In Cases Involving UPI Intermediaries, Magistrates Cannot Direct Transfer Of Money From Their Account Without Hearing Them: Karnataka HC

Justice M Nagaprasanna said, "This Court is coming across scores and scores of cases where the account is frozen, defrozen and the amount that the complainant [claims] is due from a suspect or an accused is transferred to the account of the complainant from the account of third parties which action is contrary to all cannons of law."

"It has therefore, become necessary for this Court to direct the learned Magistrates that while dealing with applications under Sections 451 and 457 of the Cr.P.C., particularly in cases where it involves intermediaries like the petitioners, to hear those intermediaries and then direct transfer of the amount, and not allow the application filed under Sections 451 and 457 of the Cr.P.C in a casual manner."

The court said the magistrates are required to note that they are dealing with the properties of third parties and decision on an application under Sections 451 and 457 Cr.P.C. cannot become a "frolicsome act" on the part of the judicial officers merely because it is subject of indemnity.

"It is not the question of security but it is the question of right to property of an individual, from whose account the money is transferred without any information to him," said the court.

The court further said that the freezing of account in terms of Section 102 of the Cr.P.C, is a power that is available, but if the amount is sought to be transferred to any other account, the account holder whose account is frozen or de-frozen for the purpose of transfer of the amount shall be heard.

The court asked the magistrates to notice the following while considering the applications:

(a) Whether the accused has been identified by the Investigating Officer?

(b) Whether the account of the accused is identified by the Investigating Officer?

(c) If the rival claimant is not an accused, whether intimation is given to the account holder, from whose account the money is sought to be transferred to the account of the complainant and such order of transfer of amount from the particular account shall only be after hearing the person, from whose account the money is sought to be transferred to the account of the complainant, before its transfer.

"The learned Magistrates considering the applications under Sections 451 and 457 of the Cr.P.C. shall bear in mind the aforesaid directions, while passing orders under the said provisions, only in the cases of the kind aforementioned," it added. 

The directions were passed while allowing the petition filed by PhonePe Private Limited and its Director Rahul Chari against an order of a Additional Chief Metropolitan Magistrate directing transfer of amount from the Chari's account to the account of complainant, a victim of a cyber crime.

"The amount debited from the account of the 1st petitioner [Chari] shall be refunded to his account forthwith," said the court.

Case Title: RAHUL CHARI & ANR v. STATE OF KARNATAKA & others

Case No: WRIT PETITION No.2865 OF 2022

Citation: 2022 LiveLaw (kar) 454

K.S.ABHIJITH, HCGP FOR R1.

VIKRAM UNNI RAJAGOPAL, ADVOCATE FOR R3.

Click Here To Read/Download Order