~ SHUBHAM PHOPHALIA

 Case No.  Crl. Appeal No. 1099/2017
 Petitioner’s Adv.  Aparna Bhat
 Respondent’s Adv.  —
 Bench  Dipak Misra, CJI.  A.M. Khanwilkar, D.Y. Chandrachud, JJ.
 Judgment By  A.M. Khanwilkar, JJ.
 Full Judgment  Click Here

Facts:

From the year 2007 till 4th Jan, 2014, the accused Teesta Setalvad, Javed Anand, Tanvir Jafri,Salim Sondi, Firoz Gulzar and others who came out in the picture after inquiry, had mainly conspired and exhibited videos and photographs of Gulberg society and other affected areas and thereby put up with the help of internet on CJP( Citizens for Justice and Peace Trust) and Sabrang’s websites and further appealed wealthy people to deposit money in IDBI A/C of CJP and UBI A/C of Sabrang and thereby obtained deposits of crores and diverted the same to different institutions, for personal use, with one/same address, indulging in wrong activities in name of religion, and used Rs 1,51,00,000 for personal use, committed breach of trust and cheated victims by using internet.

Therefore, a complaint was filed by members of Gulberg society on 14th Jan, 2014 for offence punishable under section 406, 420 and 120B of IPC, 1860 and section 72-A of IT Act, 2000 and an order was issued by ASP, Crime branch, Ahmedabad to branch of UBI and IDBI of respective areas working in Mumbai to seize the accounts of CJP and Sabrang trust, Teesta Setalvad and Javed Anand.

Arguments advanced before Metropolitan Magistrate Court No XI, Ahmedabad

In the application for de-freezing the concerned bank accounts, it was contended that the Investigation officer had failed to comply with the section 102 of CrPC, 1973, by not informing the magistrate of freezing the accounts and also not given prior notice to the concerned bank holders before freezing their accounts.

CJP trust contended that they maintain proper accounts, duly audited; and contributions made by the foreign fund is after complying with the competent authority. It further contended that the bank accounts had no causal connection with the alleged offence and no donor even suspected of this activity.

Magistrates View:

Rejected the application by saying that the preliminary investigation did reveal that there were substantial discrepancies in the account as huge deposits and withdrawals raised suspicion and appellants too were not co-operating in this investigation, being at a nascent stage.

Main issue:

The power under section 102 of CrPC, 1973, couldn’t be exercised as no material was produced by investigating authority to support the fact that concerned property was parted to indicate the commission of the said offence of cheating/ breach of trust/ forgery of record.

Appeal to High Court

(Arguments advanced in brief by counsel for petitioners)

  • The absence of prior notice for seizing accounts.
  • Intimation to the magistrate was illegal.
  • No requirement of seizing, if a chance was given to execute a bond for compensating state, if at all case made out against appellants.
  • Continued seizure unjustified as having no relation with the crime.
  • Accounts were Foreign Contribution Regularization Accounts( FCRA), authorized by Home Ministry, therefore, local police had no authority to freeze them.
  • Accounts were re-audited by Chartered Accountants, and no irregularity or illegality was found during the said re-audit.
  • Appellants should be free to operate accounts by executing the bond, which would subserve the interests of justice.
  • This activity of freezing accounts was motivated to paralyse the working of trust and also appellants and others were extending full support to the investigation.

(Arguments in brief by respondents)

  • When investigating agency wanted to ascertain the extent of tainted accounts, and the whole corpus of accounts is under cloud of doubt, mere execution of bond is not going to serve the purpose of justice.
  • It was contended by the learned Public Prosecutor that arguments of the learned counsel for the petitioners justifying the transactions or offering the justification as to certain entries are more in the nature of defence than valid arguments at this stage.
  • The arguments impugning the freezing of the accounts under Section 102 of Cr.P.C. without notice to the petitioners are to be noted for rejection for the simple reason that the Section 102 does not contemplate the issuance of any such notice, and for the purpose of investigation, no notice to the suspect can be expected under the law.
  • “The question as to the applicability of a particular provision is required to be left to the discretion of the investigating agency and then to the Court as and when and if the report under Section 173 of Cr.P.C. is filed.”

Court’s Inference

  • The case of the prosecution is based on cogent documentary evidence received from charity commissioner, banks, etc.
  • Petitioners remained absent before every investigation and tried to avoid the due process of law.
  • Approximately 44% of donations received in Sabrang trust and 35% received in CJP, were transferred to their personal accounts.
  • Cash withdrawal running over crores of rupees needs to be scrutinized.
  • Credit Card details received from UBI and Citi bank revealed expenditure of personal nature running into lacs of rupees serviced from the said accounts.
  • After considering the fact that affidavit- in- reply is filed by the state also, therefore it can’t be disputed that the investigating agency has in its possession a considerable material entitling to freeze accounts under section 102 of CrPC.
  • ‘Therefore, it is insignificant at this stage, when the investigation has progressed to a material point, to ponder around the question as to whether the act of freezing the accounts was a sequel to crime or the crime was detected later. If the arguments to that effect advanced by the learned counsel for the petitioners is accepted at this stage, it would advance the public injustice rather than serving the ends of justice. De-freezing accounts on the basis of such arguments may paralyze the investigation, which cannot be approved as an act ‘in the interest of justice.’
  • It is apparent from the affidavit-in-reply filed by the State that they have noticed and compared various entries in the audited accounts with the statements of the bank accounts.
  • The investigation under section 102 is not to be revealed in the real sense, else, it may create a room for destruction/ manipulation of evidence, rather the said notice was sent to the magistrate.

Judgment:

  • It is for the investigating agency on the conclusion of the investigation to determine the extent of the accounts tainted with crime and to De-freeze the rest, if at all such Defreezing is warranted in the facts and circumstances of the case.
  • It is well settled that if the property is not suspected of the commission of the offence, it cannot be seized under Section 102 of the Code. For, the police officer can seize only such property which may be alleged or suspected to have been alleged in the commission of an offence. Reliance has been placed on M.T. Enrica Lexie and Anr. v. Doramma and Ors.2 and Sri Jayendra Saraswathy Swamigal (II), T.N. v. State of T.N. and Ors.3 to contend that in the absence of due procedure as specified by Section 102 of the Code, seizure of bank accounts would be illegal and more so, when it has been done to stifle all the activities of the Trust.
  • The High Court, prima facie, found substance in allegations against the appellants of misuse of funds received by them through various donors and appellants were unwilling to co-operate with the investigation.
  • The High Court, in State of Maharashtra v Tapas Neogy, after analysing the provisions of Section 102 of the Code had opined that bank account of the accused or of any relation of the accused cannot be held to be “property” within the meaning of Section 102 of the Code, but the same was overruled here, by substantiating that because of increase in corruption and delay in trial cases, no narrow interpretation can be given to provisions of CrPC, otherwise the entire money can be withdrawn and the court would now be powerless to get the said money having direct link with the commission of offence, and therefore ‘bank account’ is held to be property and powers of police officer stands valid.
  • In the case of Adarsh Co-operative Housing Society Limited v. Union of India & Ors., the Division Bench of the Bombay High Court once again considered the issue and rejected the argument that prior notice to the account holder was required to be given before seizure of his bank account. It also noted that the bank account need not be only of the accused but it can be any account creating suspicion about the commission of an offence.
  • In the case of MT Enrica Lexie, “ the police officer in course of investigation can seize any property under Section 102 if such property is alleged to be stolen or is suspected to be stolen or is the object of the crime under investigation or has direct link with the commission of offence for which the police officer is investigating. A property not suspected of the commission of the offence which is being investigated into by the police officer cannot be seized”.
  • Also, the donations received by these two trusts have never reached the victims of 2002 Gujarat Riots, as promised by them earlier, and substantial discrepancies were there.
  • The details of two newly opened accounts were also not given and went for an incorrect plea.

 

Current status( Orders passed by High Court)

  • The suspicion as to how appellants appropriated these huge funds needs to be explained.
  • After completion of the investigation, the appellants can apply for de-freezing of accounts and persuade the court as the said bank accounts are no more necessary for investigation as per subsection (3) of section 102 of CrPC, and further orders will be passed accordingly upon satisfaction of magistrate.
  • Therefore, appeal dismissed.

    About the Author- Shubham is a 2nd-year B.A.LL.B student at Gujarat National Law University and he is also pursuing CS EXECUTIVE.


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