Section 91 Cr.P.C. Does Not Empower Investigating Agency To Order 'Debit Freeze' Of Bank Account: Himachal Pradesh High Court
LIVELAW NEWS NETWORK
13 Sep 2024 8:30 AM GMT
The Himachal Pradesh High Court has quashed a notice issued under Section 91 of the Code of Criminal Procedure (Cr.P.C.) by the Cyber Cell, Kullu, which directed ICICI Bank to freeze the bank accounts of a company in connection with an alleged cyber fraud.
The court, presided by Justice Sandeep Sharma, held that the powers granted under Section 91 Cr.P.C. are limited to producing documents or things necessary for investigation and do not extend to freezing bank accounts.
Justice Sharma, while hearing the petition, observed, “Section 91 Cr.P.C. empowers the Investigating Officer to cause production of any document or other thing deemed necessary or desirable for the purpose of investigation, inquiry, trial, or other proceedings. However, it does not authorize the Investigating Officer to order the freezing of bank accounts.”
The court further noted that such action could only be taken under Section 102 Cr.P.C., which governs the seizure of property, including bank accounts, and requires reporting to a Magistrate, a step that was not taken in this case.
The case arose when the petitioner, Aeronfly International Private Limited, challenged the freezing of its bank accounts by the Cyber Cell, Kullu, Himachal Pradesh. The freeze was initiated after a complaint was lodged by an individual who claimed ₹10,000 was fraudulently debited from his account and credited to the company's account through a suspicious online transaction.
The Cyber Cell issued a notice under Section 91 Cr.P.C. to ICICI Bank, directing the freeze on suspicion of cyber fraud. The State, represented by Additional Advocate General Mr. Rajan Kahol, argued that the action was necessary as the company's account was linked to 94 similar complaints across different states, raising concerns of widespread fraud.
However, Mr. Kahol conceded that the notice under Section 91 Cr.P.C. could not have been issued to freeze the account, acknowledging that the correct procedure under Section 102 Cr.P.C. should have been followed.
On the other hand, the petitioner's counsel, Mr. Aditya Mishra, contended that the company had no involvement in the fraud, had immediately requested the refund of the amount, and that Section 91 Cr.P.C. does not authorize freezing of bank accounts, which should have been done under Section 102 Cr.P.C. after following proper legal procedure.
Despite the company's effort to refund the amount credited to its account, the bank was unable to process the refund due to the freeze order issued by the Cyber Cell. The company contended that such a freeze without due process was causing irreparable damage to its business, including the non-payment of its employees.
The petitioner company further contended that no cogent evidence had been brought against it to justify the debit freeze. It argued that the company's accounts, which facilitate digital payments and utility bill settlements, were wrongfully frozen due to an alleged fraud involving ₹10,000.
Justice Sharma referenced several precedents set in similar cases. The court underlined the judgment of the Madras High Court in Sahil Raj v. State of Tamil Nadu, where it was held that “On the summons issued under Section 91 of Cr.P.C., an account cannot be frozen.”
Similarly, the Telangana High Court in K. Sathvik Reddy v. Union of India followed the same principle, affirming that freezing bank accounts under Section 91 Cr.P.C. is illegal. The court observed that in both cases, freezing orders were quashed, as the proper procedure under Section 102 Cr.P.C. had not been followed.
Justice Sharma concluded that the Investigating Officer's actions in ordering the debit freeze were legally unsustainable. He emphasized that the proper procedure for freezing a bank account is laid out under Section 102 Cr.P.C., which mandates that such actions be reported to a Magistrate. Without following this process, any freeze order is invalid. He remarked, “At no point of time did the Cyber Cell approach the competent court of law under Section 102 Cr.P.C. for ordering the freeze of the bank account.”
Consequently, the court set aside the notice issued under Section 91 Cr.P.C., quashing the freeze order on the petitioner's bank accounts, allowing the company to operate its accounts freely.
Case Title: Aeronfly International Private Limited Versus State of Himachal Pradesh and Others
Citation: 2024 LiveLaw (HP) 55
