S.102(3) CrPC | Info Regarding Freezing Of Bank Account Must Be Given To Jurisdictional Magistrate: Madras High Court

While ordering de-freezing of an account seized pursuant to investigation into a loan fraud, the Madras High Court held that it was an essential requirement of Section 102(3) of CrPC that information of the seizure should be duly reported to the Magistrate.

Justice GK Ilanthiraiyan observed that in the case on hand, the information regarding the seizure was made after considerable delay.

The Hon'ble Supreme Court of India and this Court repeatedly held that the provision under Section 102(3) of Cr.P.C. requires that the police officer shall forthwith report the seizure to the Magistrate having jurisdiction. In the case on hand, the account was frozen on 18.02.2021 and the same was informed to the Magistrate concerned only on 17.09.2021. Therefore, the information of the seizure reported to the Magistrate only on 17.09.2021. Thus, the condition contemplated under Section 102(3) of Cr.P.C. to forthwith report the seizure before the Magistrate has not been complied with as well as it is not known whether superior officer has been informed in compliance with Section 102(2) of Cr.P.C. 

The petitioner had contended that the respondent banks had ordered for freezing of his bank accounts in connection with a crime registered for the offences under Sections 120(b), 420, 465, 467, 468, 471 of IPC. The allegation was that the accused had given a fake address and had obtained loan from reputed banks. When the accused failed to repay the loan amount, recovery proceedings were instituted. it was during this scrutinization that the banks realised that the documents produced were fabricated ones and were filed with malafide intention.

The petitioner however claimed that he was neither an accused nor a witness in the matter. He was running agricultural food export business in the name and style of 'Karthika Agencies Export House'. The respondents had wrongly instructed to freeze his account along with that of the fraudulent company. He thus challenged this order on the ground that the procedure contemplated under Section 102(3) of CrPC was not duly followed.

The respondents submitted that all the procedures were duly followed. Relying on the decision of the Supreme Court in Teesta Atul Setalvad v. State of Gujarat, it was submitted that the provision under Section 102(3) of Cr.P.C. does not contemplate the issuance of any notice to the account holder for the purpose of investigation and that no notice to the suspect can be expected under law. 

The court, however, opined that in the present case, the petitioner was not an accused and was the holder of an account. Thus, the above case could not be applied to the present facts. Further, even if the petitioner was not entitled to any prior notice, the freezing of the account should have been informed to the jurisdictional Magistrate forthwith. 

As this necessary procedure of law was not complied with, the court deemed it fit to set aside the order of seizure of the bank account. The court, however, also noted that the respondent was at liberty to proceed with the investigation and freeze the petitioner's account in accordance with the law.

Case Title: Karthika Agencies Export House v. The Commissioner of Police and others

Case No: WP.No.17953 of 2021

Citation: 2022 LiveLaw (Mad) 339

Counsel for the Petitioner: Mr.Mohammed Riyaz for Mr.M.Mohamed Saifulla

Counsel for the Respondent: Mr.A.Gopinath, Government Advocate (Criminal Side)