Kerala High Court
Babu Varghese vs Deputy Superintendent Of Police And ... on 13 January, 1999
Equivalent citations: 1999(2)ALT(CRI)322, [1999]97COMPCAS436(KER), 1999CRILJ1111
JUDGMENT K.A. Mohamed Shafi, J.
1. This Crl. M. C. is filed by the accused in Crime No. 154 of 1997, registered by the Manarcadu Police to set aside the proceedings taken by the investigating officer for freezing the accounts maintained by the accused-petitioner as per annexures "C" to "G" and to allow the petitioner's company to operate the accounts in the normal course of business with all the banks in which the company has got deposits and to direct the second respondent to return all the books of account, computers and other documents seized from the office of the company so as to enable the petitioner to carry on the business of the company without any let or hindrance, under Section 482 of the Criminal Procedure Code.
2. Crime No. 154 of 1997 is registered by the Manarcadu Police against M/s. Prizeindia Ltd., a public limited company of which the petitioner is the chairman and managing director alleging offence punishable under Section 420 of the Indian Penal Code on the basis of the complaint filed by Johnykutty K. Joseph. During the course of the investigation the investigating officer found that the petitioner had collected large amounts from various depositors promising to invest the amount very lucratively and cheated them. The investigating officer also found that large amounts so collected by the petitioner were deposited in various banks. Therefore, the investigating officer issued notices to the different banks in which the petitioner had deposited the amounts, under Section 102 of the Criminal Procedure Code directing the banks to freeze the operation of the accounts of the petitioner with the bank. The investigating officer also seized several documents from the head office and different branches of the petitioner's company. The petitioner has filed this petition under Section 482 of the Criminal Procedure Code seeking to quash the notices issued by the investigating officer under Section 102 of the Criminal Procedure Code to various banks freezing the accounts, alleging that those notices are illegal and beyond the competence of the investigating officer, which is not permitted under the provisions of Section 102 of the Criminal Procedure Code, and also for return of the documents in order to enable the petitioner to conduct the business without any let or hindrance.
3. Counsel for the petitioner and the public prosecutor were heard.
4. When the above Crl. M. C. came up for hearing counsel for the petitioner did not address any argument regarding the release of the documents alleged to have been seized by the investigating officer from the petitioner's company and he confined his arguments to quash the notices issued by the investigating officer to the various banks freezing the operation of the accounts maintained by the petitioner.
5. Counsel for the petitioner vehemently submitted that Section 102 of the Criminal Procedure Code does not empower the police officer to direct the bank not to allow the accused to withdraw money from the bank and, therefore, the notices issued by the first respondent herein evidenced by annexures "C" to "G" to the bankers of the petitioner freezing the accounts maintained by the petitioner and directing the bankers not to pay any amount from the petitioner's account, are illegal and unsustainable and, therefore, they are liable to be quashed.
6. Section 102 of the Criminal Procedure Code reads as follows :
"102. Power of police officer to seize certain property.--(1) Any police officer may seize any property which may be alleged or suspected to have been stolen, or which may be found under circumstances which create suspicion of the commission of any offence.
(2) Such police officer, if subordinate to the officer-in-charge of a police station, shall forthwith report the seizure to that officer.
(3) Every police officer acting under Sub-section (1) shall forthwith report the seizure to the Magistrate having jurisdiction and where the property seized is such that it cannot be conveniently transported to the court, he may give custody thereof to any person on his executing a bond undertaking to produce the property before the court as and when required and to give effect to the further orders of the court as to the disposal of the same."
7. Section 102(1) empowers any police officer to seize any property which may be alleged or suspected to have been stolen or which may be found under circumstances which create suspicion of the commission of any offence, Sub-section (2) of Section 102 stipulates that if the officer who seizes the property is subordinate to the officer in charge of a police station he should forthwith report the seizure to the officer in charge of the police station. Sub-section (3) lays down that every police officer acting under Sub-section (1) shall forthwith report about the seizure to the Magistrate having jurisdiction and where the property seized is such that it cannot be conveniently transported to the court, he may give custody thereof to any person on his executing a bond undertaking to produce the property before the court as and when required and to give effect to the further orders of the court as to disposing of the property.
8. Counsel for the petitioner vehemently submitted that the money in deposit in a bank is not property capable of seizure as contemplated under Section 102 of the Criminal Procedure Code and the moment the money passes from the accused to the banker the money cannot be seized as it is not identifiable. In support of this contention counsel for the petitioner has relied upon the decisions of several High Courts.
9. In the decision in Textile Traders Syndicate Ltd. v. State of U. P., AIR 1960 All 405 ; [1960] Crl. LJ 871, a single judge of the Allahabad High Court has held that the order passed by a police officer prohibiting the bank not to pay any amount to the accused out of his account with the bank is without jurisdiction under Section 550 of the Criminal Procedure Code, corresponding to the present Section 102 of the Code. In that decision, the learned single judge of the Allahabad High Court has found that the word "seizure" was used in Section 550 of the Criminal Procedure Code, in the sense that it could only mean the act of taking actual physical possession of the property capable of being so possessed. The learned judge has observed as follows (at page 408) ;
"The bank really became a debtor of the applicant to that extent. It was not necessary for it to keep any money always in hand in anticipation of any demand to be made by the applicant. When the applicant actually made a demand it could procure the necessary amount from anywhere and pay it to the applicant. In the circumstances it cannot be said that there was any 'property' with the bank of which actual physical possession could be taken. Section 550 does not appear to contemplate a police officer prohibiting the payment of a debt by a debtor to the accused person ...
As long as the money is in the possession of the thief and capable of seizure it may be open to the police officer to seize it on the ground that it was or was suspected to be stolen property but once it passes into the hands of the debtor and the money becomes unidentifiable there can be no question of its being seized by the police officer . . .
It, therefore, appears to me that the applicant is correct in his contentions that the orders passed under Section 550 of the Code by the police officer could not be passed under that provision and must be quashed on that account."
10. In the decision in Swaran Sabharwal v. Commissioner of Police, [1988] Crl. LJ 241 (Delhi), a Division Bench of the Delhi High Court held that the prohibitory order passed by the police officer under Section 102 of the Criminal Procedure Code, prohibiting the operation of the account in the bank is liable to be quashed.
11. In the decision in Purbanchal Road Service v. State [1991] Cri. LJ 2798 a single judge of the Gauhati High Court has held that the order passed by the police officer directing the bank not to allow the accused to withdraw money or property from the accounts and lockers held by him is not permissible under Section 102 of the Criminal Procedure Code.
12. In the decision in Malnad Construction Co. v. State of Karnataka [1994] Crl. L] 645, a single judge of the Karnataka High Court held that "seizure" contemplated in Section 102 of the Criminal Procedure Code does not include issuance of a prohibitory order to the banker of the accused prohibiting operation of the account and the prohibitory order issued by the police officer to the bankers of the accused to freeze or suspend the operation of his account is unsustainable.
13. In the decision in Swaran Sabharwal v, Commissioner of Police [1988] Crl. LJ 241, referred to above, the Division Bench of the Delhi High Court has observed that "they are not quite sure whether money deposited in a bank account can be seized by means of a prohibitory order as was done in that case under the provisions of Section 102 of the Criminal Procedure Code and assuming that a bank account is property within the meaning of the section, it should be property found under circumstances which create suspicion of the commission of an offence to justify the action under Section 102 of the Criminal Procedure Code. But ultimately finding that in that case it is not the case of the department that the money in the bank constitutes "case property", i.e., property involved in the commission of the crimes with which Ram Swarup is charged, the seizure of the money by the issue of a prohibitory order cannot be upheld."
14. In a subsequent decision a single judge of the Delhi High Court in the decision in P.K. Parmar v. Union of India [1992] Crl. LJ 2499 after elaborate consideration of the power of the police officer to direct the various bankers and financial institutions to freeze the accounts of the accused, held that such orders passed by the police officer under Section 102 of the Criminal Procedure Code are legal and valid. In that case, the contention was that the accused-company withdrew huge amounts from the Government by way of subsidy by producing bogus documents without actually manufacturing the product in question and the amounts of subsidy so obtained were presumably kept in various bank accounts and lockers, etc. in fake names. Therefore, the CBI, the investigating agency in that case issued directions to various banks and financial institutions freezing the accounts of the accused. That order was challenged before the Delhi High Court. In that judgment, the single judge of the Delhi High Court has observed as follows (at page 2503) :
"Besides that, during the investigation the prosecution also came to know that without actually manufacturing phosphate and fertilizers, the first petitioner withdrew as much as Rs. 3.39 crores as subsidy from the Government of India by producing bogus documents. The question, therefore, would arise that if the firm/company started by the petitioner did not in fact manufacture the fertilizer or even procure the raw material, etc. and obtained huge amounts of subsidy from the Government of India, where such amounts have been kept/invested by the first petitioner ? It was only in consequence of such weighty suspicions against the petitioners, who are alleged to be none other than the show pieces of the first petitioner, that amounts of subsidies drawn by him were presumably kept in various bank accounts, lockers and invested in various policies by the first petitioner fraudulently in the name of all other petitioners. So the recovery of such assets links them prima facie with the commission of various offences with which they have been charged by the CBI. The suspicion of the CBI is not that the sale proceeds of fertilizers have been held in various accounts by the petitioners, In fact, according to the CBI, there was no manufacture of fertilizers by PPPL at all and all the documents regarding alleged purchase of raw material for the same and its sale were forged/ fabricated solely with the intention of cheating the Government and realise subsidies from it and invest the same in fake names by the first petitioner. I am, therefore, of the view that the issuance of directions by the CBI to various banks/financial institutions freezing the accounts of the petitioners is based on a sound footing in the present case. I, therefore, see no reason to interfere in the steps taken by the CBI."
15. In the decision in Bharath Overseas Bank v. Minu Publication [1988] MLJ (Crl.) 309, a single judge of the Madras High Court has found that money in a bank account is property within the meaning of Section 102 of the Criminal Procedure Code and the police officer is competent to issue orders prohibiting operation of the accounts of the accused in the bank and such orders are valid.
16. After a careful analysis of the above referred decisions, I find that the decisions of the single judge of the Delhi High Court in P.K. Parmar v. Union of India [1992] Crl. LJ 2499 and of the Madras High Court in Bharath Overseas Bank v. Minu Publication [1988] MLJ (Crl.) 309 should be preferred to the judgments of the single judge of the Allahabad High Court in Textile Traders Syndicate v. State of U, P., AIR 1960 All 405 ; [1960] Crl. LJ 871, the Division Bench of the Delhi High Court in Swaran Sabharwal v. Commissioner of Police [1988] Crl. LJ 241, the single judge of the Gauhati High Court in Purbanchal Road Service v. State [1991] Crl. LJ 2798 and the single judge of the Karnataka High Court in Malnad Construction Co, v. State of Karnataka [1994] Crl. LJ 645. I am in respectful agreement with the view expressed by the single judges of the Madras High Court and the Delhi High Court in the decisions in Bharath Overseas Bank v. Minu Publication [1988] ML] (Crl.) 309 and P.K. Parmar v. Union of India [1992] Crl. LJ 2499, respectively, regarding the meaning of the words "seize", "seizure" and "property" used in Section 102 of the Criminal Procedure Code.
17. In the decision in Bharath Overseas Bank v. Minu Publication [1988] MLJ (Crl.) 309, the single judge has observed as follows :
"19. In modern days, where commission of white collar crimes and bank frauds, are very much on the increase and banking facilities have been extended to the remotest rural areas, interpreting the term 'property' in Section 102 of the Criminal Procedure Code, in a way, as to exclude money in a bank, would have the effect of placing legal hurdles, in the process of investigation into these crimes, which would never have been the intent of the framers of the Criminal Procedure Code. In view of the wide meaning given to the term property in Section 452(5) of the Criminal Procedure Code, as including, in the case of property regarding which an offence appears to have been committed, not only such property as was originally in the possession, but also any property into which it might have been converted or exchanged and also anything acquired by such conversion or exchange, whether immediately or otherwise, to put too narrow a construction on the term 'property' occurring in Section 102 of the Criminal Procedure Code would be against the very spirit of the Criminal Procedure Code."
18. I am in respectful agreement with the above observations made by the learned judge of the Madras High Court and those observations are appropriate to the facts of this case.
19. In this case the prosecution has contended that though the above case has been registered on the basis of the complaint made by one Johnykutty K. Joseph, more than 220 witnesses questioned in this case have stated before the investigating officer that the petitioner had collected large amounts from those persons promising to invest and cheated them without investing the amount as promised. Therefore, the contention of the petitioner that the above case is registered on the allegation that the petitioner has cheated that Johnykutty K, Joseph to the tune of Rs. 3,000 and the petitioner is prepared to pay that amount to Johnykutty K. Joseph so that nothing further remains in this case to seize the bank accounts of the petitioner, is absolutely unsustainable.
20. Though the crime is registered on the basis of the F. I. statement given by one of the depositors regarding a small amount, the petitioner cannot escape from the liability for the offence punishable under Section 420 of the Indian Penal Code, 1860, in case the investigation revealed that the petitioner had collected huge amounts from a large number of creditors and cheated them by merely contending that the defacto complainant had only complained of cheating of Rs. 3,000 and the petitioner is prepared to settle that amount. Therefore, on a careful and anxious consideration of the facts and circumstances of this case and especially the allegation that the petitioner has deposited huge amounts collected from various persons in different banks in their account and the amounts so lying to the credit of the petitioner in those banks constitute property found under the circumstances of this case which create suspicion of the commission of the offence as contemplated under Section 102(1) of the Criminal Procedure Code and as such the investigating officer is competent to issue prohibitory orders against the operation of the accounts of the accused in the respective banks. Therefore, the notices evidenced by annexures "C" to "G" produced in this case issued by the investigating officer to the banks freezing the accounts maintained by the petitioner in the respective banks, are perfectly legal and valid under the provisions of Section 102 of the Criminal Procedure Code.
21. Therefore, I find that there is absolutely no ground to interfere with those notices issued by the investigating officer in this case. Hence, this Crl. M. C. is dismissed.