Information about freezing of account by police

Madras High CourtTmt.T.Subbulakshmi vs The Commissioner Of Police on 30August, 2013

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED : 30.08.2013

CORAM:

THE HON'BLE MR.JUSTICE R.SUBBIAH

Crl.O.P.Nos.13103, 13104 & 13105 of 2013

1.Tmt.T.Subbulakshmi .. Petitioner in Crl.O.P.13103 &13105/2013

2.T.Yamini .. Petitioner in Crl.O.P.13104/2013

Vs.

1.The Commissioner of Police,

Egmore, Chennai-8.

2.State represented by Inspector of Police, Central Crime Branch, Team-XV, Egmore, Chennai-600 008. .. Respondents 1 & 2 in above three Ops

3.The Manager, Indian Overseas Bank, Valmiki Nagar Branch,Chennai-41. .. 3rd respondent in Crl.O.P.13103/2013

4.The Manager, Indian Bank, Thiruvanmiyur Branch, Chennai. .. 3rdrespondent in Crl.O.P.13104 & 13105/2013 Prayer: Petitions filedunder Section 482 of the Criminal Procedure Code praying for adirection directing the respondents herein to defreeze thepetitioners' bank accounts maintained with the respective 3rdrespondent-Bank.

For Petitioners : Mr.R.Shanmugha Sundaram, Senior Counselfor Mr.P.Venkata Subramaniam and Mr.A.Gopinath

For Respondents : Mr.C.Emalias, APP (For R1 & R2)

Mr.D.Saikumaran (For R3 in Crl.OP.13103/2013)

Mr.P.Raghu Raja (For R3 in Crl.OP.13104 & 13105/2013)

* * * * *

COMMON ORDER

All these three petitions have been filed seeking for a directiondirecting the respondents to defreeze the bank accounts maintained by thepetitioners with the respective 3rd respondent-Banks.

2.Since the issues involved in all these three petitions are one andthe same, these petitions are disposed of by way of this common order.

3.One Tmt.T.Subbulakshmi is the petitioner in Crl.O.P.Nos.13103 and13105 of 2013 and her daughter T.Yamini is the petitioner in Crl.O.P.No.13104of 2013.

4.The Inspector of Police, Central Crime Branch, has registeredcases against the petitioners in Crime Nos.154, 233 & 315 of 2012for the alleged offences under Sections 420, 465, 467, 468, 471r/w 120-B of IPC. The petitioner Subbulakshmi was arrested on25.10.2012 at Bangalore and she was produced before the learnedJudicial Magistrate, Tambaram on 26.10.2012 and remanded tojudicial custody. Subsequently, she was released on bail. Thepetitioner T.Yamini, who has been arrayed as accused in CrimeNo.315 of 2012, obtained anticipatory bail from this Court.

5.It is the case of the petitioners that only due to the personaland political vendetta, the above criminal cases have beenfoisted against them. The petitioner Subbulakshmi was examinedduring her police custody by the respondent-Police on 25.10.2012& 26.10.2012. As per the orders of the learned JudicialMagistrate, Tambaram, she was subjected to three days policecustody from 02.11.2012 to 05.11.2012 till 5.00 pm. But, even atthe time of custody, no materials were recovered from her.

6.It is further case of the petitioners that the petitionerSubbulakshmi is maintaining a Savings Bank Account with theIndian Bank, Thiruvanmiyur Branch, Chennai vide., Savings BankAccount No.443503512 and she is also maintaining a Savings BankAccount with the Indian Overseas Bank, Valmiki Nagar Branch,Chennai, vide Savings Bank Account No.147201000002821. The

petitioner T.Yamini is maintaining savings bank account with theIndian Bank, Thiruvanmiyur Branch, Chennai, vide Savings BankAccount No.443519920. The above said three bank accounts werefrozen by the said Banks on the written request dated 27.09.2012made by the Inspector of Police, Central Crime Branch, Egmore,Chennai. Hence, the petitioners have sent legal notices to theBanks on 27.10.2012 stating that freezing of the bank accounts isnot in consonance with the law & practice and the legalformalities, which have to be obtained from the JudicialMagistrate, have not been followed. Further, there is no progressin the investigation since April-2012 and the motive for freezingof the bank accounts of the petitioners is only to put thepetitioners in great hardship and mental agony. Hence, thepetitioners have come forward with the present petitions beforethis Court seeking a direction directing the respondents todefreeze their bank accounts.

7.The learned senior counsel appearing for the petitioners byinviting the attention of this Court to Section 102 of Cr.P.C.,which deals with the powers of the Police Officer to seizecertain property, submitted that if the seizure of the propertyis only in accordance with the provision of Section 102 ofCr.P.C., the same can be sustainable, otherwise such a seizure isnot legally sustainable.

8.In this regard, the learned senior counsel appearing for thepetitioners placed reliance on the judgment reported in 1999(7)SCC 685 (State of Maharashtra Vs. Tapas D.Neogy) and submittedthat as per the dictum laid down in the said judgment, the bankaccount will fall within the meaning of the property mentionedunder Section 102 of Cr.P.C., and that therefore, unless thefreezing of the bank account is in accordance with section 102 ofCr.P.C., the same cannot be legally sustainable. In this regard,the learned Senior Counsel appearing for the petitioners hasdrawn the attention of this Court to Sub-Clause 3 to Section 102

of Cr.P.C. and submitted that every Police Officer acting underSub-section (1) to Section 102, shall forthwith report theseizure to the Magistrate having jurisdiction and that in theinstant case, though the bank accounts of the petitioners werefreezed on the written request dated 27.9.2012 made by theInspector of Police, Central Crime Branch, the freezing of thebank accounts was not reported to the Magistrate havingjurisdiction forthwith. The learned Senior counsel for thepetitioner submitted that therefore, the freezing of the bankaccounts of the petitioners is not legally sustainable and therespondents may be directed to defreeze the bank accounts of thepetitioner.

9.The learned Senior Counsel for the petitioners relied upon thejudgment reported in 2003 Crl.L.J 2779 (B.Ranganathan Vs. Stateand others) in support of his contention that as per the dictumlaid down in the said judgment, if the bank account of theaccused is freezed, the police should report the concernedMagistrate forthwith regarding the prohibitory order and thePolice should also give notice of the seizure to the accused andallow him/her to operate the bank account subject to his/herexecuting a bond.

10.The learned senior counsel for the petitioners relied on thefollowing judgments in support of his contention that if seizurewas not reported forthwith to the concerned Magistrate, the sameis not legally sustainable:-

1)2002(5) CTC 598 (R.Chandrasekar Vs. Inspector of Police, FirLand Police Station, Salem and another

2)2003 CRI.L.J. 2902 (Rajamani Vs. Inspector of Police, Salem andothers)

3)2005(1) CTC 657 (His Holiness Sri Kanchi Kamakoti PeetadhipathiJagadguru Sri Sankaracharya Samigal Srimatam Samasthanam Vs. TheState)

4) (2005)8 SCC 771 (Sri Jayendra Saraswathy Swamigal (II) Vs.State of Tami Nadu)

5) 2008 Crl.L.J. 148 [Dr.Shashikant D.Karnik Vs. State ofMaharashtra]

11.The learned senior counsel for the petitioners submitted thatby applying the ratio laid down in the above said judgments, adirection may be given to the respondents to defreeze the bankaccounts of the petitioners.

12.The learned Public Prosecutor submitted that it is the case ofthe prosecution that the property situated at Old No.189, NewNo.51, Sholinganallur Village, 'The Sea Shore TownTambaram Taluk,Kancheepuram District, S.No.12/1 an 12/2 as per PattaS.No.12/356, Plot No.297 measuring an extent of 12,000 sq.ft (5grounds) originally belonged to one Chokkalinga Mudaliar. Fromthe said Chokkalinga Mudaliar, the said property was purchased byone Mr.Mahendra Kumar N.Kampani and his wife Mrs.Malini MahendraKumar N.Kamapani vide sale deed dated 25.02.1967 registered asDocument No.881/1967. The said Mrs.Malini Mahendra KumarN.Kampani died on 07.02.1980 and Mr.Mahendra Kumar N.Kampani diedon 26.08.1997. After their demise,one Dhanalakshmi, relative ofthe petitioners herein, created a forged power of attorney dated12.04.2007 along with eleven other persons and executed a saledeed in favour of the petitioner Subbulakshmi on 17.05.2007 andthe petitioner Subbulakshmi executed a settlement deed dated22.04.2008 in favour of one Mrs.Yuba T.Reichard, who in turnexecuted a Power of Attorney in favour of T.Yamini, thepetitioner in Crl.O.P.No.13104 of 2013. Thus, the petitionersinvolved in the land grabbing and they had been depositing the

income that they were deriving from the said property in the bankaccounts, and in respect of which freezing order was issued.

13.The learned Public Prosecutor submitted that as per Section102(3) of Cr.P.C., only such of those properties seized from theaccused, if it cannot be conveniently transported to the Court orthere is difficulty in securing the proper accommodation for thecustody of such property or the continued retention of theproperty in police custody may not be considered necessary forthe purpose of investigation, only then the report of the seizureshould be sent to the concerned Magistrate and not in all thecases. So far as the freezing of bank account is concerned, it isonly a prohibitory order preventing the petitioners fromoperating the Bank account and no actual seizure of the propertyinvolved. Therefore, the question of sending report to theMagistrate forthwith does not arise in this case.

14.The learned Public Prosecutor has also invited the attentionof this Court to the judment reported in 2000(1) Madras WeeklyNotes (cri) 49 in the case of C.Aranganayagam Vs. State by theDirector of Vigilance and Anti-corruption, Erode and another andsubmitted that the dictum laid down in the said judgment wouldshow that the non-compliance of the provisions under Section102(3) of Cr.P.C. can be considered only as an irregularity andthe same cannot vitiate the entire freezing.

15.The learned Public Prosecutor also relied upon the judgmentdelivered by the Full Bench of Bombay High Court reported in2011(1) MWN (Cr) 497 (Vinoshkumar Ramachandran Valluvar Vs. TheState of Maharashtra) and submitted that the freezing of the bankaccount does not deprive any person of his liberty or hisproperty. The prohibition is temporary in nature, till the meritsof the case is decided and therefore, non-reporting of freezingof the accounts to the Magistrate will not vitiate the entirefreezing proceedings.

16.I have carefully heard the submissions made on either side andperused the materials available on record.

17.Since the entire submissions were made on either side byplacing reference to the Section 102 of Cr.P.C, which deals withthe power of Police Officer to seize certain property, it wouldbe appropriate to extract Section 102 of Cr.P.C.

102.Power of Police Officer to seize certain Property:- (1)AnyPolice Officer may seize any property which may be alleged orsuspected to have been stolen, or which may be found undercircumstances which create suspicion of the commission of anyoffence.

(2)Such police officer, if subordinate to the Officer in chargeof a Police Station, shall forthwith report the seizure to thatofficer.

(3)Every Police Officer acting under sub-section (1) shallforthwith report the seizure to the Magistrate havingjurisdiction and where the property seized is such that it cannotbe conveniently transported to the Court or where there isdifficulty in securing proper accommodation for the custody ofsuch property, or where the continued retention of the propertyin police custody may not be considered necessary for the purposeof investigation, he may give custody thereof to any person onhis executing a bond undertaking to produce the property beforethe Court as and when required and to give effect to the furtherorders of the Court as to the disposal of the same.

Provided that where the property seized under sub-section (1) issubject to speedy and natural decay and if the person entitled tothe possession of such property is unknown or absent and thevalue of such property is less than five hundred rupees, it mayforthwith be sold by auction under the orders of theSuperintendent of Police and the provisions of Sections 457, and

458, shall, as nearly as may be practicable, apply to the netproceeds of such sale..

18.According to the learned Senior Counsel for the petitioners,the bank accountfalls within the meaning of the propertymentioned under Section 102 of Cr.P.C., and therefore, if thereis any violation in following the procedures contemplated underSection 102, the freezing of the bank account is not sustainablein law. In this regard, the learned counsel for the petitionersrelied upon the judgment of the Hon'ble Supreme Court reported in1999(7) SCC 685 (State of Maharashtra Vs. Tapas D.Neogy) whereinit has been held as follows:-

Having considered the divergent views taken by different HighCourts with regard to the power of seizure under Section 102 ofthe Code of Criminal Procedure, and whether the bank account canbe held to be property within the meaning of the said Section102(1), we see no justification to give any narrow interpretationto the provisions of the Criminal Procedure Code. It is wellknown that corruption in public offices has become so rampantthat it has become difficult to cope up with the same. Then againthe time consumed by the Courts in concluding the trials isanother factor which should be borne in mind in interpreting theprovisions of Section 102 of the Criminal Procedure Code and theunderlying object engrafted therein, inasmuch as if there can beno order of seizure of the bank account of the accused then theentire money deposited in a bank which is ultimately held in thetrial to be the outcome of the illegal gratification, could bewithdrawn by the accused and the courts would be powerless to getthe said money which has any direct link with the commission ofthe offence committed by the accused as a public officer. We are,therefore, persuaded to take the view that the bank account ofthe accused or any of his relations is propertywithin the meaningof Section 102 of the Criminal Procedure Code and a policeofficer in course of investigation can seize or prohibit the

operation of the said account if such assets have direct linkswith the commission of the offence for which the police officeris investigating into.From the dictum laid down in the above saidjudgment, it is clear that the bank account will fall within themeaning of the property mentioned under Section 102 of Cr.P.C andthe same is attachable and the Police Officer in the course ofinvestigation can seize or prohibit the operation of the saidaccount. Therefore, I am of the opinion that when it has beenclearly held in the said judgment that the bank account is aproperty within the meaning of the Section 102(1) of Cr.P.C., andthe Investigating Officer can seize the same in the course ofinvestigation, the same has to be done only in accordance withthe provisions of Section 102. As per Section 102(3) of Cr.P.C.,the Police Officer shall report with regard to seizure of theproperty forthwith to the concerned Magistrate, but in theinstant case, the freezure of the bank account was not reportedforthwith to the Magistrate, which is in total violation to theprovision under section 102(3) of Cr.P.C.

19.In this regard a reference could be placed on the judgmentrelied upon by the learned Senior Counsel for the petitionersreported in 2003 Crl.L.J 2779 (B.Ranganathan Vs. State andothers) wherein it has been held by this Court as follows:-

21.Yet another legal aspect pointed out on the part of thepetitioner by his counsel is the procedure that is to be adoptedon seizure of bank account. In case of seizure of a bank account,the police officer should do two things; he should inform theconcerned Magistrate forthwith regarding the prohibitory order.He should also give notice of the seizure to the accused andallow him/her to operate the bank account subject to his/herexecuting a bond undertaking to produce the amounts in account asand when required or to hold them subject to such orders as thecourt may make regarding the disposal of the same. An order underSection 102, without doing so is liable to be set aside, as held

in Ms.Swaran Saharawal Vs. Commissioner of Police reported in1988 Cri LJ 241 (Delhi) (extracted supra). This procedure that isto be followed and felt mandatory has also not been followed bythe first respondent.

20.But, according to the learned Public Prosecutor, in the casein 2003 Crl.L.J 2779 (B.Ranganathan Vs. State and others) reliedupon by the learned Senior Counsel for the petitioners the bankaccounts of the entire family members of the accused were freezedand only in that background, this Court held that the PoliceOfficer should inform the concerned Magistrate with regard to theprohibitory order. The factual aspects of the case in hand aretotally different from the factual aspects of the case reliedupon by the learned Senior Counsel for the petitioners. Accordingto the learned Public Prosecutor, it is only a prohibitory orderpreventing the petitioners from operating the bank accounts andtherefore, the judgments relied upon by the learned SeniorCounsel cannot be made applicable to the present case. In supportof his contention the learned Public Prosecutor relied upon thejudgment reported in 2011(1) MWN (Cr) 497 (VinoshkumarRamachandran Valluvar Vs. The State of Maharashtra) and submittedthat even if the Police does not comply with the procedurecontemplated under Section 102(3), it is only an irregularity,which would not vitiate the entire freezing. The relevant portionin the said judgment reads as follows:-

12.No doubt under Section 102(3), Criminal Procedure Code, everypolice officer acting under Section 102(1) shall forthwith reportthe seizure to the Magistrate having jurisdiction. Now in thepresent case, immediately it has not been complied with by thefirst respondent. Simply because the 1st respondent failed tocomply with Section 102(3) Criminal Procedure Code, it cannot beconcluded that the entire freezing of the account is vitiated. Atbest, it can be said that it is only irregular and the 1strespondent has failed to comply with the procedure. Further more,

the bank itself has communicated to the petitioner within aperiod of 59 days from the date of freezing of account, but,however, the petitioner has come forward with an applicationunder Section 451 of Cr.P.C., only after a period of one yearfrom the date of freezing of account.

21.But, in my considered opinion, in the judgment of the Hon'bleSupreme Court reported in 1999(7) SCC 685 (State of MaharashtraVs. Tapas D.Neogy) it has been clearly held that the bank accountwill come within the meaning of the property mentioned underSection 102 of Cr.P.C. Since it has been legally settled in thesaid judgment that the bank account is a property within themeaning of Section 102 of Cr.P.C., there can not be two differentyardsticks in following the procedures to seize the property, onefor a bank account and another for other than the bank account.Hence, in my opinion the freezing of the bank account has to bedone only as per the procedure laid down under Section 102(3) ofCr.P.C., Therefore, I am not inclined to accept the submissionmade by the learned Public Prosecutor that the reporting of theseizure to the Magistrate will not apply to the bank account.

22.Though the learned Public Prosecutor submitted that non-compliance of the procedure laid down under Section 102 ofCr.P.C., is only an irregularity and it will not vitiate thefreezing of the bank account, I am not inclined to accept thesaid submission, since Section 102(3) of Cr.P.C. mandates thereport of the seizure of the property to the Magistrate. In fact,the judgment in 2000(1) Madras Weekly Notes (cri) 49[C.Aranganayagam Vs. State by the Director of Vigilance and Anti-corruption, Erode and another] relied upon by the learned PublicProsecutor was delivered by this Court in the case filed underthe Prevention of Corruption Act. The said judgment wasconsidered by another learned Single Judge of this Court in thecase of Rajamani Vs. Inspector of Police, Salem and others ( 2003Cri. L.J.2902) wherein it has been held as followed_ 12.On the

part of the respondents, the learned Government Advocate wouldalso cite a judgment of the learned single Judge of this Courtdelivered in C.Aranganayagam Vs. State, by Director of Vigilanceand Anti-Corruption, Erode Detachment, Erode, reported in 2000MLJ (Crl.) 20 where, in a case registered by the Directorate ofVigilance and Anti-Corruption for the commission of the offenceon the part of the accused under Section 13(2) r/w 13(1)(3) ofthe Prevention of Corruption Act, the learned single Judge, hasarrived at the conclusion that:

Every Police Officer acting under Section 102(1) Cr.P.C. shallforthwith report the seizure to the Magistrate havingjurisdiction. Simply because the first respondent failed tocomply with Section 102(3), Criminal Procedure Code, the entirefreezing of the account is not vitiated.

This judgment is in a case of corruption wherein the accounts ofthe accused therein have been frozen and in a case of corruption,the investigation is done entirely on a different platform andtherefore the decision arrived at by the learned single Judgepertaining to the facts and circumstances encircling the saidcase have absolutely no bearing on the facts and circumstancesand the position of law regarding the case in hand and thereforethe norms held therein cannot be applied to this case. Therefore,as observed earlier, I am of the opinion that the Judgment reliedupon by the learned Public Prosecutor was delivered in aPrevention of Corruption Act and the factual aspect of the saidcase totally stands in a different platform and the said judgmentcannot be made applicable to the facts of the present case, sincethe petitioners herein/accused have been charged for the offenceunder the Indian Penal Code. Therefore, I am not inclined toaccept the submissions of the learned Public Prosecutor thatreporting the seizure of the property forthwith to the Magistratewould arise only to such of those properties which cannot betransported to the Court or there is difficulty in securing the

proper accommodation for the custody of such property or thecontinued retention of the property in police custody may not beconsidered necessary for the purpose of investigation.

23.Though the learned Public Prosecutor has placed reliance onthe Full Bench Judgment of the Bombay High Court reported in2011(1) MWN (Cr) 497 (Vinoshkumar Ramachandran Valluvar Vs. TheState of Maharashtra) in support of his contention that freezingof bank account does not deprive of any person of his liberty orhis property, I find that the in said judgment the question thathad been dealt with was that whether Section 102 of Cr.P.C.,requires the issuance of notice to the account holder/accusedbefore or simultaneously with the action of attaching the bankaccount and while dealing with the said question, the Full Benchof Bombay High Court held that the freezing of bank account is anact in investigation and it does not deprive any person of hisliberty or his property and Section 102 of the Cr.P.C., does notrequire issuance of notice to a person before or simultaneouslywith the action of attaching bank account. But, the question thathas arisen for consideration in the case on hand is whether thefreezing of the bank account by the Police officer during thecourse of investigation has to be reported forthwith to theconcerned Magistrate or not. Therefore, the Full Bench Judgmentof the Bombay High Court referred to above cannot be madeapplicable to the facts of the case on hand.

24.Further, to decide the issue involved in this case as towhether the reporting the seizure of the bank account to theMagistrate by the Investigating officer is necessary or not,useful reference could be placed on some of the judgments, whichwere relied upon by the learned Senior Counsel for thepetitioners.

25.In the judgment reported in 2005(1) CTC 657 (His Holiness SriKanchi Kamakoti Peetadhipathi Jagadguru Sri Sankaracharya SamigalSrimatam Samasthanam Vs. The State) it has been held as follows:-

29.Though 'bank accounts' is not explicitly mentioned under thesaid provision, the Supreme Court and High Courts haveconsistently taken the view that the word propertywould includebank accounts also. Learned Senior Counsel for the petitionerdoes not dispute this position, and it therefore follows that thepower under Section 102 of Cr.P.C., could be extended to bankdeposits/accounts also and the competent authority can take stepsto freeze the accounts, if the other requirements are satisfied.

30.A reading of the provision clearly indicates the scope of thepower under the provision and that it is an exhaustive provision.Only two categories of properties are mentioned, namely, (1)alleged or suspected to have been stone, or (2) which may befound under circumstances which create suspicion of thecommission of any offence. No other categories can be included ordeemed to be included as may otherwise be possible in anexpansive definition by using certain other expressions inaddition such as as the case may be, as the authorities deem fitand necessary, etc., which may render the provision an inclusiveand illustrative one and not an exhaustive one. The language ofSection 102 of Cr.P.C., is very clear and it is clearly anexhaustive provision, as it should be. Otherwise, the provisionwould be arbitrary and unconnected to the offence and would beliable to be misused for ulterior purposes. Therefore,designedly, the Parliament has restricted the power under Section102 of Cr.P.C., to specific and narrow limits.

31.In State of Maharashtra vs. Tapas D.Neogy, 1999(3) CTC 350:1999(7) SCC 685, the Supreme Court had occasion to consider thescope of Section 102 of Cr.P.C., vis-a-vis, what constitutesproperty. While holding that bank account would also fall underthe provision, the Supreme Court also held that the amount has tobe the outcome of commission of offence by the accused, if suchassets have direct links with the commission of the offence forwhich the Police officer is investigating into.

32.The legal position for invoking Section 102 of Cr.P.C., isthus very clear, namely, that bank deposits can also be broughtunder the provision, provided, the deposits represent eitherstolen money or should be connected with the commission of anyoffence. In short, there must be nexus to the crime alleged andthe money to be seized. The charge in this case is not of theft,and therefore, the first alternative, which is specific, is notsatisfied. The second alternative, which is general in nature,has to be examined in the light of the factual background of thiscase.

26.Similar issue has been dealt with by the Bombay High Court inthe judgment reported in 2008 Crl.L.J. 148 [Dr.ShashikantD.Karnik Vs. State of Maharashtra] and the relevant portions inthe said judgment are as as follows:-

So far as requirement under Section 102(1) is concerned, it isobligatory upon the police to show that the property which theywant to attach or attaching is under circumstances which createsuspicion of the commission of any offence.

................

Second requirement of Section 102(2) of Cr.P.C., is that theofficer seizing the account or attaching the account subordinateto the officer in charge of the police station has to forthwithreport the seizure of attachment to his superior i.e, to theofficer in charge of the police station.

..............

Third requirement of sub-section (3) of Section 102, lays down amandate that every police officer acting under sub-section (1)shall forthwith report the seizure or attachment of accounts tothe Magistrate having jurisdiction. Admittedly, this is not donein the present case. Paragraph 5 of the second affidavit of

Mr.Pardeshi, quoted above is very clear in this regard as well asthe oral submission of Mrs.Mahispurkar. It will be thereforeclear that there is absolutely no compliance to any of theprovisions of sub-sections (1), (2) and (3) of Section 102 ofCr.P.C., in this matter. Consequently, the petition is requiredto be allowed and the orders are required to be quashed as prayedfor.

27.From the dictum laid down in the judgments relied on by thelearned senior counsel for the petitioners it is clear that thebank account is a property within the meaning of Section 102 ofCr.P.C and sub-section (3) to Section 102 requires the reportingof seizure of the property to the concerned Magistrate forthwith,which is mandatory in nature. Moreover, the freezing of bankaccount is an act of the investigation and therefore, the duty iscast upon the Investigating Officer under Section 102(3) ofCr.P.C. to report the same to the Magistrate, since the freezureof the bank account prevents the person from operating the bankaccount pursuant to an investigation by the Police in a criminalcase registered against him. If there is any violation infollowing the procedures under Section 102 of Cr.P.C., thefreezing of the bank account cannot be legally sustained. Sincein the case on hand the 2nd respondent-Police has not reportedthe freezing of the bank accounts of the petitioners herein tothe concerned Magistrate forthwith, which is mandatory underSection 102(3) of Cr.P.C., the proceedings of the 2nd respondent-Police in freezing of the bank accounts of the petitioners hereinare not legally sustainable.

28.For the foregoing reasons, the present criminal originalpetitions are allowed and the proceedings of the 2nd respondent-Police dated 27.09.2012 in freezing the bank accounts of thepetitioners herein are hereby quashed. Since the present order ofquashing the proceedings is only on technical ground, it is madeclear that the Investigating Officer (2nd respondent herein) may

initiate fresh proceedings after following the procedures asindicated above.

ssv To,

1.The Commissioner of Police, Egmore, Chennai-8.

2.The Inspector of Police, Central Crime Branch, Team-XV, Egmore,Chennai-600 008.

3.The Public Prosecutor, High Court, Madras

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The Code Of Criminal Procedure, 1973

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Section 5 in The Indian Penal Code

Section 102 in The Code Of Criminal Procedure, 1973

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Andhra High CourtPacl India Ltd. Rep. By Its ... vs The Axis Bank A BodyCorporate ... on 27 March, 2008

Author: P Narayana

Bench: P Narayana

ORDER P.S. Narayana, J.

1. This Court issued Rule Nisi on 3.12.2007.

2. PACL India Limited, the petitioner, filed the present WritPetition praying for issuance of an appropriate Writ Order ordirection more particularly one in the nature of Writ of Mandamusdeclaring the action of the respondents 2 to 9 in freezing theaccounts of the petitioner company basing on the letter of the10th respondent dated 21.8.2007 as illegal arbitrary,ultravirous, malafide and against the principles of naturaljustice and pass suitable orders.

3. 11th respondent-the Sub-Divisional Police Officer, Vikarabad,Ranga Reddy District addressed letters to the concerned followinginstitutions as R1 to R9, and the letter dated 21.8.2007addressed to Punjab National Bank, M.G. Road, Secunderabad-R7reads as under:

Government of Andhra Pradesh (Police Department) From To P.Venkateshwara Rao The Branch Manager Sub-Divisional PoliceOfficer Punjab National Bank Vikarabad Sub-Division SecunderabadBranch Sir, Sub: Investigation of Criminal Case-Please furnish

the upto date Bank statement and freezing the collection accountsof PACL India limited-Secunderabad Branch-Regarding.

Ref: Account No. 3631002100011615 of PACL India Limited ofSecunderabad Branch.

*** I, invite your attention with reference to the above citedsubject, there are complaints against PACL INDIA LIMITED and inthis regard a case was registered and investigation and enquiresare being done. There is lot of public money is involved in thesetransactions. Hence, it is requested to freeze the Bank Accountsof PACL India Limited and also to furnish the up to date Bankstatements. It is also requested that these accounts should notbe opened by any of them till further intimation is given.

The required information may please be furnished at the earliestfro the purpose of investigation under Section 91 and 102 Cr.P.C.

Yours faithfully, P. Venkateswara Rao, Sub-Divisional PoliceOfficer, Vikarabad Sub-Division Ranga Reddy District.

4. In the light of such similar letters, which had been addressedto the respective banking institutions there has been freezing ofaccounts of the writ petitioner.

Submissions of Sri Ashok B.

5. The learned Senior Counsel representing the Writ Petitionerhad taken this Court through the contents of the affidavit filedin support of the Writ Petition, the respective stands taken inthe counter affidavits and also the provisions of the A. P.Protection of Depositors of Financial Establishments Act, 1999(hereinafter in short referred to as 'the Act') and also A.P.Protection of Depositors of Financial Establishments Rules, 1999(in short hereinafter referred to as "Rules" for the purpose ofconvenience), and would maintain that in the light of the factsand circumstances, the freezing of accounts of the writ

petitioner cannot be sustained. The ingredients of Section 3 ofthe Act are not satisfied at all. The learned senior counsel alsohad taken this Court through Sections 2, 3, 4, 5 and 6 of the Actas well, and further made elaborate submissions pointing out theorder made by a competent Criminal Court in this regard and wouldmaintain that in the light of the same, the action of theinstitutions in taking a stand that they are just following thedirections of the police to freeze the accounts in exercise ofthe powers, which in fact had been exercised by the police, underSection 102 of the Code of Criminal Procedure, 1973, definitelycannot be sustained. The learned senior counsel also wouldcontend that at any rate this is just abuse of process of law andno ad interim order had been made and no further progress in theinvestigation at least had been made and in a way the actiontaken at this juncture cannot be sustained. The learned seniorcounsel also placed strong reliance on a decision of RajasthanHigh Court in this regard.

Submissis of Sri Ashok Anand Kumar:

6. Sri Ashok Anand Kumar, the learned Counsel representing R1 toR6 had taken this Court through the contents of the counteraffidavit filed by R1 to R6 and would maintain that the ordermade by the police, as such, had not been called for in questionand hence, the Writ Petition, as framed, cannot be maintained andthe Writ Petition is liable to be dismissed on this ground alone.The learned Counsel also while further elaborating thesubmissions had taken this Court through Sections 3, 4, 5, 6, 7,8, 9, 10, 11 and 12 of the Act, in general and further emphasizedon the language employed under Section 13 of the Act, inparticular. While elaborating the submissions the learned Counselwould maintain that by virtue of Section 13 of the Act, procedureunder the Code of the Criminal Procedure 1973 to be followed.Even in the present case, the action of the police cannot befound fault with and further inasmuch as the banking institutionsare bound to follow such directions and the impugned action being

in accordance with law and a well justified action, and suchaction being in public interest as well, the same cannot be foundfault with. The learned Counsel also distinguished the decisionof the Rajasthan High Court on facts. The learned Counsel furtherrelied upon several decisions to substantiate the stand taken byR1 to R6 in the counter affidavit.

Submissions of Sri Amar Kumar

7. Sri Amar Kumar, learned Counsel representing R7 substantiallyadopted the stand taken by Sri Ashok Anand Kumar and had takenthis Court through the contents of the counter affidavit filed byR7 and would maintain that inasmuch as the power of the policecannot be doubted at all and the freezing of accounts being theonly grievance against the banking institutions, the WritPetition is liable to be dismissed.

Submissions of Narender Reddy:

8. Sri Narender Reddy, learned Counsel representing R9 wouldmaintain that the banking institutions are not interested inharassing the customers, however, when the police exercised thepowers under the provisions of the Code of Criminal Procedure,1973, the banking institutions are bound to follow suchdirections.

Submisions of AGP for Home:

9. The learned AGP for Home had taken this Court through thecontents of the counter affidavit filed by R 11 and also haddrawn the attention of the Court to Section 91 read with Section102 of the Code of Criminal Procedure, 1973, and would maintainthat the order made by the Criminal Court being not on merits,would not come in the way at all and the orders of the Governmentare being awaited and in the light of the facts and circumstancesand also in public interest, the action which had been taken byR2 to R 11 being in accordance with law and since the said action

had not been called in question, specifically in the reliefportion, the relief prayed for as such cannot be granted and theWrit Petition is liable to be dismissed.

10. Heard the counsel and perused the respective stands taken inthe affidavit and in the counter affidavits filed by the paritiesand also the material produced before this Court.

11. The petitioner is a Public Limited Company. One of the mainobjects of the petitioner-Company is to sale and purchase of theland, development of the land, taking up construction work in thepurchased land and to sale the same to the proposedbuyers/customers. The petitioner company is having variousoffices across the country having its Regional Office atHyderabad in Pooja Edifice, 201, 2nd Floor, Door No. l-10-20/2B,Begumpet, Hyderabad. The petitioner company in the State of A.Phas purchased several hundred acres of agricultural land forallotment to its customers.

12. Further it is stated that the business of the petitionercompany had been lawfully conducted as per the various laws, by-laws and rules and regulations of the respective Government andDistrict administration. The business of the petitioner companyfor sale and purchase of the land had been held to be absolutelylawful, as per authoritative pronouncement made by the Hon'bleHigh Court of Rajasthan in the Civil Petition No. 6735/99 decidedon 28.11.2003 and the operative portion of the said judgmentreads as hereunder:

Thus, on the facts and circumstances we agree with learned Sr.counsels for the petitioner company and also Mr. Dhankar, learnedsenior counsel in D.B. Civil Writ Petition No. 6747 of 1999 thatthe scheme of the company does not fall within the definition ofCollective Investment Scheme, as defined in Section 11AA and Sub-Section (IB) of Section 12 of the Act, 1992 as well asRegulations, 1999 have no application.

As we have taken the view that scheme of petitioner company doesnot come within the definition of Collective Investment Schemegiven in Section 11AA. Regulations, 1999 have no application incase of this petitioner company. Thus, now we need not go intothe alternative prayer to examine the validity of provision ofSection 11AA, Sub-section 1BO of Section 12 and legality ofRegulation of 1999.

In the result, notices dated 30.11.1999 and 10.12.1999 arequashed and both the writ petitions are allowed.

13. The competitor and the rivals of the petitioner company havenever left any opportunity to harass the petitioner company andhamper the business of the petitioner company by lodging a falsecomplaint by manipulating one or two customers of the petitionercompany.

14. It is further averred that under some ill advise of the someof the rivals and competitors of the petitioner company acomplaint was lodged by one Mr. N. Pandu Ranga Reddy S/o NarayanaReddy R/o 7/2/34., Kothagodi, Vikarabad Mandal, Ranga ReddyDistrict (AP). The complaint mainly stated that the petitionercompany refused to allot the land despite having received theentire sale consideration of Rs. 50,000/- from the complainant.In fact the said complainant never made any demand from thepetitioner company for refund of money, however, under the illinfluence of some rivals company, the complainant had lodged thecomplaint before the sub-Divisional of Police Officer, Vikarabad,Ranga Reddy District. On the basis of the complaint of Mr. N.Pandu Ranga Reddy, the Sub-Inspector of Police registered a crimein FIR No. 195/07 PS Vikarabad, Ranga Reddy District.

15. It is further stated that the police in collusion with therivals of the petitioner company prevail upon the complainant andgot the aforesaid case registered against the petitioner company

under Section 420, 406 and 511 IPC and Section 5 of the A.P.Protection of Depositors of Financial Act, 1999.

16. Further it is stated that the petitioner company came to knowthat the agents/the field workers of the petitioner company arebeing harassed by the respondent police, the petitionerimmediately through its employees contacted the said complainantSri N. Pandu Ranga Reddy. The complainant Sri N. Pandu RangaReddy on 24.8.2007 filed an affidavit before the Sub-DivisionalPolice Officer and made a statement that the complainant wish towithdraw the complaint since he had filed the said complainantunder the ill influence of some persons.

17. Further it is averred that it would be pertinent to mentionthat the alleged deposit of Rs. 50,000/- was made by the saidcomplainant only on 13.7.2007 for purchase of a plot and justafter three days he had lodged the aforesaid complaint with thepolice station, which clearly go to show that the respondentpolice along with the complainant with oblique motives and withcertain extraneous consideration wanted to implicate thepetitioner and its officials and agents in the criminal case.However, the entire money of Rs. 50,000/- had been returnedwithin a period of 10 days after the deposition. Hence, theintention of the petitioner company could not have been said tobe malafide.

18. Further it is stated that under the grab of aforesaidcomplaint and by registering the said FIR No. 195/07 PS.Vikarabad, Ranga Reddy District (AP) the respondents and therivals of the petitioner had been successful in implicating thepetitioner, its agents and employees in false criminal casesregistered under Sections 420, 406 and 511 IPC R/w Section 5 ofA.P. Protection of Depositors of Financial Establishments Act,1999. The entire episode mentioned above goes to show that thecomplainant Sri N. Pandu Ranga Reddy with dishonest intention andunder the ill influence of the rivals of the petitioner had

deliberately approached the petitioners and its agents with arequest to register the names of the complainant and itscustomers for allotment of a plot and offered Rs. 50,000/- on13.7.2007 and after three days i.e., 17.8.2007 lodged a complaintwithout any correspondence, without any notice and without anydemand of the return of the said deposits from the petitioner.

19. Further it is stated that the respondent police withouthaving any authority of law issued request letter dated 21.8.2007with a direction to the respondents 2 to 9 and all its brancheswherever the petitioner is maintaining the accounts to freeze theaccounts of the petitioner so that the petitioner itself is notable to meet the demand/request of other customers for payment.The said letter dated 21.8.2007 written by the respondent policeto the bankers of the petitioner, then the respondents 2 to 9, isabsolutely without any notice or intimation and the respondentbanks freezed the accounts of the petitioner company without anyproper authority and contrary to the provisions of Sections 3," 4and 5 of the Act.

20. Further it is averred that the respondent police had filed apetition before the Court of the Principal Sessions Judge, R.R.District, Hyderabad, praying to issue directions to therespondents. 2 to 9 and all its branches to freeze the accountsstanding in the name of the petitioner stating that the case ofcheating, criminal breach of trust and collection of depositsunder the Act, had been registered in the Crime No. 195 of 2007under Section 420, 406 and 511 of IPC and under Section 5 of theAct. The respondents police 10 and 11 have admitted before theSessions Judge that the respondent banks have frozen the accountsof the petitioner.

21. The learned Sessions Judge had heard all the parties in theaforesaid matter and had passed a detailed order on merits videits order dated 19.9.2007 in Crl. M.P. No. 384 of 2007 in CrimeNo. 195 of 2007 and the relevant portion is as hereunder:

It is premature to decide whether the scheme floated by the PACLIndia Limited Company can be treated, as Collective InvestmentScheme, especially, when the investigation is in progress.However, a perusal of the provisions of Section 3 and 4 of theAct and Rules 3 and 6 of the Rules there under, made it clearthat the role of the Special Court comes into picture, under Sub-Section (3) of Section 4 of the Act, 1999, only after thecompetent authority, under the Act, applies to make the ad-interim orders of attachment of the properties of the accusedabsolute, within 15 days, after the receipt of the orders of theGovernment attaching the properties of the accused. In fact, inthe memo, itself the public prosecutor mentioned that the DeputySuperintendent of Police, Vikarabad has sent a letter/noticeunder Section 91 and 102 of the Code of Criminal Procedure tohold all the Banks accounts standing in the name of the PACLIndia Limited Company and accordingly, the Branch Managers of theeight branches mentioned in the memo have stopped payments. It isalso mentioned in the memo that the Government of Andhra Pradeshis being addressed for passing ad-interim attachment orders ofthe banks accounts and properties of PACL India Limited Companyand the matter is pending with the Government. Under thesecircumstances, this Court can not pass orders freezing theaccounts of the PACL India Limited Company with the banksmentioned in the memo.

In view of the above facts and circumstances, the memo is notmaintainable under law and is dismissed.

22. It is further averred that the petitioner after havingreceived the aforesaid order passed by the learned PrincipalSessions Judge, R.R. District, Hyderabad had made a request inperson, in writing and also through its Advocate to defreeze theaccounts, however, the respondents-banks have disobeyed the orderpassed by the Principal Sessions Judge, R.R. District, Hyderabadand have not allowed the petitioner to deposit or withdraw theamount even for its day to day requirement. The action of all the

respondents banks are not only arbitrary and violative to thefundamental rights of the petitioner but also contrary toSections 3, 4 and 5 of the said Act, which has been observed andheld by the Principal Sessions Judge, R.R. District, Hyderabad.

23. The petitioner being aggrieved by the aforesaid action of therespondents 2 to 9 for freezing the accounts of the petitionercompany basing on the letter of the 10th respondent is left withno other option but to approach this Court by invokingjurisdiction of this Court under Article 226 of the Constitutionof India.

24. In the counter affidavit filed by R1 to R6, substantialallegations had been denied. It is averred that the petitionerCompany opened the following collection accounts, duly followingthe banking norms:

(a) Account No. 24401110200003612 with the respondent No. 2Branch,

(b) Account No. 152010200007429 with the Respondent No. 3 Branch,

(c) Account No. 69010200019895 with the Respondent No. 4 Branch,

(d) Account No. 2730102000003537 with the Respondent No. 5Branch; and

(e) Account No. 1070102000009249 with the Respondent NO.6 Branchof the Bank.

The Writ Petitioner has been operating the Accounts with therespondents 2 to 6.

25. While this being so, respondents 2 to 6 received the lettersdated 21.8.2007 and 1.10.2007 intimating respondents 2 to 6 thatCrime No. 195/2007 of P.S., Vikarabad, was registered underSection 420, 406 and 511 IPC and Section 5 of the A.P. Protectionof Depositors of Financial Establishments Act, 1999 and the

investigation and enquiries are being conducted by the police.According to the respondent No. 11 herein, the Crime No. 195 of2007 on the file of the P.S. Vikarabad is pending enquiry andinvestigation and lot of public money is involved in thetransaction. The respondents 2 to 6 were requested by therespondent No. 11 to seize the bank accounts of the WritPetitioner and furnish the up to date bank statements andtherefore, their accounts shall not be operated by any of themtill further intimation is given, exercising their powers ofinvestigation under Section 91 and 102 of Cr.P.C.

26. It is further stated that under Section 102 Cr.P.C any PoliceOfficer can seize any property, which is alleged or suspected tohave been stolen or which may be found under the circumstances,which create suspicion of the commission of an offence. The term'any property' is wide enough to cover the seizure of the amountsin the Bank accounts. Therefore any Police Officer is entitled toexercise his powers conferred under Section 102 Cr.P.C and issuea prohibitory order to the respondents 1 to 6 to freeze the Bankaccounts. Hence, the prohibitory orders issued by the respondents10 & 11 are not illegal or without jurisdiction. It is furthersubmitted that Section 91 confers power to the respondents 10 and11 to direct the respondents to produce the statement of account.Hence, the orders impugned in this writ Petition are perse notillegal or without jurisdiction.

27. It is further averred that no Writ of Mandamus can be issuedto question a prohibitory order passed by the respondents 10 and11 in exercise of their power conferred under Section 102 Cr.P.C.This Writ Petition does not seek to enforce any rights conferredunder Part II of the Constitution of India. The Writ Petitionerhas an alternative and an efficacious remedy provided under theCriminal Procedure Code. Hence, this Writ Petition is notmaintainable.

28. It is also stated that the right to conduct business, asenshrined under Article 19(1)(g) of the Constitution of India canbe made with reasonable restrictions. The right of police toinvestigate an offence and exercise their powers lawfullyconferred under Section 102 of Cr.P.C. are reasonablerestrictions stipulated under Article 19 of the Constitution ofIndia.

29. Further it is averred that the FIR No. 185 of 2007 on thefile of the P.S., Vikarabad clearly indicates that a Crime isregistered against the Writ Petitioner Company for offences underSection 420, 406 and 511 of IPC apart from Section 5 of theAPPDFE Act, 1999. The Section 4(1) of Cr.P.C clearly mandatesthat all offences under IPC shall be investigated, inquired into,tried and otherwise dealt with according to the provisions ofCr.P.C. Therefore, a Police Officer investigating the offencesunder Section 406, 420 and 511 of IPC can exercise the powersconferred under Section 91 and 102 of Cr.P.C and the same cannotbe termed as illegal., The Section 4(2) and Section 5 of Cr.P.CR/w Section 13 of APPDFE Act, 1999 clearly mandate that theprovision of Cr.P.C applies to the said Act. Therefore, therespondents 10 and 11 can exercise the powers conferred. on themunder Section 91 and 102 of Cr.P.C. The offences alleged againstthe writ petitioners are Sections 406, 420 and 511 of IPC, towhich Section 102 of Cr.P.C applies, besides the respondents 10and 11 suspect that the amounts in the Bank are connected to theoffences mentioned therein. Hence, the exercise of powers underSections 91 and 102 of Cr.P.C by the respondents 10 and 11 andissuing the impugned prohibitory orders to freeze the BankAccounts is neither illegal nor without jurisdiction and they donot warrant any interference by this Hon'ble Court.

30. It is also stated that the orders passed by the learnedSessions Judge is extracted in para 14 of the writ affidavit doesnot take away powers of the respondents 10 and 11 to exercise thepowers conferred under Section 102 of Cr.P.C. The learned

Sessions Judge only held that the said application is notmaintainable duly referring to the APPDFE Act, 1999 and itsRules. The learned Sessions Judge did not refer to any of theprovisions contained in Cr.P.C before holding that the said Courtcannot pass any orders freezing the "Accounts of the WritPetitioner and dismiss the same as not maintainable. The learnedSessions judge did not declare the impugned action of therespondents 10 and 11, as illegal and without jurisdiction. Theexistence of two specific forums available under the APPDFE Act,1999 and the powers of the police to issue letters, in exerciseof powers conferred under Section 102 of Cr.P.C., aresupplementary and complementary to each other. Sections 3 and 4of the APPDFE Act, 1999 and its provisions regulating the modeand manner of attachment cannot be exercised for an offencecovered by it. They cannot be stretched to include offencesfalling under the provisions of IPC. Hence, when offences underAPPDFE Act, 1999 and IPC are simultaneously investigated in thesame FIR, the respondents 10 and 11 are entitled to invoke theprovisions of Section 102 of Cr.P.C and the provisions of Section104 of APPDFE Act, 1999. Hence, the impugned action of theRespondents 10 and 11 is not illegal and without jurisdiction andprays for dismissal of the Writ Petition.

31. In the counter affidavit filed by R7, the averments had beendenied and it is stated that on receipt of the letter dated12.8.2007 addressed by the respondent No. 11, the Sub-DivisionalOfficer, Vikarabad, R.R. District referring the provisions of lawunder Sections 91 and 102 of Cr.P.C., the respondent bankaddressed a letter to the petitioner, for which the petitionerhad got issued legal notice dated 24.8.2007. The matter wasreferred to the higher authorities of the bank and in the lightof decision of this Court in 1997 ISJ (Banking) 216, it is saidthat the operations of the petitioner's account is suspended forinvestigation of the case by the police. This respondent had doneno improper Act. or against law. Certain further averments alsohad been made in the counter affidavit of R7.

32. In the counter of R 11 the Sub-Divisional Police Officer,Vikarabad Division, Rnga Reddy District stated that on thecomplaint of one Mr. Narayanagari Pandu Ranga Reddy, a case inCr.No. 195/2007 under Sections 420, 406 r/w 511 IPC and Section 5of A.P. Protection of Depositors of Financial Establishment Act,1999 (for short 'the Act') was registered against the petitionerand two others on the file of the Vikarabad Police Station andinvestigation was taken up by Inspector of Police, Vikarabad.

33. Further it is stated that during the course of investigation,the Investigation Officer examined six witnesses and recordedtheir detailed statements. No arrests were made so far.Investigation is still pending.

The investigation so far done revealed that the Office bearers ofthe petitioner company had approached the complainant and otherwitnesses and brought them into confidence that they will get1000 sq. yards of land each if they pay some amount, as fixeddeposit or on instalment basis as per their terms and conditions,and after maturity of the amount they registering the plot on thename of subscriber and if the subscriber is interested to takethe plot, he will be paid entire amount after the maturity ofsaid instalments. It was further revealed during investigationthat when the complainant insisted the office bearers and othersto show the place where they are going to provide the plot, theoffice bearers took him and other depositors to Nirmal ofAdilabad District and shown a place situated in the Forest Area,which is not suitable for the purpose of agriculture or otherdevelopment works.

34. It is also stated that the investigation discloses that theaccused in the FIR are cheating the innocent people. The companyhad no proper by-laws, Annual Reports, Audit Reports. Thestatements of accounts were also not shown. The amounts receivedby the Regional Office and Branch Office were being immediatelydiverted by the accused to the Head Office at Delhi on various

accounts and was being used by the Managing Director andDirectors for their personal schemes and business they hadalready established and there is no proper accountability. Theagents were encouraged by paying commission and remunerationsetc., for having enrolled the members and this is nothing butmoney circulation and deposit mobilization, with an intention tocheat the people and the same amounts to criminal breach oftrust. Thus the acts of the accused constitute the offencepunishable under Sections 420, 406 r/w Section 511 IPC andSection 5 of the Act and Sections 3, 4, 5(2) Chits and PrizesMoney Circulation(Banning) Act, 1978. The investigation is stillpending for want of collection of further evidence.

35. It is further stated that the petitioner's company had goteight branches in Andhra Pradesh and they had been collecting thehuge sums from the customers. Keeping in view of the above factsand circumstances and to safeguard the public interest and forthe purpose of investigation, he addressed letters to the BranchManagers of the respective Banks requesting to freeze the BankAccounts of the petitioner's Company. It is submitted that apetition was also filed before the Court of Principal SessionsJudge, Ranga Reddy District at L.B. Nagar, Hyderabad praying theCourt to issue directions to the Banks mentioned in the petitionto freeze the accounts standing in the name of the PACL ltd. Thesaid Hon'ble Court dismissed the petition filed by thisrespondent vide its order in Crl. M.P. No. 384/2007 in Cr.P.No.195 of 2007 dated 19.9.2007.

36. Further it is stated that the letter addressed by thisrespondent dated 21.8.2007, requesting the Banks to freeze theaccounts of the PACL Ltd., which is impugned in this writpetition, is legally valid and the same is issued in the publicinterest and for the purpose of investigation.

37. It is also further stated that the complainant filed anaffidavit-dated 24.8.2007 before him requesting to withdraw his

complaint is false and hence denied. The allegation of thepetitioner that the respondent police along with the complainantwith oblique motives and with certain extraneous considerationwanted to implicate the petitioner, its officials agents in thecriminal case is false and hence denied. It is pertinent to notethat the purpose of investigation and in order to safeguard theinterests of the larger public, he addressed letters to therespective banks to freeze the accounts of the petitioner'scompany. To divert the attention of the Investigation Officer,the petitioner filed the present writ petition. Hence, the WritPetition is devoid of any merits.

38. These are the respective stands taken by the parties. Thefacts, which had been narrated in the affidavit filed in supportof the Writ Petition and the specific stand taken in the counteraffidavits by the Banking Institutions and the Police being selfexplanatory, they need not be elaborated again. It is not inserious controversy that the State of Andhra Pradesh through P.S.Vikarabad had invited orders in Cr. M.P. No. 384 of 2007 in CrimeNo. 195 of 2007 dated 19th September, 2007 on the file ofPrincipal Sessions Judge, R.R. District at L.B. Nagar, Hyderabad.It may be appropriate to look at the points at paragraphs 3, 4, 5and 6 of the said order and the same read as under:

(3) Heard the Public Prosecutor and the counsel for the accused.

(4) Now the points for consideration are:

(i) Whether this Court can freeze the accounts of PACL IndiaLimited company in the branches of various Banks mentioned in thememo, as prayed for?

(ii) Whether the scheme floated by PACL India Limited Company canbe treated as 'Collective Investment Scheme' or not?

(iii) To what relief?

(5) POINT Nos. 1 and 2:

It is premature to decide whether the scheme floated by the PACLIndia Limited Company can be treated as "Collective InvestmentScheme", especially, when the investigation is in progress.However, a perusal of the provisions of Section 3 and 4 of the A.P. Protection of Depositors of Financial Establishments Act, 1999and Rules 3 and 6 of the Rules, there under, made it clear thatthe role of the Special Court comes into picture, under Sub-Section (3) of Section 4 of the Act, 1999, only after thecompetent authority, under the Act, applies for making the ad-interim orders of attachment of the properties of the accusedabsolute, within 15 days, after the receipt of the orders of theGovernment, attaching the properties of the accused. In fact, inthe memo itself, the public prosecutor mentioned that the DeputySuperintendent of Police, Vikarabad has sent a letter/noticeunder Section 91 and 102 of the Code of Criminal Procedure tohold all the Banks accounts standing in the name of the PACLIndia Limited Company and accordingly, the Branch Managers of theeight branches mentioned in the memo have stopped payments. It isalso mentioned in the memo that the government of Andhra Pradeshis being addressed for passing ad-interim attachment orders ofthe banks accounts and properties of PACL India Limited Companyand the matter is pending with the Government. Under thesecircumstances, this Court cannot pass orders freezing theaccounts of the PACL India Limited Company with the Banksmentioned in the memo. Points are accordingly answered.

(6) Point No. 3: In view of the above facts and circumstances,the memo is not maintainable under law and is dismissed.

39. Section 2 of the Act deals with Definitions. Section 2 of theAct defines 'Financial Establishment' which reads as under:

Financial Establishment' means any person or group of individualsaccepting deposit under any scheme or arrangement or in any other

manner but does not include a corporation or a cooperativesociety owned or controlled by any State Government or theCentral Government or a banking company as defined under Clauseof Section 5 of the Banking Regulation Act, 1949, (Central Act 10of 1949) Section 3 of the Act dealing with Attachment ofproperties on default in respect of deposits reads as hereunder:

"Notwithstanding anything contained in any other law for the timebeing in force,

(i) Where, upon complaints received from a depositor ordepositors, that any financial establishment defaulted or islikely to default in the return of deposits in cash or kind aftermaturity, or in any manner agreed upon: or

(ii) Where the Government have reason to believe that anyfinancial establishment is acting in a manner prejudicial to theinterests of the depositors with an intention to defraud thedepositors;

And if the Government are satisfied that such financialestablishment is not likely to return to deposits in cash or kindafter maturity, or in any manner agreed upon, the Government may,in order to protect the interests of the depositors of suchfinancial establishment, pass an ad-interim order attaching themoney or other property alleged to have been procured either inthe name of the financial establishment or in the name of anyother person from and out of the deposits collected by thefinancial establishment, or if it transpires that such money orother property is not available for attachment or not sufficientfor repayment of the deposits, such other property of the saidfinancial establishment, or the promoter, manager or member ofthe said financial establishment, as the Government may thinkfit, and transfer the control over the said money or property tothe competent authority.

Section 4 deals with Competent Authority and Section 5 deals withPenalty for default. Section 6 of the Act deals with SpecialCourt and Section 6 reads as under:

Special Court: (1) For the purpose of this Act, the Governmentshall, with the concurrence of the Chief Justice of the HighCourt, by notification, constitute a District and Sessions Courtas a Special Court.

(2) No Court including a Court constituted under the PresidencyTowns Insolvency Act, 1909 (Central Act III of 1909 and theProvincial insolvency Act, 1920, (Central Act V of 1920) otherthan the Special Court shall have jurisdiction in respect of anymatter to which the provisions of this Act apply.

(3) Any pending case in any other Court to which the provisionsof this Act apply shall stand transferred to the Special Court.

(4) The Special Court shall, on an application by the competentauthority, pass such order or issue such direction as may benecessary for the equitable distribution among the depositors ofthe money realized from out of the property attached.

Section 7 of the Act dealing with Powers of Special Courtregarding attachment reads as under:

Powers of Special Court regarding attachment:

(1) upon receipt of an application under Section 4, the SpecialCourt shall issue to the financial establishment or to any otherperson whose property is attached by the Government under Section3, a notice accompanied by the application and affidavits and ofthe evidence, if any, recorded, calling upon to show cause on adate to be specified in the notice why the order of attachmentshould not be made absolute.

(2) The Special Court shall also issue such notice, to all otherpersons represented to it as having or being likely to claim, anyinterest or title in the property of the financial establishmentor the person to whom the notice is issued calling upon suchperson to appear on the same date as that specified in the noticeand make objection, if he so desires, to the attachment of theproperty or any portion thereof on the ground that he has aninterest in such property or portion thereof.

(3) Any person claiming an interest in the property attached orany portion thereof may, notwithstanding that no notice has beenserved upon him under this Section, make an objection asaforesaid to the Special Court at any time before an order ispassed under Sub-section (4) or Sub-section (6).

(4) If no objections are made and no cause is shown on or beforethe specified date, the Special Court shall forthwith pass anorder making the ad interim order of attachment absolute.

(5) If any objection is made or cause is shown as aforesaid, theSpecial Court shall proceed to investigate the same, and in sodoing as regards the examination of the parties and in all otherrespects, the Special Court shall, subject to the provisions ofthis Act, follow the procedure and exercise all the powers ofCourt in hearing a suit under the Code of Civil Procedure, 1908(Central Act V of 1908) and any person making an objection shallbe required to adduce evidence to show that at the date theattachment, he had some interest in the property attached.

(6) After investigation under Sub-section (5), the Special Courtshall pass an order making the ad-interim order of attachmentabsolute or varying it by releasing a portion of the propertyfrom attachment or canceling the ad-interim order of attachment.

Provided that the Special Court shall not release from attachmentany interest, which it is satisfied that the financialestablishment or the person referred to in Sub-section (1) has,

in the property unless it is also satisfied that there willremain under attachment an amount or property of value not lessthan the value that is required for repayment to the depositorsof such financial establishment.

Section 8 of the Act deals with Attachment of Property of certaintransferees and Section 9 deals with Security in lieu ofattachment. Section 10 deals with Administration of Propertyattached. Section 11 deals with Appeal. Section 12 deals withSpecial Public Prosecutor and Special Government Pleader. Section13 of the Act dealing with Procedure and Power of Special Courtregarding offences is an important provision, on which thespecial emphasis had been laid and the said provision reads ashereunder:

Procedure and Powers of Special Court regarding offences: (1) TheSpecial Court may take cognizance of the offences without theaccused being committed to it for trial and in trying the accusedperson, shall follow the procedure prescribed in the Code ofCriminal Procedure, 1973 (Central Act 2 of 1974), for the trialof warrant cases by Magistrate.

(2) The provisions of the Code of Criminal Procedure, 1973(Central Act 2 of 1974), shall, so far as may be, apply to theproceedings before a Special Court and for the purpose of thesaid provisions, a special Court shall be deemed to be aMagistrate.

40. Submissions at length were made by the counsel on record inrelation to Section 3 of the Act aforesaid and also in relationto Section 13 of the Act as well. Rule 3 dealing with ad-interimorder and examination of the complainant and witnesses reads asunder:

(1) The Government shall pass the ad-interim order of attachmentunder Section 3 of the Act.

(2) Upon receipt of the orders of the Government under Sub-rule(1), the competent authority may examine the complainant and suchexamination shall be reduced in writing.

(3) The Competent authority shall have power to examine anyperson who in his opinion will be able to give any informationabout the financial establishment, and no oath shall beadministered to such person.

Rule 4 dealing with the Competent Authority's Right to requireinformation specifies as under:

The competent authority shall have power to require any financialestablishment or its officers or any officer or authority of theGovernment or a local authority or any other person to furnishsuch information as may be required and such FinancialEstablishment or Officer or authority of the Government or localauthority or person shall furnish such information to thecompetent authority.

Rule 6 dealing with power to freeze or seize property, reads asunder:

(1) Where the Competent Authority is satisfied or has reason tobelieve that any property which is liable to be attached underthe Act is likely to be concealed, transferred or dealt with inany manner which will result in defeating the purpose of the Act,may make an order seizing such property or where it is notpracticable to seize such property, make an order that suchproperty shall not be transferred or otherwise dealt with, exceptwith the prior permission of the Special Court.

(2) The Competent Authority may take the assistance of anysubordinate Officer of the Government to take possessions of theproperty in respect of which an order of seizure or freezing hasbeen made under Sub-rule (1).

(3) Any Officer-in-charge of Police Station when required by theCompetent Authority, shall take all steps, including inquiry,investigation or survey in respect of any person, place,property, documents, books or account, etc., for the purpose oftracing and identifying the properties.

(4) The Competent Authority shall maintain a record of all incomereceived and expenditure incurred of the property received,managed, and disposed and furnish the same to the Special Court.

41. Further strong reliance was placed on Sections 91 and 102 ofthe Code of Criminal Procedure, 1973 and the said provisions readas under:

Section 91: Summons to produce document or other thing: (1)Whenever any Court or any officer in charge of a police stationconsiders that the production of any document or other thing isnecessary or desirable for the purposes of any investigation,inquiry, trial or other proceeding under this Code by or beforesuch Court or officer, such Court may issue a summons, or suchofficer a written order, to the person in whose possession orpower such document or thing is believed to be, requiring him toattend and produce it or to produce it, at the time and placestated in the summons or order.

(2) Any person required under this section merely to produce adocument or other thing shall be deemed to have complied with therequisition if he causes such document or thing to be producedinstead of attending personally to produce the same.

(3) Nothing in this section shall be deemed

(a) to affect, Sections 123 and 124 of the Indian Evidence Act,1872 (1 of 1872), or the Bankers, Books Evidence Act, 1891 (13 of1891), or

(b) to apply to a letter, postcard, telegram or other document orany parcel or thing in the custody of the postal or telegraphauthority.

Section 102. Power of police officer to seize certain property(1) Any police officer may seize any property which may bealleged or suspected to have been stolen, or which may be foundunder circumstances which create suspicion of the commission ofany offence.

(2) Such Police Officer, if subordinate to the officer in chargeof a Police Station, shall forthwith report the seizure to thatofficer.

(3) Every police officer acting under Sub-section (1) shallforthwith report the seizure to the Magistrate havingjurisdiction and where the property seized is such that it cannotbe, conveniently transported to the Court or where there isdifficulty in securing proper accommodation for the custody ofsuch property, or where the continued retention of the propertyin police custody may not be considered necessary for the purposeof investigation, he may give custody thereof to any person onhis executing a bond undertaking to produce the property beforethe Court as and when required and to give effect to the furtherorders of the Court as to the disposal of the ;same.

Provided that where the property seized under Sub-section (1) issubject to speedy and natural decay and if the person entitled tothe possession of such property is unknown or absent and thevalue of such property is less than five hundred rupees, it mayforthwith be sold by auction under the orders of theSuperintendent of Police and the provisions of Sections 457 and458 shall, as nearly as may be practicable, apply to the netproceeds of such sale.

Section 4 of the Code reads as under:

Trial of offences under the Indian Penal Code and other laws: (1)All offences under the Indian Penal Code (45 of 1860) shall beinvestigated, inquired into, tried, and otherwise dealt withaccording to the provisions hereinafter contained.

(2) All offences under any other law shall be investigated,inquired into, tried, and otherwise dealt with according to thesame provisions, but subject to any enactment for the time beingin force regulating the manner or place of investigating,inquiring into, trying or otherwise dealing with such offences.

42. Further reliance was placed on Gourishetty Prabhakar v. Stateof Andhra Pradesh 2002 ALT (CRL)-1-492, wherein the learned Judgeof this Court observed:

(3) I am unable to agree with the contention of the leanedcounsel for the petitioner that the Special Court cannot takecognizance of the offence under Section 5 of the Act, unless theprocedure prescribed under Section 7 of the Act is followed.Section 7 relates to attachment of property being made absolutewhere the Government had under Section 3 of the Act ordered aninterim attachment of the property. As per Section 7 of the Act,after receipt of an application under Section 4 from thecompetent authority, the Special Court shall issue notice to thefinancial establishment, whose property was attached by theGovernment under Section 3 of the Act, to show cause why theattachment should not be made absolute. Thus, Section 7 hasnothing to do with the punishment prescribed under Section 5 ofthe Act. As per Section 13 of the Act, the Special Court can takecognizance of the offences without the accused being committed toit for trial, and in trying the accused has to follow theprocedure prescribed by Cr.P.C for trial of warrant cases by aMagistrate, and that provisions of Cr.P.C shall apply to theproceedings before it, and for the purpose thereof the SpecialCourt shall be deemed to be a Magistrate Court. There is nothingin the Act or the Rules made there under to show that a complaint

cannot be filed by an aggrieved person directly before theSpecial Court. So, the contention of the learned Counsel for thepetitioner that the complaint filed by the aggrieved persondirectly, without reference to the competent authority, is notmaintainable, cannot be accepted.

(4) Coming to the question of retrospectively of the Act, in myopinion, the contention of the learned Counsel for the petitionercannot be upheld. It should not be forgotten that the cause ofaction survives till the date petitioner repays the amountaccepted as deposit or till the expiry of the period oflimitation prescribed for recovery of the same. Though thedeposit matured on 3.10.1999, cause of action to recover theamount was surviving to the complainant by the date of filing ofthe complaint, i.e., 10.11.2001 also, i.e., after the Act cameinto force. Therefore, the contention of the learned Counsel "forthe petitioner that since the deposit matured before the cominginto force of the Act, the provisions of Section 5 of the Actcannot be made applicable to that deposit, cannot be accepted.

43. Further strong reliance was placed on the decision reportedin V. Siva Prasad v. State of A.P. 2002 (2) ALT (CRI) 419,wherein the learned Judge of this Court observed at paragraphs 21to 29 as under:

21. Normally, a regular criminal Court shall be deemed competentto deal with all offences including the offences under the IndianPenal Code. Exclusion of Jurisdiction of the Criminal Courtscannot be presumed lightly.

22. In this regard, it is necessary to refer to Section 4 ofCr.P.C which mandates that all offences under the Indian PenalCode shall be investigated, inquired into, tried and otherwisedealt with according to the provisions contained in the CriminalProcedure Code. Sub-Section (2) of Section 4 of Cr.P.Ccontemplates that all offences under any other law shall be

investigated, inquired into, tried and otherwise dealt withaccording to the same provisions, but subject to any enactmentfor the time being in force regulating the manner or place ofinvestigating, inquiring into, trying or otherwise dealing withsuch offences.

23. Section 5 of Cr.P.C provides that nothing contained in thisCode shall, in the absence of a specific provision to thecontrary, affect any special or local law for the time being inforce or any special jurisdiction or power conferred, or anyspecial form of procedure prescribed by any other law for thetime being in force.

24. A plain reading of these provisions of the Cr.P.C would makeit abundantly clear that normal assumption in respect of offencesunder Indian Penal Code is that they shall be investigated,enquired into, tried or otherwise dealt with according to theprovisions in the Criminal Procedure Code. In regard to the otheroffences, a similar presumption shall be raised unless there isany special enactment relating to the manner or the place ofinvestigating, enquiring into or trying or otherwise dealing withsuch offences.

25. Section 5 of the Cr.P.C saves the operation of any other lawfor the time being in force creating any special jurisdiction orpower conferred or any special form of procedure prescribed.

26. In this case, 'enactment' mentioned in Sub-Section (2) ofSection 4 of Cr.P.C., and 'any special or local law' or 'anyspecial jurisdiction or power conferred' contemplated underSection 5 of Cr.P.C., should be referable to Section 6 of the Actif the contention of the learned Counsel for the petitioner is tobe accepted.

27. A close examination of the provisions of Section 6 of the Actwould lead to a conclusion that as far as investigation, enquiryor trial of the offences under the Indian Penal Code is

concerned, the normal jurisdiction as contemplated under Section4 of Cr.P.C is not affected at all. There is nothing in Section 6of the Act to indicate that any offence under the Indian PenalCode including the offence under Section 420 of IPC isencompassed by it. With reference to Section 5 of Cr.P.C., it isobvious that the special jurisdiction conferred on the specialCourt under Section 6 of the Act is confined to maters to whichthe provisions of the said Act apply. It is obvious that anoffence under Section 420 of IPC is not a matter to which theprovisions of the said Special Act apply. As stated above, thematters which will fall within the purview of specialjurisdiction as conferred under Section 6 of the Act shall atbest be relating to trial of offences specially created underSection 5 of the Act and matters relating to attachment of theproperties as contemplated under Section 3 and other provisionsof the Act.

28. It may be mentioned that mere default in payment of thedeposited amount has been legislatively converted into an offencepunishable under the Act. This offence does not supplant ordisplace the offence under Section 420, IPC Exclusivejurisdiction of the Special Court contemplated under Section 6 ofthe Act could only be in relation to the said offence createdunder Section 5 of the Act. By no stretch of imagination, couldit be inferred that the Special Court will have an exclusivejurisdiction in respect of an offence of cheating punishableunder Section 420 of IPC even if it is committed by the financialinstitutions as defined in the Act.

29. Further exclusive jurisdiction of special Court has relevancefor the trial of offences and not for investigation. On thisground proceedings at the stage of investigation cannot bequashed even in respect of allegations of commission of specialoffence. At any rate, in this case the allegations indicatespecial offence as well as offences under Indian Penal Code.

44. Strong reliance was also placed on the decision of the ApexCourt in State of Maharashtra v. Tapas D. Neogy wherein the ApexCourt observed at paragraphs 6 to 12 as under:

6. A plain reading of Sub-section (1) of Section 102 indicatesthat the police officer has the power to seize any property whichmay be found under circumstances creating suspicion of thecommission of any offence. The legislature having used theexpression "any property" and "any offence" have made theapplicability of the provisions wide enough to cover offencescreated under any Act. But the two preconditions forapplicability of Section 102(1) are that it must be "property"and secondly, in respect of the said property there must havebeen suspicion of commission of any offence. In this view of thematter the two further questions that arise for consideration arewhether the bank account of an accused or of his relation can besaid to be "property" within the meaning of Sub-section (1) ofSection 102 CrPC and secondly, whether circumstances exist,creating suspicion of commission of any offence in relation tothe same. Different High Courts in the country have takendivergent views in this regard. In the case of Swaran Sabharwalv. Commissioner of Police 1998 Cri. L.J. (Del) a Division Benchof the High Court examined the question whether a bank accountcan be held to be "property" within the meaning of Section 102Cr.P.C. IN the said case, proceeds realized by sale of officialsecrets were deposited by the accused in his wife's account. TheCourt in that case came to hold that it is not quite sure whethermonies deposited in a bank account can be seized by means of aprohibitory order under the provisions of Section 102 but evenassuming that a bank account is a "property" within the meaningof Section 102 of the Code of Criminal Procedure, the furtherconsideration must be satisfied namely that the property has beenfound under circumstances which create the suspicion of thecommission of an offence. But in that case it is not thediscovery of the property that has created suspicion ofcommission of an offence but on the other hand the discovery of

the bank account is a sequel to the discovery of commission ofoffence inasmuch as the police suspected that some of theproceeds realized by the sale of the official secrets have beenpassed on to the bank account of the wife of the accused.Therefore, the Court was of the opinion that the provisions ofSection 102 cannot be invoked. In the case of Purbanchal RoadService v. State 1991 Cri. L.J. 2798 (Gau) a learned single Judgeof the Gauhati High Court examined the provisions of Section 102of the Criminal Procedure Code and the validity of an order by apolice officer, prohibiting the Bank from paying amount to theaccused form his account. The learned Judge came to theconclusion that the word "seize" used in Section 102 CrPC meansactual taking possession in pursuance of a legal process and,therefore, in exercise of the said power, a bank cannot beprohibited not to pay any amount out of the account of theaccused to the accused nor can the accused be prohibited fromtaking away any property from the locker, as such an order wouldnot be a "seizure" within the meaning of Section 102 of theCriminal Procedure Code. The learned Single Judge agreed with theview taken by the Allahabad High Court in the case of TextileTraders Syndicate Ltd. v. State of U.P. . In the Allahabad caseon which the Gauhati High Court relied upon (Textile Traders),what was decided by the Court is, once money passes on from theaccused to some other person or to the bank, money itself becomesunidentifiable and therefore, there cannot be any question ofseizure of the same by the police officer.

7. In the case of Malnad Construction Co. v. State of Karnataka1994 Cri. L.J. 645 (Kant) a learned Single Judge ofthe ;Karnataka High Court examined the provisions of Section 102would mean taking actual physical possession of the property andrelying upon the Gauhati High Court decision referred to supra,came to hold that the "seizure" in Section 102 would mean takingactual physical possession of the property and such a prohibitoryorder to the banker of the accused not to operate the account isnot contemplated under the Code and consequently, the police has

no power to issue such order. Thus the High Courts of Karnataka,Allahabad, Gauhati and Delhi have taken the view that theprovisions of Section 102 of the Criminal Procedure Code cannotbe invoked by the police officer in course of investigation toissue any prohibitory order to the banker or the accused fromoperation the bank account.

8. In P.K. Parmar v. Union of India 1992 Cri. L.J. 2499 (Del) alearned Single Judge of the Delhi High Court considered the powerof the police officer under Section 102 of the Criminal ProcedureCode, in connection with the fraudulent acquisition of propertiesand opening of fictitious bank accounts and withdrawal of hugeamounts as subsidy from the Government by producing bogusdocuments by the accused. The learned Judge took note of theearlier decision of the Delhi High Court in Swaran Sabharwal v.Commr. of Police and analysed the provisions of Section 102 ofthe Criminal Procedure Code and the facts of the case were asunder: It was revealed that during investigation the prosecutioncame to know that without actually manufacturing phosphate andfertilizers, the accused withdrew as much as Rs. 3.39 crores assubsidy from the Government of India by producing bogusdocuments. The Court ultimately came to the conclusion that therecovery of assets in the Bank links prima facie with thecommission of various offences with which they had been chargedby CBI and, therefore, the police officer could issue directionsto various banks/financial institutions freezing the accounts ofthe accused. The learned Judge in the aforesaid case has reallyconsidered the amount of money which the accused is alleged ;tohave swindled by producing bogus documents which prompted him tohold that the power under Section 102 CrPC can be exercised.

9. In Bharath Overseas Bank v. Minu Publication 1988 MLW (Cri)106 a learned Single Judge of the Madras High Court consideredthe same question and came to the conclusion that the expression"property" would include the money in the bank account of theaccused and there cannot be any fetter on the power of the police

officer in issuing prohibitory orders from operating the bankaccount ;of the accused when the police officer reaches theconclusion that the amount in the Bank is the outcome ofcommission of offence by the accused. The Court considered thefact as to how in modern days, commission of while-collar crimesand bank frauds are very much on the increase and bankingfacilities have been extended to the remotest rural areas and,therefore the expression "property" may not be interpreted in amanner so as to exclude the money in a bank which in turn wouldhave the effect of placing legal hurdles, in the process ofinvestigation into the crimes. According to the learned Judge,such literal interpretation of the expression "property" couldnot have been the intent of the framers of the Criminal ProcedureCode. In para 11 of the said judgment, the learned Judge referredto the object behind investing 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 investingthe police with powers of seizure. Seizure and production incourt of any property, including those regarding which an offenceappears to have been committed or which appears to have been usedfor the commission of any offence or any other property will havea twofold effect. Production of the above property may benecessary as evidence of the commission of the crime. Seizure mayalso have to be necessary, in order to preserve the property, forthe purpose of enabling the Court to pass suitable orders underSection 452 of the Criminal Procedure Code at the conclusion ofthe trial. This order would include destruction of the property,confiscation of the property or delivery of the property to anyperson claiming to be entitled to possession thereto. It cannotbe contended that the concept of restitution of property to thevictim of a crime, is totally alien to the Criminal ProcedureCode. 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 bringabout restoration of property or its restitution. As Section 452

Cr.P.C itself indicates, one of the modes of disposing ofproperty at the conclusion of the trial, is ordering their returnto the person entitled to possession thereto. Even interimcustody of property under Sections 451 and 457 Cr.P.C recognizesthe rights of the person entitled to the possession of theproperties. An innocent purchaser for value is sought to bereimbursed by Section 453 Cr.P.C. Restoration of immovableproperty under certain circumstances, is dealt with under Section456 Cr.P.C. Even, monetary compensation to victims of crime orany bona fide purchaser of property, is provided for underSection 357 Cr.P.C., wherein when a count while convicting theaccused imposes fine, the whole or any part of the fine, ifrecovered, may be ordered to be paid as compensation to anyperson, for any loss or injury, caused by the offence or to anybona fide purchaser of any property, after the property isrestored to the possession of the person entitled thereto. Thistwofold object of investing the police with the powers ofseizure, have to be borne in mind, while settling this legalissue.

10. This judgment of the learned Single Judge of the Madras HighCourt was followed in a later decision in the case of BharatOverseas Bank Limited v. Prema Ramalingam 1991 MLW (Cri) 353wherein the leaned judge agreeing with Padmini Jesudurai, J, inBharat overseas bank case came to hold that money in a bankaccount is "property" within the meaning of Section 102 of theCriminal Procedure Code, which could be seized by a prohibitingorder. In the aforesaid case, the learned Judge has also noticedthe fact that the judgment of Padmini Jesudurai, J. In BharatOverseas Bank was upheld by the Division Bench subsequently.

11. In the case of Gurcharan Singh (Dr) v. State of Punjab (1978)80 Punj LR 514 (DB) a Division Bench of the Punjab 86 HaryanaHigh Court differing with the view taken by the Allahabad HighCourt in Textile Traders came to hold that the bank account would

be "property' and as such would be capable of being seized underSection 102 of the Code of Criminal Procedure.

12. Having considered the divergent views taken by different HighCourts with regard to the power of seizure under Section 102 ofthe Code of Criminal Procedure, and whether the bank account canbe held to be 'property' within the meaning of the said Section102(1), we see no justification to give any narrow interpretationto the provisions of the Criminal Procedure Code. It is wellknown that corruption in public offices has become so rampantthat it has become difficult to cope up with the same. Then againthe time consumed by the courts ;in concluding the trials isanother factor which should be borne in mind in interpreting theprovisions of Section 102 of the Criminal Procedure Code and theunderlying object engrafted therein, inasmuch as if there ca beno order of seizure of the bank account of the accused then theentire money deposited in a bank which is ultimately held in thetrial to be the outcome of the illegal gratification, could bewithdrawn by the accused and the courts would be powerless to getthe said money which has any direct link with the commission ofthe offence committed by the accused as a public officer. We are,therefore, persuaded to take the view that the bank account ofthe accused or any of his relations is "property" within themeaning of Section 102 of the Criminal Procedure Code and apolice officer in course of investigation can seize or prohibitthe operation of the said account if such assets have directlinks with the commission of the offence for which the policeofficer is investigating into. The contrary view expressed by theKarnataka, Gauhati and Allahabad High Courts, does not representthe correct law. It may also be seen that under the Prevention ofCorruption Act, 1988, in the matter of imposition of fine underSub-section (2) of Section 13, the legislatures have providedthat the Courts in fixing the amount of fine shall take intoconsideration the amount or the value of the property which theaccused person has obtained by committing the offence or wherethe conviction is for an offence referred to in Clause (e) of

Sub-section (1) of Section 13, the pecuniary resources orproperty for which the accused person is unable to accountsatisfactorily. The interpretation given by us in respect of thepower of seizure under Section 102 of the Criminal Procedure Codeis in accordance with the intention of the legislature engraftedin Section 16 of the Prevention of Corruption Act referred toabove. In the aforesaid premises, we have no hesitation to cometo the conclusion that the High Court of Bombay committed errorin holding that the police officer could not have seized the bankaccount or could not have issued any direction to the bankofficer, prohibiting the account of the accused from beingoperated upon. Though we have laid down the law, but so far asthe present case is concerned, the order impugned has alreadybeen given effect to and the accused has been operating hisaccount, and so, we do not interfere with the same.

45. In the light of the language employed in Section 13 of theAct, and also in the light of the Sections 4, 91 and 102 of theCode of Criminal Procedure, elaborate submissions were made inrelation to power to issue such directions and also the actionrelating to the freezing of the accounts of the petitioner. On acareful reading of the material available on record, it is not inserious controversy that already an order was made by a CompetentCriminal Court, and this Court need not further elaborate thesame since the relevant portion of the order had already beenspecified supra. On a careful reading of Section 3 of the Act,this Court is also of the opinion that the ingredients are notprima facie satisfied. Even otherwise in the present WritPetition the criminal proceedings, as such, are not beingchallenged and hence, these aspects need not be gone into anyfurther. Certain submissions were made that the action had beeninitiated not only on the strength of the provisions of the Actonly but also in addition thereto in relation to the offenceseven under the Indian Penal Code.

46. When a competent Criminal Court had already expressed anopinion in the light of the alleged directions issued by theconcerned police, the banking institutions are not justified infreezing the accounts. This Court is expressing this opinionespecially in the light of the insufficient material on thestrength of which, the very action had been initiated. This Courtis not inclined to express or touch upon the merits or demeritsrelating to the allegations made, as against the petitionerCompany, only on one complaint. Even otherwise, this Court isthoroughly satisfied that. On the strength of such directions thebanking institutions freezing the accounts of the petitionercompany especially at this stage, in the peculiar facts andcircumstances, cannot be said to be a justifiable action. Allother further contentions which had been argued in elaborationneed not detain this Court any longer especially in the light ofthe order already made in this regard by a Competent CriminalCourt specified above.

47. Hence, viewed from any angle, the Writ Petitioner is bound tosucceed and accordingly, the Writ Petition is hereby allowed. Noorder as to costs.

Can the Police Freeze your Assets?Over the next few months we will take a look at the Proceeds of Crime Act 2002, legislation designed to recover the proceeds of criminal offending.  First up, we lookat Restraint Orders, where property is frozen in anticipation of seizure.

There are certain circumstances when the Police could freeze your bank account, your property, and your business, even when you have not even been charged with an offence.  This is known as a Restraint Order.

Under s40 of the Proceeds of Crime Act 2002, the Police can ask a Prosecutor to apply to the Crown Court to restrain the assets of someone who is:

(1)    Subject to a criminal investigation, even where there has been no charge;

(2)    Facing court proceedings for an offence;

And there is reasonable cause to believe that the person has benefitted from criminal conduct.

Restraint Orders can also be made where the Prosecution are appealing the Court’s decision not to make a Confiscation Order.

The application will be made to the Court ex parte, without notice to the restrained party.  The first time you would hear you were subject to a Restraint Order is when the police serve you with the Order, or when you cannot access your bank account!  TheRestraint Order will usually restrain specific bank accounts and property, but may have a clause stating that any property you own, even that not known to the Police, isrestrained.

Under the Act the Court can make provision for reasonable living expenses and legal expenses and can make provisions that enable a restrained business to continue trading. Breaching the Restraint Order could be a contempt of Court and could result in a fine or even a prison sentence.

If you find yourself subject to a Restraint Order you should contact a solicitor immediately.  emeryjohnson can advise you on what you can and can’t do when your property is restrained, and can help you make an application to vary or discharge the Order.