Delhi High Court - Orders
Spade Financial Services Limited & Ors vs State. Of Nct Of Delhi & Anr on 15 September, 2021
Author: Mukta Gupta
Bench: Mukta Gupta
$~20
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CRL.M.C. 2271/2020
CRL.M.A. 16128/2020 (Stay)
SPADE FINANCIAL SERVICES LIMITED & ORS...... Petitioners
Represented by: Mr.Amit Sharma, Sr.Advocate with
Mr.Rohit Kishan Naagpal and
Mr.Dipanshu Gaba, Advocates with
Director of petitioners company.
versus
STATE. OF NCT OF DELHI & ANR. ..... Respondents
Represented by: Mr.Ravi Nayak, APP for State with
SI Vikram Singh, PS EOW.
Mr.Shreyan Das, Advocate for
respondent No.2.
Mr.Pulkit Deora and Mr.Arnav
Vidyarthi, Advocates for respondent
No.3.
CORAM:
HON'BLE MS. JUSTICE MUKTA GUPTA
ORDER
% 15.09.2021 The hearing has been conducted through Video Conferencing.
1. By this petition, petitioner challenges the order dated 13 th October, 2020 whereby the learned Additional Sessions Judge stayed the order dated 24th September, 2020 passed by the learned Metropolitan Magistrate.
2. A brief background of the case is that FIR No.746/2014 under Sections 406/409/420/34 IPC was registered at PS Sarita Vihar, Delhi which was transferred to Economic Offence Wing on 2nd November, 2014 wherein the petitioners were the accused.
3. During the course of investigation the Investigating Officer froze the Signature Not Verified CRL.M.C. 2271/2020 PageDigitally 1 of Signed MUKTA 6GUPTABy:JUSTICE Signing Date:15.09.2021 20:34:02 accounts of the petitioners' company under Section 102 Cr.P.C. It is the case of the petitioners that the said act of the Investigating officer was contrary to the law laid down by the Hon'ble Supreme Court in the decision reported as 1999 7 SCC 685: Cri LJ 4305 State of Maharashtra vs. Tapas D. Neogy.
4. Be that as it may, finally a closure report was filed pursuant to the investigation by the Economic Offences Wing on 21 st December, 2017. On the closure report being filed, the petitioners filed the three applications for de-freezing all the accounts under Section 452 Cr.P.C. However, the complainant who is respondent No.2 herein filed a protest petition without any supporting affidavit and documents. The said applications were decided by the learned Metropolitan Magistrate vide order dated 24th September, 2020 noted hereinafter:
"State vs. Closure Report FIR No.746/14 PS EOW Case No.1007/18 24.09.2020
1. Vide this order, I shall dispose off the three applications filed on behalf of applicants through AR for de-freezing of bank accounts under Section 452 Cr.P.C.
2. It is stated in the aforementioned applications that a FIR No.746/2014 was lodged at PS Sarita Vihar, which was transferred to PS EOW and the IO during pendency of the investigation had seized/freezed all transactions from various banks accounts belonging to applicants/accused companies namely Spade Financial Services Ltd., AAA Landmark Pvt. Ltd., and Connect India Private Limited under Section 102 Cr.P.C. It is further stated that closure report has been filed and further the report on the applications has also been filed by IO wherein he has given NOC to the de-freezing of the bank accounts of the applicants. During arguments it has been argued by Ld. Counsel for Applicant that the mandatory procedure Signature Not Verified CRL.M.C. 2271/2020 PageDigitally 2 of Signed MUKTA 6GUPTABy:JUSTICE Signing Date:15.09.2021 20:34:02 prescribed under Section 102 Cr.P.C for freezing of bank accounts/share accounts has not been followed. Ld. Counsel for applicants had relied upon the judgments of Hon'ble Apex Court and Hon'ble High Courts in this regard. It has been further stated that closure report has been filed in the present FIR and it has been prayed for the accounts be de-freezed as even the IO of the case has given a NOC in his reply to the aforementioned application. Ld. Counsel for applicants has also placed on record, order of Hon'ble High Court dated 15.05.2018, wherein this court was directed to expeditiously dispose off the applications for de-freezing of accounts under Section 452 Cr.P.C. It is further submitted that there is no prima facie link of the money in the bank accounts to the offences alleged by the complainant. It is argued that the applicants companies are also ready to execute Bonds before the court to produce the amount in the court as and when required. The list of accounts are mentioned in Annexure-A.
3. All the three applications have been vehemently opposed by Ld. Counsel for complainant no. 1, who has argued that Board Resolution filed along with the three applications does not give correct CIN Number and that the Protest Petition is still pending before the court. It has been prayed that three applications for de- freezing of accounts should not be allowed before deciding on the protest petition. It is further argued by counsel for complainant no.l that Arun Nanda has empowered himself which is not permissible and there is no written authority to this effect and Board Resolution does not pertain to the present applications. It is also argued by Ld. Counsel for the other complainant that the money lying in the banks accounts would be required to pay to the Bank and Home Buyers, who have been allegedly cheated and has prayed that present applications should not be allowed. However, Ld. Counsels for both the complainants have also submitted that if the applications of de- freezing of bank accounts/share accounts are allowed, bonds should be executed by the Applicants/accused companies before the court, so that in case the protest petition, is allowed, the complainants could be indemnified and are not left remediless.
4. Arguments heard. Record perused.
5. A specific query was put to the IO regarding reporting of the seizure to the concerned Magistrate while freezing the accounts qua the accused companies in question during pendency of investigation.Signature Not Verified
CRL.M.C. 2271/2020 PageDigitally 3 of Signed MUKTA 6GUPTABy:JUSTICE Signing Date:15.09.2021 20:34:02 The IO fairly conceded that no specific/separate intimation of seizure of the bank account/share accounts was given to the area Magistrate.
6. At this stage reliance is placed on the decision of Hon'ble High Court of Delhi in Muktaben M. Mashru V. State of NCT of Delhi and Anr. CRL.M.C. 4206/2018 & Crl.M.A.30311/2018 (supra), it was categorically observed by the High Court that:
"36. Now reverting back to the present petition, taking into consideration the oral as well as the written submissions of both the parties and also taking into consideration the material on record as well as the legal position, more specifically in view of the judgments discussed hereinabove, this Court has no hesitation to hold that the reporting of the freezing of bank accounts is "mandatory". Failure to do so, apart from other conditions, will vitiate the freezing of bank account, which should be "forthwith" reported to the concerned Magistrate and non-compliance of this mandatory requirement goes to the root of the matter. If there is any violation in following the procedures under Section 102 of the Cr.PC, the freezing of the bank accounts cannot be legally sustained."
7. Further, the Hon'ble Apex Court in the case of Manish Khandelwal & Ors V. State of Maharashtra, 2019 SCC Online Bom 1412, the court rejected the contention that non-compliance of the procedure laid down under Section 102 Cr.P.C. is only an irregularity and will not vitiate freezing of the bank accounts. It was held that in case the mandatory provision under Section 102 Cr.P.C. has not been followed then it would entail the consequence of giving directions to defreeze the bank account. The duty of reporting to Magistrate any seizure of bank account is cast upon the IO as freezing of the bank account prevents the person from operating the bank account pursuant to investigation. If there is any violation in following the procedures under Section 102 Cr.P.C., freezing of account cannot be legally sustained.
8. Thus, it was the duty of the IO to immediately report seizure of a case property to concerned Magistrate, as also he could only have seize a property, connected or concerned with the Crime. In the present case, I find that prima facie both conditions have not been fulfilled till date. Even otherwise, more than 6 years have been Signature Not Verified CRL.M.C. 2271/2020 PageDigitally 4 of Signed MUKTA 6GUPTABy:JUSTICE Signing Date:15.09.2021 20:34:02 elapsed since seizure of the property and closure report has been filed in the present case. In fact, the IO has given a NOC to de- freezing of the accounts in his reply to all the three applications for defreezing of accounts.
9. Be that as it may, equities need to be balanced for all concerned in the present case and therefore, in case the protest petition filed on behalf of the Complainant is allowed and if, it is prima facie established that the amount lying in the bank accounts as well as Share accounts is crime proceeds, the money may no longer be available if released simplicitor. Therefore, in all fairness, considering that seizure has continued for more than 6 years, it is directed that the amount lying in the accounts as well as Share accounts may be released to the applicant subject to furnishing surety/security/bank guarantee for the accounts numbers as mentioned in Annexure A, equal to the value of amount lying in the bank/share accounts to the satisfaction of the court before the same can be released.
10. Applications are disposed off accordingly.
Copy Dasti (Gurmohina Kaur) CMM/S.E. District, Saket, New Delhi/24.09.2020"
5. On a perusal of this order, it is evident that both the complainants i.e. respondent Nos.2 and 3 as also the petitioners had no objection to the bonds being submitted which would have also secured the interest of the complainants as well. Till date the protest petition filed by the respondent No.2 has not been decided and is still pending. The accounts of the accused company cannot lie in a frozen condition even after a detailed investigation has been carried out and a closure report filed by the investigating agency.
6. Today also learned counsel appearing on behalf of the respondent No.2 prays for an adjournment as the arguing counsel is not available. Even on the last date, the same request was made and an adjournment was sought. After having been granted an ex-parte stay from the learned Additional Signature Not Verified CRL.M.C. 2271/2020 PageDigitally 5 of Signed MUKTA 6GUPTABy:JUSTICE Signing Date:15.09.2021 20:34:02 Sessions Judge the complainant/respondent No.2 cannot drag these proceedings causing prejudice to the other parties.
7. In view of the fact that order de-freezing the accounts was subject to furnishing the bonds by the petitioners, this Court finds no error in the order dated 24th September, 2020.
8. Consequently, the impugned order dated 13th October, 2020 is set aside to the extent it stays the impugned order dated 24th September, 2020.
9. Petition and application are disposed of.
10. Order be uploaded on the website of this Court.
MUKTA GUPTA, J.
SEPTEMBER 15, 2021 'vn' Signature Not Verified CRL.M.C. 2271/2020 PageDigitally 6 of Signed MUKTA 6GUPTABy:JUSTICE Signing Date:15.09.2021 20:34:02