Madras High Court
S.Ganapathi vs State Represented By on 5 December, 2014
Author: K.B.K.Vasuki
Bench: K.B.K.Vasuki
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 05.12.2014 CORAM: THE HON'BLE Ms.JUSTICE K.B.K.VASUKI Crl.O.P.No.800 of 2014 S.Ganapathi .. Petitioner Vs. 1.State represented by the Sub Inspector of Police, Central Crime Branch, St. Thomas Mount, Chennai. 2.Dr.Kamakshi Memorial Hospital Pvt. Ltd. rep. by its Administrative Officer C.T.Lakshmanan .. Respondents (R2 impleaded as per the order of this court dated 11.8.2014 made in MP.No.1/2014) Criminal Original Petition is filed under Section 482 of the Code of Criminal Procedure, praying to direct the respondent police to defreeze the accounts frozen vide Police letter dated 20.6.2013 in X Crime No.1 of 2011 on the file of the first respondent. For Petitioner : Mr.K.Sukumaran For Respondents : Mr.C.Emalias, APP (R1) Mr.M.S.Krishnan, SC for M/s.Sarvabhuman Associates (R2) O R D E R
This petition is filed to direct the first respondent police to defreeze the petitioner's account frozen vide letter dated 20.6.2013 in X Cr.No.1/2011 on the file of the first respondent.
2.Few facts, which are relevant for consideration herein are as follows:
The second respondent defacto complainant has filed the complaint against the petitioner herein and the same is registered as FIR in Cr.No.1/2011 on the file of the first respondent Police for the offences under sections 408, 419, 471, 477A, 468 r/w 109 IPC. The complaint proceeds that the second respondent Dr.Kamatchi Memorial Hospital Pvt. Ltd, Pallikaranai is a multi Speciality Hospital and its entire banking transaction is being carried on with Indian Overseas Bank, R.K.Salai, in the course of which, the petitioner herein, who was working as Clerk attached to the said IOB, came in close contact with the Managing Director of the Hospital by name Dr.T.G.Govindarajan and helped him for processing loans, thereby gained the confidence of the Managing Director, who employed the petitioner as Financial Controller and Advisor of the Hospital during 2005. While so, in 2006, the Hospital had financial problem and the petitioner offered to secure funds from his NRI brother Venkatramani Swaminathan to the tune of Rs.5 crores and the petitioner prepared all the papers and also created an agreement, but only a sum of Rs.2,12,36,836/- was disbursed. Thereafter, one software created and marketed by M/s.Custom Solution owned by the petitioner's wife Pushpalatha was installed in the Hospital, on the persuasion of the petitioner and the petitioner's cousin by name N.Suresh was appointed as Maintenance Engineer at the instance of the petitioner and the Hospital Management reposed utmost trust on the petitioner and the entire financial system was controlled by the petitioner in February 2005, without any cross verification. While so, auditing of accounts of the Hospital was done by an Internal auditor on 18.2.2009, in the course of which, it came to light that the petitioner misappropriated huge amount of the Hospital by systematically diverting the funds of the Hospital. The complaint further proceeds to say that the petitioner misappropriated a sum of Rs.7,83,04,260/- and US $ 2,14,502 by committing irregularity in the cash as well as in the bank transactions. In the course of investigation, the petitioner was arrested and remanded to judicial custody and was released on bail by conditional bail order dated 7.2.2011. The conditional order was thereafter, modified by order dated 26.4.2013 and the condition imposed on the petitioner was complied with.
3.The first respondent police has, in the course of investigation recorded statement from 11 witnesses and collected documents. It is stated in para 5 of the counter filed by the first respondent police that the fixed deposits jointly held by the petitioner and his wife and the petitioner and his daughter numbering 9 were also at the request of the Investigating Officer dated 21.1.2011, freezed by the Manager, Indian Overseas Bank. Thereafter, further witnesses were examined and the present IO gave a requisition on 20.6.2013 to the General Manager, Indian Overseas Bank, Central office, Anna Salai, Chennai-2 to freeze the fixed deposits and accounts either standing in the name of the petitioner himself or jointly with his family members. The request made by the petitioner through his letter dated 17.1.2013 to defreeze the accounts/deposits was not acceded by the bank authorities. The petitioner was intimated by letter dated 1.4.2013 that they have been advised to await the outcome of the criminal case, which is pending investigation. Aggrieved against the freezing of the accounts/deposits of the petitioner and his family members, the present petition came to be filed for the relief as stated supra.
4.The petitioner has challenged the legality of the action taken by the first respondent in freezing the accounts/deposits on the following grounds: (i)the freezure of bank accounts/deposits is in violation of the mandatory requirement under section 102(3) Cr.P.C. by reason of the failure of the first respondent police to report about seizure to the concerned Magistrate and to give notice to the petitioner and his family members; (ii) freezure of accounts/deposits can only be for shorter while; (iii))there is no compelling circumstances, warranting freezure of the accounts/deposits for longer time and (iv)freezure of accounts/deposits, that too, at the instruction of the Investigating Officer, without any evidence to show that the amount deposited was the amount allegedly misappropriated is not legally valid.
5.It is contended by the learned counsel for the petitioner before this court that the IO ought to have either before or immediately after the accounts were frozen, duly reported to the concerned jurisdictional Magistrate and duly intimated to the petitioner and their failure to do so, is in violation of the statutory requirement under section 102(3) Cr.P.C. The learned counsel for the petitioner further contended that the request for freezing the bank accounts/deposits was made by the Investigating Officer as a matter of routine during investigation without collecting any evidence to prove that the amounts in the accounts/deposits in the name of the petitioner and his family members either individually or jointly, are the amounts allegedly misappropriated from the account of the Hospital, that too, without specifying the period for which the accounts were frozen, is illegal, arbitrary, unjustified and unsustainable. It is also argued before this court that when the quantum of amount allegedly misappropriated is above Rs.7crores, the materials so far collected in the course of investigation disclosed that the alleged misappropriation is Rs.1,08,40,000/-, that too on the basis of the bank transaction borne out from the records, as such, the question of freezing the accounts/deposits of the petitioner and his family members is not warranted. It is also his case that when the alleged misappropriation is to the tune of Rs.1,08,40,000/- as against Rs.2,12,36,836/- borrowed from the petitioner's brother by the Hospital management, the question of freezing the entire bank accounts/deposits of the petitioner and his family members is uncalled for.
6.Per contra, the learned Additional Public Prosecutor for the first respondent would, by relying on the materials so far collected by the Investigating officer in support of the allegations raised in the complaint, defend the action taken for freezing the accounts/deposits of the petitioner and his family members.
7.The relief sought for herein is seriously opposed by the second respondent defacto complainant mainly on the ground that the amount misappropriated by the petitioner is huge in nature and the amount in the accounts/deposits is forming part of the amount misappropriated and under such circumstances, the accounts, which were frozen cannot be defreezed so as to enable the petitioner and his family members to deal with the amount so misappropriated.
8.The parties have also cited the following authorities in support of their respective contentions raised herein.
Petitioner's side
(i)2002 (5) CTC 598 (R.Chandrasekar v. Inspector of Police and another);
(ii)2005 (1) CTC 657 (His Holiness Sri Kanchi Kamakoti Peetadhipathi Jagadguru Sri Sankaracharya Swamigal Srimatam Samasthanam rep. by its Manager v. The State of Tamil Nadu and others);
(iii)(2005) 8 SCC 771 (Sri Jayendra Saraswathy Swamigal (II), TN v. State of Tamil Nadu and others);
(iv)2008 (3) CTC 657 (Padmini v. The Inspector of Police, District Crime Branch, Tirunelveli and others);
(v)(2011) 1 SCC 694 (Siddharam Satlingappa Mhetre v. State of Maharashtra and others); and
(vi)2013-2-LW.(Crl.) 465 (T.Subbulakshmi and T.Yamini v. The Commissioner of Police, Egmore, Chennai and others).
Respondent's side
(i)Indian Kanoon - http://indiankanoon.org/doc/28042 Crl.OP.Nos.4892 and 3710 of 2007 (J.Alice Mary and another v. The Inspector of Police); and
(ii)Crl.OP.Nos.576 and 577 of 2013 dated 17.9.2013 (R.Sivaraj and another v. The State)
9.Heard the rival submissions made on both sides and perused the records.
10.The facts that the second respondent has given the complaint against the petitioner for the act of misappropriation and the same is registered as X Cr.No.1/2011 and the same is under investigation and in the course of investigation, the accounts of the petitioner and his wife and daughter both individually and jointly in Indian Overseas Bank in more than one branch, are frozen, at the instance of the Investigating Officer, are not denied. The perusal of the file relating to the investigation produced by the first respondent police would reveal that the accounts/deposits are frozen at the request of the IO in writing during 2011 and 2013 to the same Bank authorities for freezing all the accounts/deposits standing either individually in the name of the petitioner or jointly with his family members. However, the IO has neither thought it fit to immediately report about the freezure of the same to the concerned Jurisdictional Magistrate nor intimate the same to the petitioner. The specific allegation of the petitioner that the freezure of bank accounts/deposits was neither reported to the concerned Magistrate nor intimated to the petitioner, is not denied on the side of the first respondent IO. The file relating to the investigation also does not contain any record in this regard. Such failure on the part of the IO to report the same to the concerned Magistrate is in violation of mandatory requirement of section 102(3) Cr.P.C and the same in the opinion of our High court in the following judgments, vitiated the action so taken: (i)2002 (5) CTC 598 (R.Chandrasekar v. Inspector of Police and another); (ii)2003 Crl.LJ 2779 (B.Ranganathan v. State and others); (iii)2005 (1) CTC 657 (His Holiness Sri Kanchi Kamakoti Peetadhipathi Jagadguru Sri Sankaracharya Swamigal Srimatam Samasthanam rep. by its Manager v. The State of Tamil Nadu and others); (iv)2008 (3) CTC 657 (Padmini v. The Inspector of Police, District Crime Branch, Tirunelveli and others); and (v)2013-2-LW.(Crl.) 465 (T.Subbulakshmi and T.Yamini v. The Commissioner of Police, Egmore, Chennai and others).
11.In all these cases, the frozen order in respect of the bank accounts/deposits held by the petitioner and his family members was held to be vitiated and set aside, not only for the failure on the part of the police officer to give notice to the petitioner, but also on the ground that mere discovery of commission of offence is not sufficient enough to attract section 102 Cr.P.C, as there was no nexus between the amount lying in the accounts/deposits and the sum misappropriated, which is also one of the grounds raised in this petition against freezure of bank accounts.
12.It is contended herein that the amounts in the bank accounts/deposits standing in the name of the petitioner and his family members are the self earned money belonging to the petitioner and his family members and there is no material available on record to show that the same is the amount allegedly misappropriated from the hospital funds and through bank transactions. The learned counsel for the petitioner has also drawn the attention of this court to the explanation given by the petitioner to the Commissioner of Police, Chennai vide letter dated 4.8.2011 for the transfer of amounts from the account of the second respondent/complainant to the account of either the petitioner or his wife or his brother, the copy of which is enclosed at page 993 in Vol.III of the IO file. It may be true that the bank records would reveal the transfer of some amounts from the account of the hospital and hospital authorities to the petitioner and his wife and an explanation is forthcoming from the petitioner in this regard. But, the perusal of the IO file does not reveal any investigation into the truthfulness or otherwise of the explanation made by the petitioner. Except recording the statement from the second respondent complainant and others regarding the banking transaction in respect of the accounts held by the hospital and hospital authorities, no further investigation is done with regard to the explanation so offered by the petitioner, though substantial investigation is reported to be completed. The petitioner has also, by letter dated 30.6.2012 addressed to the IO, pointed out that the accounts/deposits frozen represent the amounts audited under the Income Tax Return and filed documents in support of the same. He also produced along with this petition, chartered accountant certificate for the income of the petitioner himself and as HUF and his wife Pushpalatha for the assessment years 1995-96 to 2010 to 11. Except the copy of bank statement, no other record is made available to show that the entire money in the accounts/deposits standing in the name of the petitioner and his wife and daughter represent the money misappropriated by the petitioner. In the absence of one such material to prima facie to show nexus, the freezing of all the accounts/deposits of the petitioner and his family members is in my considered view, legally unsustainable.
13.Another factor to be considered herein is the amount of Rs.2,12,36,836/- borrowed from the petitioner's NRI brother. The money was disbursed to the hospital management through DSLV ventures LLC represented by one Venkatramani, who is none else than the brother and also the petitioner's wife Pushpalatha. The financial assistance to that extent was arranged through the petitioner and the amount was till date not paid. The factum of borrowal is also referred to in the bail order dated 7.2.2011 made in Crl.OP.No.2530/2011. It is referred so in para 6 of the order that the investment of Rs.2.50 crores made by the petitioner along with his wife and his brother, was not disputed. It is again referred to in para 7 of the order made in Crl.MP.No.1/2012 in Crl.OP.No.2530/2011 that the defacto complainant had admitted the loan taken for the allotment of shares, but he had not given share to the accused. It is but relevant to point out at this juncture that the amount allegedly misappropriated is stated to be above Rs.7 crores in the complaint, whereas, the materials gathered would show that it is only to the tune of Rs.1,08,40,000/-. As a matter of fact, the second respondent complainant along with three others already filed a suit in CS.No.35/2013 on the file of this court against the petitioner, his brother, his wife, DSLV Ventures LLC and others for recovery of the amount, allegedly misappropriated by the petitioner. Wherein also it is admitted in para 96 of the plaint that the sum of Rs.2,12,23,230/- infused by the defendants 2 and 4 by names Venkatramani and DSLV Ventures LLC. If that is so, in the event of the petitioner being held guilty of act of misappropriation, the same can be only to an extent of Rs.1,08,40,000/- and the same is sufficient enough to meet out the liability, if any, by the petitioner. As such, the contention raised on the side of the petitioner that the freezure of the accounts/deposits of the petitioner and his family members is not warranted deserves merits and acceptance.
14.The Hon'ble Apex Court in the judgment reported in (2005) 8 SCC 771 (cited supra) did not approve freezing of all bank accounts of Mutt and its associated trusts and endowments merely on the ground that head of the accounts involved in the murder case. That was one of the grounds raised by the accused and accepted by the Apex Court for transferring the sessions case from the file of the Principal Sessions Court, Chengalpet, Tamil Nadu to the file of the Principal District and Sessions Court, Pondicherry on the ground that the action of the prosecuting agency and State machinery created reasonable apprehension that the accused will not get justice if the trial is held in any place inside the State of Tamil Nadu.
15.Other contention raised on the side of the petitioner is that freezure of all accounts/deposits of the petitioner's wife and daughter, who are in no way involved in the present case, rendered it very difficult for the petitioner and his entire family members to lead their normal life, without sufficient income and without sufficient amount to sustain themselves. It is contended herein that the petitioner's family is unable to meet out their day today livelihood and banking requirements and are hence put to serious hardship and suffering. The learned counsel for the petitioner has at this juncture drawn the attention of this court to the decision reported in (2011) 1 SCC 694 (Siddharam Satlingappa Mhetre v. State of Maharashtra and others) wherein, the Hon'ble Apex Court, while considering the case of arrest of any person, has put forth some suggestions, one of which is that bank accounts be frozen for small duration during the investigation. Admittedly, in the instant case, the transactions were borned out from the records, which are already under the custody of the bank and the petitioner was already subjected to domestic enquiry, as such, freezure of all accounts/deposits of the petitioner and his family members is totally unwarranted.
16.Viewing from any angle, the order of freezure of all bank accounts and deposits held in the name of the petitioner, his wife and his daughter is bad in law, unsustainable and stands vitiated and is liable to be quashed.
17.In the result, this Criminal Original Petition is ordered by defreezing the accounts/deposits of the petitioner and his family members.
05.12.2014 rk Index:Yes/No Internet:Yes/No To
1.The Sub Inspector of Police, Central Crime Branch, St. Thomas Mount, Chennai.
2.The Public Prosecutor, High Court, Madras-104.
K.B.K.VASUKI, J.
rk Crl.O.P.No.800 of 2014 05.12.2014