Kerala High Court
Madhu.K vs The Sub Inspector Of Police on 26 August, 2020
Author: T.V.Anilkumar
Bench: T.V.Anilkumar
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE T.V.ANILKUMAR
WEDNESDAY, THE 26TH DAY OF AUGUST 2020 / 4TH BHADRA, 1942
WP(C).No.9820 OF 2020(B)
PETITIONER:
MADHU.K.,
AGED 48 YEARS,
S/O.KUTTAN NADAR, PANKAJ HOUSE, MUZHANGIL
NELLIKKALU, KAKKANAM, MARAYAMUTTOM,
NEYYATTINKARA.
BY ADVS.SRI.B.S.SWATHI KUMAR
SMT.ANITHA RAVINDRAN
SRI.HARISANKAR N UNNI
SMT.P.S.BHAGYA SURABHI
RESPONDENTS:
1 THE SUB INSPECTOR OF POLICE, MARAYAMUTTOM
POLICE STATION, MARAYAMUTTOM.P.O,
NEYYATTINKARA-695124
2 MRIDHUL KUMAR,
SUB INSPECTOR OF POLICE, MARAYAMUTTOM POLICE
STATION, MARAYAMUTTOM.P.O., NEYYATTINKARA-695124
3 THE BRANCH MANAGER,
STATE BANK OF INDIA, PERUMKADAVILA BRANCH,
PERUMKADAVILA.P.O, THIRUVANANTHAPURAM-695124
R1 BY SR. PUBLIC PROSECUTOR SRI. UDAYAKUMAR K.B.
R3 BY ADV. SRI.R.S.KALKURA
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
10-08-2020, THE COURT ON 26-08-2020 DELIVERED THE FOLLOWING:
W.P.(C)No.9820/2020
-:2:-
"C.R."
Dated this the 26th day of August, 2020
J U D G M E N T
The petitioner is the 9th accused in Crime No.926/2019 of Marayamuttam Police Station registered under Sections 406, 420, 465, 467 and 468 read with Section 34 of the Indian Penal Code,1860 (for short, 'the IPC'). During the course of the investigation of the crime, the third respondent, Branch Manager, State Bank of India, Perumkadavila branch, suspended the operation of petitioner's Savings Bank account No.67031821151 and Cash Credit account No.37310035507 on 18.02.2020 acting upon Ext.P9 request addressed to him by the second respondent, Sub Inspector of Police. Being aggrieved by the freezing of accounts, the petitioner filed this writ petition seeking a declaration that Ext.P9 requisition as well as the consequential freezing is illegal and liable to be quashed. A direction commanding the third respondent to de-freeze the accounts was also sought in the writ petition.
2. The petitioner is a contractor by W.P.(C)No.9820/2020 -:3:- profession and a member of the Director Board of Marayamuttam Service Co-operative Bank (hereinafter, 'the Co-operative Bank'). The co-accused in Crime No.926/2019 are either the members of the Board or the employees of the Bank. The Crime was registered on the motion of a farmer, who is one of the beneficiaries of poultry farming scheme introduced by the Bank in the year 2015-16. The bank introduced the farming scheme by which the beneficiaries were provided with chicken, cages and feed free of cost on condition that the farmers ought to supply in return, the eggs to the Bank, for which the farmers were to get the maintenance charges.
3. The de facto complainant claims to have supplied the eggs as undertaken, for a period of one year and the entries evidencing receipt of eggs from him were recorded by the Bank in the passbook maintained in his name. According to him, an amount of Rs.3,37,654/- due towards the maintenance charges for the year were not yet paid to him.
4. His instant grievance is that a notice was issued by the Co-operative bank calling upon W.P.(C)No.9820/2020 -:4:- him to clear the loan arrears of Rs.2,37,146/- allegedly due to it as if he had already received the loan and kept the amount in arrears without discharging his liability. He denied having received any loan from the bank or executed documents evidencing any request for loan or receipt of any such amount. It is further stated that similar notices have been issued to majority of the beneficiaries of the scheme and all are equally aggrieved and the act of the bank authorities has amounted to forgery and cheating punishable under law.
5. The contention raised by the petitioner is that the amounts kept in his accounts have no connection whatsoever with the loans advanced by the Marayamuttam Service Co-operative Bank to the farmers and therefore, the act of second respondent freezing the accounts in exercise of power under Section 102 of the Code of Criminal Procedure,1973 (for short, 'the CrPC') is quite illegal.
6. Another contention is that the de facto complainant subsequently withdrew from his complaint and none of the beneficiaries of the W.P.(C)No.9820/2020 -:5:- scheme has also any grievance against the Bank and therefore itself, the entire accusation against the petitioner and co-accused is baseless.
7. During the pendency of this writ petition, the Investigating Officer de-freezed the Cash Credit Account No.37310035507 by Ext.P11 letter addressed to the petitioner on discovering that the amounts kept in that account had nothing to do with the crime but were only related to his contract work. What, therefore, survives for the present is whether the freezing of savings bank account is illegal and liable to be removed.
8. The third respondent Branch Manager did not file any counter.
9. The learned Public Prosecutor took strong exception to the request made for de-freezing of the SBI account and submitted a detailed statement of facts indicating the various steps taken by the Police as well as the stage of present investigation. It is stated that the investigation revealed that the members of the Director Board as well as the employees of the Co-operative Bank obtained loan applications in blank forms along with blank stamp papers signed by the W.P.(C)No.9820/2020 -:6:- beneficiaries, at the time of their admission to the poultry farming scheme and misappropriated the funds of the bank by creating loan accounts in the individual names of the farmers without their knowledge and consent. It is stated that about 77 members of the scheme were cheated by the accused persons misappropriating approximately an amount of Rs.10 Crores. As regards the part played by the petitioner, it is stated that the scrutiny of the entries in his SBI account revealed that during the relevant period of time, he had transacted amounts exceeding One Crore and it is yet to be explored as to whether the assets were connected with those misappropriated under the cover of the loan accounts created in the names of the farmers.
10. The learned counsel for the petitioner submits that accounts were frozen by the second respondent even before he could have seen the account or ascertained as to whether the transactions in the accounts were connected with the commission of the alleged offences.
11. This submission appears to be correct on perusing Ext.P9 letter which was addressed to the Bank Manager. It contained second respondent's W.P.(C)No.9820/2020 -:7:- request for furnishing the details of the petitioner's accounts in the bank and also for simultaneous freezing of the same.
12. It is also submitted that a Police Officer acting under Section 102 of the CrPC has no power to effect seizure of a property unless there is ground for satisfaction that the proposed property has close link or nexus with the offences in question. In other words, the core of the submission is that the Police Officer before proceeding to act under Section 102 of the CrPC ought to base suspicion as to the alleged link, on tangible materials rather than on surmises and conjunctures. In order to substantiate his submission, the learned counsel relied on decisions reported in Lathifa Abubakkar v. State of Karnataka & ors. [2012 KHC 3491], Dr.Shashikant D. Karnik v. State of Maharashtra [2008 CrLJ 148], Chandrasekar R. v. Inspector of Police, Salem & Anr. [2003 KHC 2064], State of Maharashtra v. Tapas D. Neogy [1999 KHC 797] and Enrica Lexie M.T. v. Doramma [2012 KHC 4259].
13. The bank account of a person is also a property within the fold of Section 102 of the W.P.(C)No.9820/2020 -:8:- CrPC though the expression 'seizure' is ordinarily understood to denote taking physical custody of a thing which is tangible or corporeal. All the same, the true effect of physical seizure could be put on a Bank account also, by having its operation prohibited through an order of freezing. It is now well nigh settled through the decision of the Honourable Supreme Court in State of Maharastra v. Tapas D.Neogy [1999 KHC 797] that a Police Officer has power to freeze the bank account of a person as if it is essentially a part of the power exercisable under Section 102 of the CrPC. Therefore itself, all conditions as to seizure of a thing or a movable property stipulated under Section 102 of the CrPC should apply with equal force to seizure of a bank account also.
14. The general policy behind envisaging the provision for seizure in the Code of Criminal Procedure is to enable the prosecution to prove the charges against the offender by resort to production of the seized thing or property involved in the crime, as evidence in the case. Section 102 also seeks to preserve the interests W.P.(C)No.9820/2020 -:9:- of the Society at large by having a thing in relation to which an offence is committed, seized and brought to the custody of a court so that it could either be confiscated or delivered to the person entitled to the custody thereof as the case may be, at the appropriate stage of the criminal proceedings.
15. It is obvious from Section 102 of the CrPC that the property which a Police Officer is empowered to seize must be one discovered under circumstances which create suspicion of commission of the offence. Where no suspicion of commission of offence exists or is made out, any steps resorted to by the Police Officer for seizure are nothing but the abuse of law. What Section 102 postulates is that the suspicion as to commission of offence must essentially precede the proposed seizure of property.
16. It is essential that the properties sought to be seized under Section 102(1) of the CrPC must have direct or close link with the commission of offence in question. The power to seize a bank account could be justifiably exercised when the Police Officer has reasonable W.P.(C)No.9820/2020 -:10:- grounds to believe that the property has direct nexus with the offence in question. To repeat, the pre-requisite for exercising powers under Section 102(1) is the existence of direct link between the tainted property and the alleged offence. It is imperative that the seizure should never turn out to be an arbitrary, whimsical, perverse, defiant or arrogant action as it happens in some cases.
17. The Police Officer acting under Section 102 of the CrPC cannot arrogate to himself an unregulated and unbridled power to freeze the bank account of a person on mere surmise and conjuncture since such unguarded power may bring about drastic consequences affecting the right of privacy as well as the reputation of the account holder. If the Investigating Officer adopts an arbitrary approach of freezing the account, without even bothering to scrutinise the entries and the nature of transactions and instead, takes a belated chance of tracing the link between the assets and the offence, it is to be said that he acts contrary to the very object and spirit of the section. The seizing officer should have concern and regard for the civil rights of the individuals W.P.(C)No.9820/2020 -:11:- and be able to visualise the trauma of the holder of an account who later turns out to have no link with the offences in question in the usual course of inquiry. None can possibly remedy the loss sustained by the irresponsible conduct of such seizing Officer.
18. The general scheme of the CrPC regarding the search and seizure is that a Police Officer before proceeding to search and seize should satisfy the Magistrate having jurisdiction as to the necessity for the proposed action and may obtain a warrant or such permission as the case may be. The satisfaction of the Magistrate depends as to how the place sought to be searched or things liable to be seized are associated with the alleged commission of offence. Section 165(1) of the CrPC, however, draws an exception to this general rule and permits an Officer in charge of the Police Station or the Police Officer making investigation to proceed to the proposed place of search and effect seizure after recording in writing the grounds of his belief and of the need for initiating emergent search otherwise than by a warrant obtained from the court. As per Section W.P.(C)No.9820/2020 -:12:- 165(5), after forwarding to the nearest Magistrate the search memorandum so prepared, the Officer could justifiably conduct the search in the suspected place and effect seizure also. There is no reason why the above safeguard provided by the provisions of the CrPC against unprincipled search should not extend to the cases of freezing of bank accounts also.
19. Though every provision in Section 165 may not sensibly apply to freezing of accounts, the theory underlying the section must be given due effect to. This is absolutely necessary to prevent false and frivolous seizure from being resorted to by the authorities.
20. Section 102(2) enjoins a Police Officer to report the seizure immediately to the Officer in charge of the Police Station. So also, Section 102(3) enjoins the Police Officer to report seizure forthwith to the concerned Magistrate also. In respect of these two conditions, the contention of the learned counsel for the petitioner is that there is complete breach of the provisions. Even though it was submitted by the learned prosecutor that the seizure was reported W.P.(C)No.9820/2020 -:13:- to court, it was not substantiated. So also, as regards report of seizure to the Officer in charge of the Police Station, who in the present case is the CI of Police, the same was not similarly substantiated. It was therefore argued by the learned counsel for the petitioner that the breach of the aforesaid conditions amounted to contravention of mandatory provisions of law and therefore itself, the seizure of the bank accounts in question is vitiated by illegality.
21. In my view, it may not be correct to say that the seizure is vitiated only because there was failure on the part of the Police Officer to report seizure to the Officer in charge of the Police Station and to the concerned Magistrate. The purpose of providing for immediate reporting of seizure is to ensure that the search and seizure conducted are reliable, trustworthy and free from suspicion. Once the materials are sufficient to establish that the search and seizure were trustworthy and truthful, there is no reason to reject them as illegal.
22. So far as seizure of bank accounts is concerned, breach of conditions provided in W.P.(C)No.9820/2020 -:14:- Sections 102(2) and 102(3), may not have as much impact as in ordinary cases related to movables since neither existence nor operation of the account becomes a matter of dispute and ordinarily a holder may not tend to take a contention that no account existed in his name. What can be said of a freezing made in breach of Section 102(2) and (3) is that it is only irregular rather than illegal. It is axiomatic that an irregular search and seizure cannot invalidate the seizure or their admissibility in evidence. They are capable of being acted upon by the courts. This, however, does not mean that a Police Officer can act against the provisions of law and go to any extent. Such violations must be curbed and the erring Officer be proceeded against as per law. The violations are no doubt official misconduct, for which, the erring Police Officer must be held liable under the relevant law of discipline and proceeded departmentally. In appropriate cases, it is upto the Magistrates concerned to bring such violations to the notice of the appropriate authorities for departmental action. All would W.P.(C)No.9820/2020 -:15:- however depend upon the facts and circumstances of each individual case.
23. Questions may often arise as to the legal remedy which a person can resort to, upon being aggrieved by the seizure of his bank account which reveals no nexus with the alleged offence. In case the seizure is illegal and the account freezed lacked direct link with the offences alleged, the legal remedy open to the aggrieved is to approach the concerned Magistrate under Section 451 or 457 of the CrPC as the case may be, and seek to get the account de-freezed. But if the freezing is per se contrary to the provisions of law and could be assailed as illegal without reference to factual disputes involved in the matter, nothing precludes the affected person from approaching this Court for appropriate relief.
24. If a Police Officer wants to depart from the normal procedure of getting a warrant or such permission from the concerned Magistrate, he must then have to draw a search memorandum in writing containing sufficient grounds for his belief as to how the assets in the account are associated with the alleged offences and also as to how an W.P.(C)No.9820/2020 -:16:- emergent freezing of account would be justified in the circumstances of the case on hand. He must forward the same to the nearest Magistrate forthwith as required under Section 165(5). If there is breach in this respect, it is to be considered as being irregular than illegal. All that the Magistrate has to decide on the motion made for defreezing of the account is whether the seizure complained of is illegal and the account did have any direct/close nexus or link with the offences in question. In other words, despite there could be complaint of irregularity in the matter of seizure also, once the Magistrate is satisfied that the account seized nevertheless has got direct or close link with the offences in question, then it is not a case where the account could be ordered to be de-freezed at the request of the aggrieved. This will not, however, preclude the Magistrate from reporting the violation if any, committed by the erring Police Officer, to his departmental head for initiating necessary disciplinary action.
25. So far as this case is concerned, many violations are alleged and brought to my notice. W.P.(C)No.9820/2020 -:17:- The concerned Officer did not obtain a warrant or such permission before the proposed freezing. So also, no search memorandum was prepared and forwarded to the concerned Magistrate before proceeding to seize the account. This is on the other hand, a case where the Officer took a call to freeze the accounts without even seeing them before hand. Added to this, there was no immediate report of seizure either to the Officer in charge of the Police Station or to the concerned Magistrate.
26. Despite all these infirmities, the main consideration which governs de-freezing of the accounts seized is whether the assets therein have got any close or direct link with the offences in question.
27. The learned Public Prosecutor submitted that the Investigating Officer could not so far examine the entries in the SB account of the petitioner and conduct necessary inquiry in the matter owing to the prevailing situation of pandamic COVID-19 and his involvement in COVID protocol duties. It was submitted that some more time was needed to complete the inquiry regarding W.P.(C)No.9820/2020 -:18:- the matter in issue. The learned Public Prosecutor requested this Court to grant a minimum period of two months, so that it could be discerned as to whether the assets in question have got any link with the commission of the offences.
28. It is now clear from the records before me that the current account seized under Ext.P9 request was already de-freezed on the premise that the transactions therein have no connection with the alleged offences.
29. On the other hand, the learned counsel for the petitioner submitted that the de facto complainant, at whose instance the present crime was registered, has withdrawn from the prosecution after realising that the allegation happened to be made by him was on a mistaken notion. It was also submitted that none of the beneficiaries of the poultry farming scheme has come forward so far with similar complaint either against the petitioner or members of the Director Board.
30. A detailed report of investigation submitted by the second respondent indicates that the offences committed are grave in nature and huge amounts involving Crores were misappropriated W.P.(C)No.9820/2020 -:19:- by the members etc. of the Co-operative Bank. The petitioner is also a member of the Co-operative Bank. The SB Account details of the petitioner reportedly contain transactions of money during the relevant and subsequent periods. The learned Public Prosecutor in these circumstances requested this Court to refrain from ordering de-freezing of the SB account of the petitioner.
31. Considering the submissions made by the learned Public Prosecutor, it appears to be fair to desist from ordering de-freezing of the account at this moment, since complete picture in the matter could not be brought out only because the second respondent was not in a position to go ahead with the inquiry due to his attending COVID- 19 protocol duties. Accordingly, I grant a period of one month for completion of inquiry in the matter. I do not propose to keep this proceeding pending till then. The second respondent will file a report in the matter indicating the outcome of inquiry before the concerned Magistrate positively within one month from today. Unless a report as directed above is submitted by the second respondent, the learned Magistrate shall de-freeze W.P.(C)No.9820/2020 -:20:- the account on the motion of the petitioner. If, on the other hand, a report of inquiry is submitted, the learned Magistrate shall after hearing the petitioner and the learned Public Prosecutor on the report and examining relevant matters, pass appropriate orders in accordance with law in the light of the principles enunciated in this Order.
In the result, this writ petition is disposed of directing the petitioner to approach the learned Magistrate concerned, who shall, on the motion of the former, de-freeze the account in case the second respondent fails to submit the report as directed above and in case a report as directed is submitted, the learned Magistrate shall pass necessary orders after hearing both parties, in accordance with law.
All pending interlocutory applications will stand closed.
Sd/-
T.V.ANILKUMAR JUDGE DST/ami W.P.(C)No.9820/2020 -:21:- APPENDIX PETITIONER'S EXHIBITS:
EXHIBIT P1 TRUE COPY OF THE CONTRACTORS REGISTRATION CARD OF THE PETITIONER DATED 2.3.2017 EXHIBIT P2 TRUE COPY OF THE ORDER IN WP(C)NO.27600/2019 DATED 21.11.2019 EXHIBIT P3 TRUE COPY OF THE FIRST INFORMATION REPORT IN CRIME NO.926/2019 DATED 22.12.2019 EXHIBIT P4 TRUE COPY OF THE ORDER IN B.A. NO.9478/2019 DATED 24.12.2019 EXHIBIT P5 TRUE COPY OF THE ORDER IN B.A. NO.1320/2020 DATED 19.02.2020 EXHIBIT P6 TRUE COPY OF THE ORDER IN WP(C)NO.5028/2020 DATED 20.2.2020 EXHIBIT P7 TRUE COPY OF THE LETTER DATED 24.2.2020 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER EXHIBIT P8 TRUE COPY OF THE JUDGMENT IN WP(C)NO.5800/2020 DATED 11.3.2020 EXHIBIT P9 TRUE COPY OF THE LETTER TO THE 3RD RESPONDENT FROM THE 1ST RESPONDENT DATED NIL.
EXHIBIT P10 TRUE COPY OF THE COUNTER AFFIDAVIT FILED BALACHANDRAN K. IN B.A.NO.1320/2020 DATED 10.3.2020. EXHIBIT P11 TRUE COPY OF THE LETTER DATED 4.6.2020 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER.
EXHIBIT P12 TRUE COPY OF THE RELEVANT PAGES OF THE STATEMENT OF ACCOUNTS FROM 1.4.2015 TO 31.3.2016 IN RESPECT OF ACCOUNT NO.67031821151 OF THE PETITIONER.
EXHIBIT P13 TRUE COPY OF THE RELEVANT PAGES OF THE STATEMENT OF ACCOUNTS FROM 1.4.2019 TO W.P.(C)No.9820/2020 -:22:- 2.3.2020 IN RESPECT OF ACCOUNT NO.37310035507 OF THE PETITIONER.
RESPONDENTS' EXHIBITS: NIL