compliant contacted one Mr.Anil
Agrawal, Director of the Company M/s. Comfort Securities
Limited and arrived at an agreement to take out necessary steps
for public issue on behalf of M/s.Ravi Kumar Distilleries
Limited. For the purpose of bringing public issue, the defacto
complaint was made to open an account with the 3rd
respondent herein/Central Depository Services (India) Limited
and alleged to have made to sign by the 2nd respondent on the
blank cheques and blank stamp papers and handed over the
same to the Anil Agrawal. It is also alleged that Anil Agrawal
has also rendered necessary financial assistance to the defacto
complainant by making necessary payments during the relevant
period and it was successful public issue and the entire amount
in respect of the said public issue was received by the defacto
complainant through the respondent/bank.
9) It is alleged that Mr.Anil Agrawal misused the
cheques of the defacto complainant which were handed over to
him, by transferring the amount into fictitious accounts by
transfer in the name of close associates of Mr.Anil Agrawal and
in turn he pocketed the said amounts. The accounts of said Anil
Agrawal and other accounts maintained by other petitioners are
shown in the table. Thus, under the guise of giving necessary
financial assistance Anil Agrawal got necessary shares of the
said company mortgaged and sold some shares for recovery of
amount advanced and said Mr.Anil Agrawal got M/s.Liquors
India Limited in his favour and/or in favour of his close
associates by taking forcible possession of those documents.
10) On the basis of allegations made by the 2nd
respondent in the written report, the crime was registered for
various offences referred supra.
11) It is alleged that the 1st respondent under influence
of 2nd respondent/defacto complaint resorted to various illegal
and high handed acts under the guise of investigation of the
alleged crime. The 1st respondent freezed the demat accounts of
petitioners and others with the 3rd respondent who have
nothing to do with the activities of the complainant. The
freezing of accounts is only because Mr.Anil Agrawal happened
to be one of the Directors of the companies though he has
nothing to do with the activities of the companies.
12) As a part of investigation, the 1st respondent
addressed letters to the 3rd respondent herein for freezing
demat accounts of petitioners along with few others based on a
complaint dated 23.08.2013 under the guise of investigation into
the allegations made in the FIR referred above. Accordingly the
petitioners demat account Nos.1205370000016984 and
1205370000001585 and the other accounts were freezed in view
of the various letters addressed by the 1st respondent to the 3rd
respondent in all the petitions which are shown in column No.3
of table.
13) The freezing of demat accounts and other accounts
with the 3rd respondent in all these petitions, by exercising
power under Section 102 Cr.P.C., without issuing prior notice or
intimation by the 1st respondent is a serious illegality.
14) The petitioners only came to know about the freezing
of accounts with the 3rd respondent on 03.05.2017
simultaneously on other days when disclosed attachment
proceedings issued by the 1st respondent for freezing of the
accounts. Thus, the alleged freezing of demat accounts and
other accounts without affording an opportunity is against the
principles of natural justice.
15) It is contended that these petitioners have nothing to
do with the alleged fraud attributed to Anil Agrawal by the 2nd
respondent in the above crime. The act of the 1st respondent in
freezing of demat accounts and other accounts with the 3rd
respondent is high handed and illegal. Therefore, the petitioners
were constrained to approach this Court under Section 482
Cr.P.C having no other alternative.
16) The petitioners' main contention is that the
proceedings dated 27.04.2017 purportedly in exercise of power
under Section 102 Cr.P.C and issuing direction to the 3rd
respondent in other petitions is without authority and ultravires
to the power conferred on 1st respondent. The transactions
referred in the said proceedings are the business transactions
related to other companies, body corporate and petitioners have
nothing to do with the said transactions. However, the
Investigating Officer acting under the pressure of 2nd
respondent is trying to harass the petitioners and others by
selectively referring to the transactions in the books of accounts.
Thus, the act of 1st respondent is highly depricable.
17) It is further contended that on account of freezing of
demat accounts, the petitioners are put to serious loss and
thereby they filed W.P.No.1845 of 2017 and batch before
Mumbai High Court. But the batch of petitions were dismissed
on the ground of lack of jurisdiction, as the transactions took
place within the jurisdictional limits of Hyderabad.
18) They contended that the action of 1st respondent in
freezing of demat accounts of the petitioners with the 3rd
respondent and other various accounts mentioned in Column
No.3 of Table mentioned above is illegal and prayed for quashing
the order passed by the 1st respondent, de-freeze various
accounts mentioned in Column.No.3 of above table.
19) The 2nd respondent filed counter only in criminal
petition No.7351 of 2018, denying material allegations inter alia
contending that petitions filed under Section 482 Cr.P.C are not
maintainable and allegations made in the petitions are all
untenable and illegal.
20) The petitioner herein is a company by name Comfort
Fincap Limited, and one of the accused in Cr.No.248 of 2013
dated 23.08.2013 i.e., Mr.Anil Agrawal, utilized the amount of
the 2nd respondent to the petitioner companies. The
investigation is under progress and there is nexus between the
petitioner and the said accused in the crime. The proceedings
issued by the 1st respondent is as a measure to see that the
petitioners and other connected persons should not tamper with
the evidence and the financial implications involved in the
present case. It is further contended that not only demat
accounts of the petitioners but also the accounts of all other
persons and companies have been under scan and freezed.
21) The 2nd respondent denied the allegations made in
the petitions by simple traversal and that the investigation is
under progress, substantiated bank statements of petitioner and
others found that an amount of Rs.29.10 cr of RKDL IPO funds
squandered by Anil Agrawal from Ravi Kumar Distilleries Ltd.
(RKDL) was laundered through the demat account Nos.
1205370000016984 and 1205370000039858 of the petitioner
and other associate/benami/shell companies to reach the hands
of Mr.Anil Agrawal in the form of RKDL shares and other
companies shares and cash, apart from grabbing M/s.Liquors
India Limited, Hyderabad. Investigation so far done by 1st
respondent authorities found that no cheque for
Rs.7,49,08,025/- was presented in Axis Bank Ltd, Malad
Branch, Mumbai and the cheque return memo was fabricated
and forged. The letter issued by Axis Bank Limited, Malad
Branch, Mumbai to Inspector of Police, Nacharam, Cyberabad,
Hyderabad which is filed along with the counter states that
"We hereby confirm that we are unable to provide
any evidence in the presentment of cheque
no.515722 dated 15.12.2011 Amount Rs.7,49,08,025
in favour of M/s.Comfort Intech Ltd from the account
of M/s.Ravikumar Distilleries Ltd. Also the Cheque
Return Memo shown to us is also not the regular
format used by our branch. We are also not able to
find any register for the entry of cheque return.
However we also confirm that there was no available
balance upto the amount of Rs.7,49,08,025
maintained in the account of M/s.Ravikumar
Distilleries Ltd. Also we are unable to identify the
signature of the staff which is done on the cheque
return memo."
22) Thus, the petitioner manipulated the cheque and
cheque return memo etc to transfer the funds of RKDL.
RKDL/2nd respondent neither availed any loan of Rs.6.82 crores
from M/s.Comfort Intech Limited, sister company of petitioner,
nor issued a cheque for Rs.7,49,08,025/- in favour of Comfort
Intech Limited, the petitioner herein. The fact as stated supra
Mr.Anil Agrawal mis-utilized one such cheque bearing
No.515722 and filled the columns of cheque in favour of
M/s.Comfort Intech Limited, a sister company of petitioner for
Rs.7,49,08,025/- to play fraud against RKDL.
23) The Investigation authorities have demanded the
petitioner M/s.Comfort Intech Limited and Anil Agrawal director
of 1st respondent to produce documentary evidence pertaining
to loan agreement and other documents pertaining to the
purported loan of Rs.6.82 cr. But the petitioner failed to
produce any such document, though it is a sister company of
the petitioner which was registered as Non Banking Financial
Company (NBFC) with Reserve Bank of India (RBI) and as per
the banking regulations M/s.Comfort Intech Limited cannot
extend any loan, without loan agreement and related
documents.
24) The Securities and Exchange Board of India (SEBI)
regulation 26 and 39 do not permit Merchant Banker and
Reserve Bank of India registered as NBFC to acquire shares of
company whose public issue is handled by them and to take
promoters shares or pledge respectively. Relevant regulations
are filed as annexures along with this counter. The 2nd
respondent/RKDL has complained to SEBI and SEBI is
investigating the matter.
25) M/s. Comfort Securities Limited, a sister company of
petitioner has admitted to SEBI as follows:
"As regards the regulation 39 of SEBI (ICDR)
Regulations, 2009 is concerned, it states that Specified
securities held by promoters and lock-in may be
pledged with any scheduled commercial bank or public
financial institutions collateral security for loan
granted by such bank or institution. In this reference
we would like to clarify the fact that Comfor Intech
Limited is a Reserve Bank of India registered NBFC
however does't fall under the definition of scheduled
commercial bank or public financial institution hence,
in out opinion regulation 39 of SEBI (ICDR)
Regulation, 2009 has not been complied with regard to
pledge of shares of Ravi Kumar Distilleries Limited."
26) EOW, CID Hyderabad while investigation is in
progress collected material and was satisfied that an amount of
Rs.29.10 cr of RKDL IPO funds squandered from RKDL was
laundered through the demat account Nos.1205370000016984
and 1205370000039858 of petitioner and other associate/
benami/shell companies to reach the hands of Mr.Anil Agrawal
in the form of RKDL shares, other companies shares and cash
apart from grabbing M/s.Liquors India Limited, Hyderabad.
27) The main contention is that the 1st respondent
during investigation found that the amount in the demat
accounts, pertaining to the crime which are laundered by
Mr.Anil Agrawal are of the petitioners and its sister company
which are shell companies. Therefore, issued a direction to 3rd
respondent in all the petitions referred in Column No.3 of the
table mentioned above for freezing of accounts both demat and
other bank accounts etc.
28) The petitioners made unsuccessful move in Mumbai
High Court and having failed in obtaining the order, the present
petitions are filed before this Court.
29) When the investigation is in progress, this Court by
exercising power under Section 482 Cr.P.C cannot quash the
orders in view of the law laid down by the Apex Court in Teesta
Atul Setalvad versus State of Gujarat1. It is also brought to
the notice of this Court that having failed in their attempt by the
petitioners in all the petitions before the Mumbai High Court,
the matter was taken to Hon'ble Supreme Court and Hon'ble
Apex Court dismissed the appeal filed by the petitioners.
Therefore, the order of freezing both demat and other accounts
(2018) 2 SCC 372
of petitioner referred in Column No.3 of the table referred above
cannot be set aside and prayed for dismissal of the petitions.
30) During hearing Mr.P.V.A Padmanabham and
N.V.Anatha Krishna, counsel for the petitioner raised the
following contentions to set aside the order of freezing demat
accounts and other accounts.
31) The main grounds urged are extracted hereunder:
"(i) The power to seize and or to freeze shall be exercised
strictly in accordance with the provisions of Sec 102
of the Cr.P.C and the said mandatory provisions are
not satisfied in this cases.
(ii) though a crime is registered on 23.08.2013 the orders
u/Sec 102 issued much subsequently there after does
not indicate any reasonable circumtacnes leading to
suspicion except reproducing /narrating the complaint
averments.
(iii) Sec 102(3) is mandatory and no such intimation is
given to Magistrate hence the orders are bad.
(iv) These are all transactions in the ordinary course of
business through negotiable instruments and the
presumption U/Sec 118 of Negiotable Instruments Act
to entertain a suspicion to invoke Sec 102 of Cr.P.C the
order must indicate a compelling reason
dispelling/disturbing the presumption U/Sec 118 of NI
Act.
(v) The petitioners are corporate entities and there is no
corporate vicarious criminal liability for the offences
alleged under I.P.C-unlike under NI Act. Hence, based
on averments in the complaint the just because Mr.Anil
Agarwal happened to be."
32) Written submissions also filed raising the above
grounds to set aside the order of freezing both demat and other
accounts of petitioners in Column No.3 of the table mentioned
above.
33) During hearing, Sri P.V.A Padmanabham and Sri
Anatha Krishna submitted that freezing of accounts of these
petitioners have nothing to do with the transactions of the 1st
respondent and Anil Agrawal.
34) Freezing of accounts of the petitioners (bank
accounts and demat accounts) is a serious illegality. When the
1st respondent proposes to freeze the accounts or seize the
property of the petitioners they would have issued a prior notice
or intimation to petitioners. Therefore, the seizure of the
property and freezing of the demat accounts and other accounts
of petitioners is against the principles of natural justice.
35) The Investigation Officer did not record any reasons
to his satisfaction as to the amount that is lying to the credit of
accounts mentioned in the Column No.3 of the table referred
above pertaining to transactions in dispute between the Anil
Agrawal and 2nd respondent. In the absence of recording such
reasons, in compliance of Section 102(1) Cr.P.C freezing of
accounts is a grave illegality.
36) The 3rd contention of the petitioners is that
noncompliance of Section 102(3) Cr.P.C vitiates entire
proceedings i.e., freezing of accounts of these petitioners shown
at Column No.3 of the table mentioned above, as the
Investigating Officer failed to give intimation in writing to the
Magistrate concerned soon after the seizure or freezing of the
accounts. Therefore, in view of the serious irregularity, the
order passed by the 1st respondent is liable to be set aside and
prayed to set aside the order.
37) Whereas, Sri Raghava Charyulu, counsel for the 2nd
respondent contended that the Investigating Agency in the
letters addressed to the 3rd respondent in all the petitions
recorded about its satisfaction that the amounts lying to the
credit of accounts pertain to transactions between Anil Agrawal
and the 2nd respondent and are strictly adhered to the
requirements of Section 102 (1) of Cr.P.C.
38) He also contended that though intimation is given
under Section 102 (3) of Cr.P.C to the Magistrate of the
jurisdiction but no material is produced by the Public
Prosecutor, as the material is available with the Public
Prosecutor of Telangana State. However, non-compliance of
Section 102(3) Cr.P.C does not vitiate freezing of accounts of the
petitioners mentioned in Column No.3 of the table mentioned
above. Therefore, none of the grounds urged by these
petitioners are sufficient to quash the proceedings.
39) Finally it is contended that the petitions under
Section 482 Cr.P.C to quash the orders passed under Section
102 of Cr.P.C is not maintainable. He placed reliance on several
judgments which will be dealt with, at appropriate stage of this
order. He also requested the Court to dismiss the petitions.
40) Whereas the Public Prosecutor for the State of
Telangana contended that the Investigating Agency addressed a
letter to Magistrate giving information about freezing of accounts
but with certain delay, the delay itself is not a ground to quash
the proceedings. Having failed in their attempts to set aside the
orders before Mumbai High Court and the trial Court, the
proceedings under Section 102 Cr.P.C, freezing both demat
accounts and other accounts of petitioners in Column No.3
cannot be set aside while exercising power under Section 482
Cr.P.C and also prayed for dismissal of the petitions.
41) In view of the rival contentions and considering the
grounds urged in the petitions as well as written submissions of
both the counsel, the points that arise for consideration are as
follows:
(1) Whether the petitions under Section 482 Cr.P.C
questioning the proceedings under Section 102
Cr.P.C is maintainable in view of the alternative
remedy available under the provisions of Cr.P.C.?
(2) Whether the non compliance of recording
satisfaction under Section 102(1) Cr.P.C of
alleged non compliance of Section 102(3) of
Cr.P.C vitiates the entire proceedings of freezing
of demat accounts and other accounts mentioned
in Column No.3 of table mentioned above? If so,
whether the orders passed by the 3rd respondent
is liable to be set aside?
POINT NO.1:
42) The first and foremost contention raised by the 2nd
respondent's counsel, Sri K.Raghava Charyulu, is that this
Court cannot entertain a petition under Section 482 Cr.P.C
when alternative remedy under Sections 451 and 457 of Cr.P.C
is available to the petitioners. They can avail remedy under
Section 457 Cr.P.C during the pendency of investigation or
under Section 451 Cr.P.C if the investigation is completed and
Calendar Case is pending for trial. Instead of availing such
remedies available under statute, the petitioners approached
this Court invoking the inherent jurisdiction of this Court under
Section 482 Cr.P.C to quash the order. On this ground alone,
the petitions are liable to be dismissed.
43) Whereas Mr.P.V.A Padmanabhma and Mr.Anantha
Krishna contended that power conferred on the Court under
Section 482 Cr.P.C is inherent and language used in Section
482 Cr.P.C is clear that any of the provisions of Cr.P.C shall not
limit the jurisdiction of High Court and the High Court can pass
any orders exercising inherent power and that no specific plea
regarding the maintainability of petitions under Section 482
Cr.P.C against the orders passed under Section 102 Cr.P.C was
raised in the counter. But for the first time, the said question
was raised during the argument and in the absence of any plea
in the counter, the petitions cannot be dismissed on the sole
ground.
44) The law is settled on the powers of High Court and as to
when such inherent power under Section 482 Cr.P.C. can be
exercised and cannot be exercised in various long line of
perspective pronouncements of the Apex Court. The leading
case on this aspect is State of Haryana Vs. Bhajanlal2,
wherein the Apex Court laid down the following seven
guidelines:
(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 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 concerned Act (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 the concerned Act, providing
efficacious redress for the grievance of the aggrieved party.
1992 Supp.(1) SCC 335
(7) Where a criminal proceeding is manifestly attended with
mala fide and/or where the 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."
45. In R.P. Kapur Vs. State of Punjab3, this Court laid down
the following principles:
(i) Where institution/continuance of criminal proceedings
against an accused may amount to the abuse of the
process of the court or that the quashing of the
impugned proceedings would secure the ends of justice;
(ii) where it manifestly appears that there is a legal bar
against the institution or continuance of the said
proceeding, e.g. want of sanction;
(iii) where the allegations in the First Information Report
or the complaint taken at their face value and accepted in
their entirety, do not constitute the offence alleged; and
(iv) where the allegations constitute an offence alleged but
there is either no legal evidence adduced or evidence
adduced clearly or manifestly fails to prove the charge.
46. In (Mrs.) Dhanalakshmi Vs. R. Prasanna Kumar and
others4, the Apex Court dealt with the scope of Section 482 of
Cr.P.C and it reads as under:
"Section 482 of the Code of Criminal Procedure empowers
the High Court to exercise its inherent powers to prevent
abuse of the process of Court. In proceedings instituted
on complaint exercise of the inherent power to quash the
proceedings is called for only in cases where the
complaint does not disclose any offence or is frivolous,
vexatious or oppressive. If the allegations set out in the
complaint do not constitute the offence of which
cognizance is taken by the Magistrate it is open to the
High Court to quash the same in exercise of the inherent
AIR 1960 SC 866
AIR 1990 SC 494
powers under Section 482. It is not, however, necessary
that there should be a meticulous analysis of the case,
before the trial to find out whether the case would end in
conviction or not. The complaint has to be read as a
whole. If it appears on a consideration of the allegations,
in the light of the statement on oath of the complainant
that ingredients of the offence/offences are disclosed, and
there is no material to show that the complaint is mala
fide, frivolous or vexatious. in that event there would be
no justification for interference by the High Court.
47. In State of Karnataka Vs. L. Muniswamy and Others5,
the Apex Court while considering scope and jurisdiction of the
High Courts, under Section 482 Cr.P.C, held as under:
"In the exercise of this wholesome power, the High Court
is entitled to quash a proceeding if it comes to the
conclusion that allowing the proceeding to continue
would be an abuse of the process of the Court or that the
ends of justice require that the proceeding ought to be
quashed. The saving of the High Court's inherent powers,
both in civil and criminal matters is designed to achieve a
salutary public purpose which is that a court proceeding
ought not to be permitted to degenerate into a weapon of
harassment or persecution. In a criminal case, the veiled
object behind a lame prosecution, the very nature of the
material on which the structure of the prosecution rests
and the like would justify the High Court in quashing the
proceeding in the interest of justice. The ends of justice
are higher than the ends of mere law though justice has
got to be administered according to laws made by the
legislature. The compelling necessity for making these
observations is that without a proper realisation of the
object and purpose of the provision which seeks to save
the inherent powers of the High Court to do justice
between the State and its subjects it would be impossible
to appreciate the width and contours of that salient
jurisdiction."
AIR 1977 SC 1489
48) In view of the rival contentions raised before the
Court it is appropriate to extract the scope of jurisdiction of
this Court under Section 482 Cr.P.C.
(1) "Section 482 of the Code of Criminal Procedure
empowers the High Court to exercise its inherent
powers to prevent abuse of the process of Court. In
proceedings instituted on complaint exercise of the
inherent power to quash the proceedings is called
for only in cases where the complaint does not
disclose any offence or is frivolous, vexatious or
oppressive. If the allegations set out in the
complaint do not constitute the offence of which
cognizance is taken by the Magistrate it is open to
the High Court to quash the same in exercise of the
inherent powers under Section 482. It is not,
however, necessary that there should be a
meticulous analysis of the case, before the trial to
find out whether the case would end in conviction
or not. The complaint has to be read as a whole. If it
appears on a consideration of the allegations, in the
light of the statement on oath of the complainant
that ingredients of the offence/offences are
disclosed, and there is no material to show that the
complaint is mala fide, frivolous or vexatious".
49) In view of the law laid down by Apex Court, the High
Court can exercise power under Section 482 Cr.P.C to prevent
abuse of power of law or Court as to secure ends of justice.
50) The main contention raised by Mr.P.V.A.
Padmanabham is that in the absence of any plea in the
counter affidavit about the maintainability of these petitions
under Section 482 Cr.P.C, this Court cannot dismiss the
petitions.
51) Undoubtedly, in the counter, no such specific plea
was raised except making an allegation in the 1st para of the
counter filed by the 2nd respondent that the criminal
petitions as filed are not maintainable and averments made in
the petitions are untenable and illegal. But the specific
averments in the 1st para of the counter not specifically
pointed out the maintainability of the petitions under Section
482 Cr.P.C against the order filed under Section 102 of
Cr.P.C. It is only general denial.
52) The contention raised by the counsel for the 2nd
respondent is jurisdictional fact. When the said contention is
raised about the very maintainability of petitions under
section 482 Cr.P.C invoking the inherent jurisdiction of this
Court the said jurisdictional fact or question can be decided
by the Court even in the absence of any plea in the counter,
since it goes to the root of jurisdiction of this Court under
Section 482 Cr.P.C.
53) The difference is a lot between jurisdictional fact
/question and adjudicatory fact/question. But when a question
as to the jurisdictional fact/question is raised, this Court is
bound to decide the jurisdictional fact before deciding other
contentions. Therefore, even in the absence of any such plea in
the counter, when such jurisdictional question is raised before
this Court, this Court is bound to decide such jurisdictional
question.
54) The Investigating Agency freezed the demat accounts
and other accounts of the petitioners by addressing letters to the
3rd respondent in all the petitions, it is the procedure followed
by investigating agency as a part of investigation. Therefore,
demat or any other accounts maintained by the petitioners and
freezing of the same is nothing but seizure of the property, since
the accounts of the petitioners are considered as property for the
purpose of Sec 102 Cr.P.C.
55) Same question came up before the Apex Court in a
judgment reported in State of Maharashtra vs. Tapas
D.Neogy 6.
56) In the facts of the above judgment, a crime was
registered against the respondents for various offences
punishable under Sections 120-B, 467, 468, 471 and 420 IPC
Section 13 (2) read with Section 13 (1) (d) of the Prevention of
Corruption Act,1988. During investigation, the bank accounts
of the respondents were freezed by exercising power under
Section 102 Cr.P.C and one of the contentions urged before the
Court is that the account is not property of the petitioner but
Section 102(1) Cr.P.C. permits the seizure of any property
pertaining to any offence. Apex Court held that the account is
the "property" of the 2nd respondent therein referring to various
judgments and concluded that the accounts of respondent is the
"property" within the meaning of Section 102 Cr.P.C. and the
police officer in the course of investigation can seize or prohibit
the operation of the said account if such assets have direct links
(1997) 7 SCC 685
with the commission of offence, which the police officer is
investigating into.
57) In view of the interpretation given by the Apex Court
to the word "property" under Section 102 of Cr.P.C, this Court
can conclude without any hesitation that the accounts of the
petitioners freezed by respondent No.1 is property within the
meaning of Section 102 of Cr.P.C.
58) The accounts of the petitioners were freezed by a
prohibitory order restraining the petitioners from operating their
accounts with the 3rd respondent by exercising power under
Section 102 Cr.P.C by investigating agency. The remedy open to
the petitioners is under Section 457 Cr.P.C, if the case is at the
stage of investigation or under Section 451 pending trial.
59) Section 457 deals with the procedure by police upon
seizure of property and it reads as follows:
1) "Whenever the seizure of property by any police officer is
reported to a Magistrate under the provisions of this
Code, and such property is not produced before a
Criminal Court during an inquiry or trial, the Magistrate
may make such order as he thinks fit respecting the
disposal of such property or the delivery of such
property to the person entitled to the possession
thereof, or if such person cannot be ascertained,
respecting the custody and production of such property.
2) If the person so entitled is known, the Magistrate may
order the property to be delivered to him on such
conditions (if any) as the Magistrate thinks fit and if
such person is unknown, the Magistrate may detain it
and shall, in such case, issue a proclamation specifying
the articles of which such property consists, and
requiring any person who may have a claim thereto, to
appear before him and establish his claim within six
months from the date of such proclamation.
60) In view of Section 457 Cr.P.C for claiming custody of
the property or release of the property attached or operation of it
is prohibited, the petitioners can approach the presiding officer
of the Court where the proceedings are pending, for release of
the property, during the pendency of the investigation, by way of
interim custody to the petitioners. In the present case, it is the
contention of the petitioners that no intimation is given to the
jurisdictional Magistrate in compliance of Section 102 (3) of
Cr.P.C soon after the seizure of the property. By letter dated
27.04.2017, the investigating officer i.e., Deputy Superintendent
of Police EOW, CID TS addressed a letter to the 3rd respondent
to freeze the demat accounts of these petitioners, while marking
notice to National Stock Exchange and Department of Corporate
Services. On 19.07.2017, an intimation was given to the 2nd
respondent by the Metropolitan Magistrate, Cyberabad,
L.B.Nagar about the seizure of the accounts in Cr.No.248 of
2013. This intimation is in compliance of Section 102 (3) of
Cr.P.C. This freezing of the property was intimated to the
Magistrate in compliance of 102(3) Cr.P.C prima facie but
belatedly. However, petitioners approached this Court after
lapse of more than a year by filing these petitions under Section
482 Cr.P.C. and by the date of approaching this Court, the
respondent No.1 complied with the requirements of Section
102(3) of Cr.P.C. Therefore, when the property was seized, the
same was intimated to the Magistrate showing that the amounts
lying to the credit of the demat accounts of the petitioners and
other accounts with the 3rd respondent which cannot be
produced before the magistrate in compliance of Section 451 or
457 of Cr.P.C. When the accounts of the petitioners were
freezed, which is property and hand over to the Magistrate, the
remedy available to these petitioners is only under Section 457
Cr.P.C to release the property or to give interim custody, subject
to conditions if any imposed by the Magistrate. Instead of
approaching jurisdictional Magistrate by filing a petition under
Section 457 Cr.P.C, the petitioners approached this Court
invoking inherent jurisdiction.
61) When a similar question came up for consideration
before the Mumbai High court in Criminal Application No.483 of
2013 in National Securities Clearing Corporation Ltd vs.
State of Maharashtra and Ors, the Single Judge of Mumbai
High Court considered the scope of Sections 102, 482 and 457
Cr.P.C., from para 23 onwards referring to various judgments of
the privy counsel, the Supreme Court and other High Courts
and concluded that a petition under Section 482 Cr.P.C is not
maintanable when a remedy under Sections 457 and 451 Cr.P.C
is available against the order passed under Section 102 Cr.P.C
and held that conspectus of facts illustrates that the applicants
had exhausted alternate remedy under Sections 451 and 457 of
Cr.P.C before the Magistrate wherein evidence was permissible
to be recorded to stake its claims or to convince it to hold shares
but by-passing that remedy, Section 482 Cr.P.C is invoked.
There are no grounds to exercise inherent jurisdiction. It
primarily also cannot be said that police have been used as lever
for settling dispute with either the applicants or between
respondents. Hence, applicants have efficacious alternate
remedy under the statute, consequently the applications under
Section 482 Cr.P.C are not maintainable.
62) If the principle laid down by Mumbai high Court is
applied to the present facts of the case, a criminal petition under
Section 482 Cr.P.C is not maintainable.
63) In another judgment, Bharath Overseas Bank v.
Minu Publication7, Madras High Court considered the question
as to the maintainability of the petition under Section 482
Cr.P.C against the order passed under Section 102 Cr.P.C and
concluded that the expression property would include the money
in the bank account of the accused and there cannot be any
fetter on the power of the police officer in issuing prohibitory
orders from operating the bank account of the accused when the
police officer reaches the conclusion that the amount in the
bank is the outcome of commission of offence by the accused.
The Court considered the fact as to how in modern days,
commission of white-collar crimes and bank frauds are very
much increased and, therefore the expression "property" may
not be interpreted in a manner so as to exclude the money in a
bank which in turn would have the effect of placing legal
hurdles, in the process of investigation into the crimes.
(2002 (2) ALT Crl.419
According to the learned Judge, such literal interpretation of the
expression "property" could not have been the intent of the
framers of the Criminal Procedure Code. In para 11 of the said
judgment, the learned Judge referred to the object behind
entrusting the police with powers of seizure. It will be
appropriate to extract the same in extenso. It would now be
useful to refer to the object behind investing the police with
powers of seizure. Seizure and production in court of any
property, including those regarding which an offence appears to
have been committed or which appears to have been used for
the commission of any offence or any other property will have a
two-fold effect. Production of the above property may be
necessary as evidence of the commission of the crime. Seizure
may also have to be necessary, in order to preserve the property,
for the purpose of enabling the Court, to pass suitable orders
under S.452 of the Criminal Procedure Code at the conclusion of
the trial. This order would include destruction of the property,
confiscation of the property or delivery of the property to any
person claiming to be entitled to possession thereto. It cannot be
contended that the concept of restitution of property to the
victim of a crime, is totally alien to the Criminal Procedure Code.
No doubt, the primary object of prosecution is punitive.
However, Criminal Procedure Code, does contain several
provisions, which seek to reimburse or compensate victims of
crime, or bring about restoration of property or its restitution. As
S.452, Crl.P.C. itself indicates, one of the modes of disposing of
property at the conclusion of the trial, is ordering their return to
the person entitled to possession thereto. Even interim custody
of property under Ss.451 and 457, Crl.P.C., recognises the
rights of the person entitled to the possession of the properties.
An innocent purchaser for value is sought to be re-imbursed by
S.453, Crl.P.C. Restoration of immovable property under certain
circumstances, is dealt with under S.456, Crl.P.C. Even,
monetary compensation to victims of crime or any bona fide
purchaser of property, is provided for under S.357, Crl.P.C.
Wherein when a Court while convicting the accused imposes
fine, the whole or any part of the fine, if recovered, may be
ordered to paid as compensation to any person, for any lose or
injury, caused by the offence or to any bona fide purchaser of
any property, after the property is restored to the possession of
the person entitled thereto. This two fold object of investing the
police with the powers of seizure, have to be borne in mind,
while setting this legal issue.
64) Similarly, a Single Judge of the Punjab & Haryana
High Court at Chandigarh in Narottam Singh Dhillon and Anr
vs State of Punjab8, at para 16 and 17 discussed the scope of
Section 102 (3) of Cr.P.C and remedy available to person
aggrieved by the order passed under Section 102 Cr.P.C by
relying on two other judgments which reads as follows:
"If the seizure of the property cannot be faulted, then its release
has to be under some relevant provisions of the Code. Such a
provision is available in the form of Section 457 Cr.P.C. In
Gangan Bihari Das vs. The State9, it was held:
1) Coming to the facts of the present case it is clear that tral
had not been conclude and , therefore, Section 452 Cr.P.C
MANU/PH/0006/2007
(2002 (4) RCR 423
with regard to disposal of property is not applicable and
Section 457 (2) Cr.P.C shall be applicable. Another decision
of Madhya Pradesh high Court in the case of Ganeshi Lal
Ranchhoddas Mahajan v. Satya Narain Tiwari10
reported in dealing with old section 523 (Section 457 in the
new code) observed as follows:
2) "Section 523 applies to property seized by the police of their
own accord as distinct from property seized under a
warrant issued by court and therefore will include even
cases where the property was seized by Court and therefore
will include even cases where the property was seized by
the police during investigation. Therefore, where the
property brought into the Court by the police in
proceedings under Section 512 was seized by the police
because it was suspected to be connected with the
commission of a crime, Section 523 would apply to the case
and the Court has jurisdiction to pas an order regarding the
disposal of the property.
3) In view of the aforesaid decision, the only way to determine
the entitlement of the present petitioners is to make an
enquiry as envisaged under Section 457 (2) of Cr.P.C what
is to be decided the Court in such an even has been
explained by this court in the case of Prabhat Kumar Das
v. Bijoy Prasad Das11 by this Court in the case of
Mahommed Zariff v. Sk.Zinaullah12. The observations
made by the Court in both the decisions are quoted below:
4) The Scope of Section 457 of the Cr.P.C has been the
subject matter of judicial discussion from time to time. The
law, however, is settled so far as this Court is concerned by
a decision of P.K.Mohanti, J. (as he then ws ) in Prabhat
Kumar Das v.Bijoy Prasad Das (1980) CLT 415. The law
was stated in these terms:
5) Under the provisions of Section 457 Cr.P.C if the
magistrate orders delivery of the property he has to deliver
it to the person entitled to the possession thereof. He has
to satisfy himself from the records and materials available
before him that the person to whom the delivery is ordered
is entitled to possession. If the materials are not sufficient,
he can make an enquiry into the matter by giving
opportunity to the claimants before passing the order. In
doing so, the magistrate should confine himself only to find
out as to who is entitled to possession of the property but
not the tile or ownership thereof. A person may be in
unlawful possession, at the time of seizure and in the
circumstance, it cannot be said that he entitled to
possession. It must be a lawful possession. The test,
therefore, is not the mere seizure, but as to who is entitled
to lawful possession. The expression 'entitled to
possession' is the sine qua non for the delivery of property
under Section 457Cr.P.C."
65) In view of the law declared by various Courts
including a judgment of Supreme Court in State of Gujarat v.
MANU/MP/0020/1958
(1980) CLT 415
MANU/OR/0154/1987
Shyamlal Mohanlal Choksi13 the provision of reporting to the
Magistrate would only be to ensure an order of the disposal of
the property either on superdari or otherwise during the
pendency of the case/investigations under Section 457 Cr.P.C.
This purpose stood achieved when the petitioners themselves
moved applications for release of their accounts and FDRs on
the ground that these were needed for day to day affairs. This
application was not moved under Section 457 Cr.P.C as the
counsel for the petitioners could not disclose the provision
under which the application was moved despite repeated
queries.
66) The main reason which weighed by case of Tapas
D.Neogy's case (2 supra) was that release of property may lead
to utilization of the money by the accused and then it may not
be available for confiscation or otherwise as can be ordered in
such cases.
67) Therefore, from the law consistently laid down by
various High Courts including Shyamlal Mohanlal Choksi's
case, (9 supra) the remedy open to the petitioners is to approach
the Court under Section 457 for release of the accounts from
prohibitory orders passed by the investigating officer exercising
power under Section 102 Cr.P.C. When direct remedy is
available in the statute i.e., Cr.P.C the petitioners instead of
availing said statutory remedy approached this Court invoking
AIR 1965 SC 1251.
inherent jurisdiction of this Court under Section 482 Cr.P.C. In
such cases, the petitioners can be relegated to approach the
Court under Section 457 Cr.P.C instead of exercising such
inherent jurisdiction by this Court at this stage.
68) In Sudeep Kaur Sawhney vs. Union of India and
Ors14 the Division Bench of the Court had an occasion to
consider a writ petition filed under Article 227 of Constitution of
India to set aside the order passed under Section 102 Cr.P.C
freezing the accounts. But the Court held that when the remedy
under Punjab Money Laundering Act is available under Section
8(c), a Writ Petition cannot be entertained.
69) In view of my foregoing discussion and pursuaded by
law laid down by various High Courts, the criminal proceedings
under Section 482 Cr.P.C is not maintainable, in view of the
availability of a specific remedy under Section 457 Cr.P.C to
these petitioners, while relegating them to approach concerned
jurisdictional Magistrate for appropriate releifs, i.e., for release of
accounts of the petitioners from prohibitory order. Accordingly,
the point is answered in favour of the respondents and against
the petitioners.
POINT NO.2
70) The main contention of the counsel for petitioners in
all the petitions is that the Deputy Superintendent of Police,
EOW, CID did not record his satisfaction that these amounts
MANU/PH/1033/2015
lying to the credit of various accounts mentioned in Column
No.3 of table mentioned above suspected to be related to the
crime and thereby freezing of the accounts of 3rd parties causes
much inconvenience or loss to the petitioners and they are not
able to operate the accounts for day to day business
transactions and non compliance of the requirement under
Section 102 (3) of Cr.P.C vitiates proceedings.
71) But this contention cannot be accepted for the
simple reason that in the letter dated 27.04.2017 in
Crl.P.No.7351 of 2018 addressed to the 3rd respondent by
Deputy Superintendent of Police, CID Telangana recorded his
satisfaction that the amount of the 2nd respondent is
misappropriated by Anil Agrawal, who is one the director of the
company, and laundered in various companies and therefore,
Deputy Superintendent of Police, EOW, CID Telangana State
suspected that the amount lying to the credit of the accounts
freezed represents the amount misappropriated by Anil Agarwal,
strictly adhering to the requirements under Section 102(1) of
Cr.P.C recorded his satisfaction, requested the 3rd respondent
herein to freeze the accounts.
72) The main contention of the counsel for the
petitioners is that no prior notice or intimation is issued before
passing the prohibitory orders by exercising power under
Section 102 (1) Cr.P.C.
73) A bare look at Section 102 Cr.P.C shows that no
such prior notice or intimation is contemplated before passing
prohibitory orders for freezing accounts.
74) Similar question came up before the Full Bench of
Mumbai High Court in Vinoskumar Ramachandran Valluvar
and Ors. Vs. The State of Maharashtra and Ors15 it held
that no prior notice or intimation is required to be issued to a
person before or simultaneously with the action of attaching his
bank account during investigation. In R.Chandrasekar v.
Inspector of Police, Salem16 the Full Bench of Mumbai High
Court considered the same issue and finally concluded that no
prior notice or simultaneous intimation be given to a person
before passing an order under Section 102(1) of Cr.P.C and it is
covered by judgment of Apex Court in State of Maharashtra vs.
Tapas D.Neogy (supra 2).
75) Therefore, persuaded by the above referred
judgments of High Courts and following the Apex Court
judgment, I hold that no prior notice or intimation is required to
be given to a person before passing an order under Section
102(1) of Cr.P.C. Accordingly, the contention of the counsel for
petitioners is rejected.
76) Finally, the counsel for the petitioners contended
that the Deputy Superintendent of Police EOW, CID, TS did not
2011 CrilJ 2522
2003 CRI LJ 294
comply with the requirements under Section 102(3) Cr.P.C
whereas the respondents counsel contended that no such plea
was raised in all the petitions and in the absence of any such
plea of non-compliance of Section 102(3) of Cr.P.C, it is not open
to the petitioners to raise such contention for the first time
during arguments.
77) As discussed in earlier paragraphs, the question
about the alleged non compliance of requirements under Section
102(3) Cr.P.C is not a jurisdictional fact/question. It is purely
an adjudicatory fact or question. Since non compliance is a
matter of evidence to be produced before the Court, Section
102(3) Cr.P.C obligates that every police officer under Section
102(1) of Cr.P.C shall forthwith report the seizure to the
Magistrate having jurisdiction.
78) But in the present case, the amount lying to the
credit of the petitioners with the 3rd respondent cannot be
produced before the Magistrate. Therefore, mere intimation is
sufficient and the reason behind this provision i.e., 102(3)
Cr.P.C is only obligating the police officer to intimate the same to
ensure an order for disposal of the property either on superdari
or otherwise during the pendency of the case/investigations
under Section 457 Cr.P.C.
79) This question came up before the Apex Court in
Shyamlal Mohanlal Choksi's case (supra 9) wherein it is held
that the provision of reporting to the Magistrate would only be to
ensure an order of the disposal of the property either on
superdari or otherwise during the pendency of the
case/investigations under Section 457 Cr.P.C. This purpose,
stood achieved when the petitioners themselves moved
applications for release of their accounts and FDRs on the
ground that these are needed for day to day business
transactions. This application was not moved under Section
457 Cr.P.C. Moreover in the facts of the present case, an
intimation by letter dated 19.07.2017 was given in compliance of
Section 102(3) of Cr.P.C in Crlp.No.7351 of 2018 but not in
other petitions. Thus, assuming for a moment, Section 102(3) is
not complied, it does not vitiate the entire proceedings, freezing
the accounts. In fact these petitioners have not raised such plea
which is an adjudicatory fact in the main petition but for the
first time, it was urged before this Court at the time of
arguments.
80) An identical situation came up before this Court in
Mohd.Maqbool Ahmed v. The Dy.Commr. of Police Hyd., &
Ors.,17 wherein the Division Bench of this Court in para 13 held
that when there is no allegation in the affidavit filed in support
of the writ petition that the requirement of sub-section (3) of
Section 102 Cr.P.C was breached, but raised such contention for
the first time in reply affidavit such contention cannot be
entertained. Even assuming that there was non-compliance of
1996 (2) A.P.L.J.97 (HC)
the requirement of Section 102(3) of Cr.P.C in that the police
officer has not informed the jurisdictional magistrate about the
factum of seizing of the bank accounts of the petitioners herein
such a course of action would not invalidate the order passed
under Section 102 (1) of Cr.P.C., freezing of bank accounts.
However, the court made it clear it is always open to the
Criminal court after a charge sheet is filed for appropriate orders
as to the handling of bank accounts and the criminal court will
pass suitable orders in the light of fact situation.
81) A Single Jude The Madras High Court in
Subbulakshmi vs. The Commissioner of Police, Egmore,
Chennai18, took a contrary view while referring to the judgment
in Aranganayagam v. State , by the Director of Vigilance
and Anti Corruption Erode19 holding the non-compliance of
Section 102(3) of Cr.P.C vitiates the proceedings, but the view
taken in B.Ranganathan v. State and others20 and view
taken by another two, single judges is contrary to law laid down
by single judge of Madras High Court. In both the judgments,
failure on the part of the investigating agency i.e., forthwith
report to the Magistrate having jurisdiction in compliance under
Section 102(3) of Cr.P.C is only a irregularity and freezing of
accounts is not vitiated.
2013 (3) MWN (Cr.) 40
2000 (1) MLJ 408 (Mad)
2003 Crl.LJ.2779
82) Earlier in Aranganayagam's case (supra 14) held
that if an offence registered against the accused and passed an
order under Section 102, freezing the accounts of the accused
and the Court took a view that police under Section 102(3) of
Cr.P.C shall forthwith report the seizure to the Magistrate having
jurisdiction. Simply because the police officer failed to comply
with Section 102(3) Cr.P.C the entire freezing of accounts is not
vitiated. Therefore, the law laid down by the Courts consistently
including Division Bench of this Court and other judgments of
Apex Court in State of Gujarat v. Shyamlal Mohanlal Choksi
(supra 9), keeping in view the purpose of compliance of Section
102(3) of Cr.P.C, it is difficult to hold that non-compliance of
Section 102(3) vitiates entire freezing of accounts. Moreover, in
the case on hand, intimation was given in Crl.P.No.7351 of 2018
but at belated stage. The purpose of intimation is only to enable
the jurisdictional Magistrate to dispose of the property during
the pendency of enquiry or investigation under Section 457
Cr.P.C. The petitioners themselves may approach the
jurisdictional Magistrate for appropriate relief, to release the
accounts from prohibitory orders under Section 457 Cr.P.C
which can be granted by the Magistrate in exercise of
jurisdiction under the provisions of Section 457 Cr.P.C.
Therefore, non compliance of Section 102(3) Cr.P.C is not a
ground to quash the proceedings at this stage.
83) Learned counsel for the 2nd respondent would
contend that when the investigation is pending or not
completed, the Court cannot defreeze the accounts, freezed by
the investigating agency by exercising power under Section 482
Cr.P.C and it seriously affects the investigation process. He
placed reliance on judgement of Apex Court in Teesta Atul
Setalvad's case (supra 1) wherein the Apex Court held that the
sweep and applicability of Section 102 Cr.P.C is no more res
integra. The question has been directly considered and
answered in State of Maharashtra vs. Tapas D.Neogy's case
(supra 2) wherein the Court took the view that the bank account
of the accused or any of his relation is 'property' within the
meaning of Section 102 Cr.P.C and a police officer in course of
investigation can seize or prohibit the operation of the said
account if such assets have direct links with the commission of
the offence for which the police officer is investigating into.
Therefore, the challenge to the action of seizure of bank account
of any person which may be found under circumstances creating
suspicion of the commission of any offence cannot be
countenanced. The bank account need not only of the accused
but it can be any account creating suspicion about the
commission of an offence. As regards freezing of bank accounts,
it is noticed that same has been followed by giving intimation to
the magistrate as required under Section 102(3) Cr.P.C and
there was nothing in sub-section 2 giving prior notice to the
account holder.
84) As the investigating officer was in possession of
material pointing out circumstances which create suspicion of
the commission of an offence, in particular, the one under
investigation and he having exercised powers under Section 102
Cr.P.C which he could in law, therefore, he could legitimately
seize the bank accounts of the petitioners after following the
procedure prescribed in sub-section (2) and sub-section (3) of
the same provision. The investigating officer after issuing
instructions to seize the stated bank accounts of the appellants
submitted report to the magistrate concerned and thus complied
with the requirement of sub-section (3). Although both sides
have adverted to statement of accounts and vouchers to rebut
their respective submissions, but is neither necessary nor
appropriate to analyze the same while considering the matter on
hand which emanates from an application preferred by the
appellants to defreeze the stated bank accounts pending
investigation of the case. Indisputably, the investigation is still
in progress. The appellants will have to explain their position to
the investigating agency and after investigation is complete, the
matter can proceed further depending on the material gathered
during the investigation. The suspicion entertained by the
investing agency as to how the appellants appropriated huge
funds, which in fact were meant to be disbursed to the
unfortunate victims of 2002 riots will have to be explained by
the appellants. Further, once the investigation is complete and
police report is submitted to the court concerned, it would be
open to the appellants to apply for defreezing of the bank
accounts and persuade the court concerned that the said bank
accounts are no more necessary for the purpose of investigation,
as provided under Section 102(3) of Cr.P.C. It will be open to
the Court concerned to consider the request in accordance with
law after hearing the investigating agency, including imposing
conditions as may be warranted in the fact situation of the case.
Such a course would meet the ends of justice. This is also
because the explanation offered by the appellants in respect of
the discrepancies in the accounts pointed out by the
respondents, will be matter of defence of the appellants at an
appropriate stage or upon completion of the investigation, and if
the investigating officer is satisfied with the explanation offered
by the appellants and is of the opinion that continuance of the
seizure of the stated bank accounts or any one of them is not
necessary, he will be well advised to issue instruction in that
behalf.
85) Thus, the ratio laid down in the above judgments is
that when there is prima facie material to satisfy the suspicion
and the investigation discloses the link between the transactions
and the crime is under investigation, not completed, no order
can be passed. Only after the investigation, the parties are
directed to approach the Court for release of the bank accounts.
86) In the present facts of the case, the Deputy
Superintendent of Police, EOW, CID, Telangana State during the
course of investigation suspected that the property i.e., the
amount lying to the credit of the petitioners, is misappropriated
by Anil Agarwal and this petitioner is one of the directors of all
the alleged shell companies and recording the satisfaction on
suspicion is in compliance under Section 102(1) of Cr.P.C and
intimated the seizure of the property by letter dated 19.07.2017
to the jurisdictional Magistrate in Crl.P.No.7351 of 2018 is
suffice to dismiss the present petitions and other petitions,
since, none of the grounds urged by petitioners are sufficient to
exercise power under Section 482 Cr.P.C.
87) Since the investigation is not completed as on date,
as admitted by both the parties, the petitioners are relegated to
a remedy under Section 457 or 451 Cr.P.C and approach the
concerned Magistrate and file appropriate applications after
completion of investigation.
88) The Public Prosecutor for the State of Telangana
contended that when no prejudice is caused to the petitioners,
this Court cannot entertain the petitions under Section 482
Cr.P.C to set aside the order passed under Section 102 Cr.P.C,
but the contention cannot be accepted, since freezing of
accounts certainly causes prejudice, as they are deprived of
operating the accounts in day to day business transactions.
89) To sum up, the Deputy Superintendent of Police,
EOW CID Telangana State recorded his satisfaction as to the
suspension of the amounts lying to the credit of various
accounts is misappropriated by Mr.Anil Agarwal who is one of
the director of these companies and other shell companies and
laundered the same into those companies in compliance of
Section 102(1) of Cr.P.C. He also complied with the
requirements under Section 102(3) of Cr.P.C by letter dated
19.07.2017 in Crl.P.No.7351 of 2018. Non compliance of
Section 102(3) Cr.P.C does not vitiate the proceedings. No prior
notice of intimation is required to be given before passing an
order under Section 102 Cr.P.C.
90) When the investigation is not completed, at this
stage, the proceedings and the order passed by the Deputy
Superintendent of Police cannot be quashed while leaving it
open to the petitioners to approach the Court under Section 457
Cr.P.C during pendency of the investigation or under Section
451 Cr.P.C after completion of investigation.
91) Applying the principles laid down in the judgments
referred above to the present facts of the case, the alleged non
compliance under Section 102 (3) Cr.P.C is not a ground to set
aside the order of freezing accounts. Therefore, I find no ground
to set aside the orders passed under Section 102 Cr.P.C by
exercising power under Section 482 Cr.P.C.
92) In the result, all the petitions are dismissed leaving it
open to the petitioners to approach the appropriate Court at
appropriate stage keeping in view the law laid down by various
Courts referred above. No order as to costs.
93) As a sequel, miscellaneous petitions, pending if any
shall stand closed.
__________________________________
M. SATYANARAYANA MURTHY, J
Date: 27 -08-2018
dv
