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SUPREME COURT OF INDIA
Krishna Murari, Sanjay Kumar, JJ.
M/s. Jermyn Capital LLC Dubai – Appellant
Versus
Central Bureau of Investigation & Ors. – Respondents
Criminal Appeal No. 1434 of 2023 (@ Special Leave Petition (Crl.) No. 9134 of 2018)
Decided On : 09-05-2023
Criminal Procedure Code, 1973 – Section 102 – Freeze order – Foreign Institutional Investor – Freeze order were levied against appellant company on grounds of necessity of investigation of an alleged crime – Imposition of bank guarantee and freeze orders passed by respondent, were solely imposed on the grounds of criminal proceedings being alive against one person who is alleged to be connected to appellant company – That person has now been discharged of alleged offences by Trial Court and he was never an employee/share holder/director or a key managerial person in appellant company – Trial faced by him was in his individual capacity and not vicariously on behalf of appellant company – In such a circumstance, wherein appellant company and accused are two separate entities, and appellant company is in no way connected to concerned Investigation, operation of freeze order against appellant company, is not legally tenable – Appellant company herein, till date, has not been named in FIR or charge-sheet – Purpose of freeze order and bank guarantee in extension of freeze order, can only be in operation to aid in investigation against alleged crime – Freeze order against appellant company’s properties is redundant qua investigation – Condition imposed upon appellant to furnish a bank guarantee by Courts below, is not liable to be sustained and set aside. (Paras 11, 12, 13, 14, 15, 17, 18 and 19)
Facts of the case:
Issue posed in front of us therefore is limited to the second freeze order. Second freeze order, which was passed by the respondent herein on 17.08.2010, had incapacitated the appellant company herein to repatriate an amount of Rs. 38.52 Crores, which was realized in favour of the appellant company herein pursuant to an order passed by the Securities Appellate Tribunal dated 08.05.2006.
Findings of Court:
Appellant shall be permitted to withdraw the amount along with 4% simple interest, which shall be payable from 08.05.2006 till the date of actual payment.
Result : Appeal allowed.
JUDGMENT
Krishna Murari, J.
Leave Granted.
2. The present Appeal is directed against the judgment and final order dated 16.08.2018 passed by the High Court of Gujarat at Ahmedabad, (hereinafter referred to as “High Court”) in Criminal Application No. 602 of 2013.
FACTS
3. The brief facts relevant for the purpose of the present appeal are that the appellant company is a Foreign Institutional Investor and was permitted by Securities and Exchange Board of India (for short ‘SEBI’) to buy and sell shares and securities in the Indian Stock Market. However, due to certain litigations, the appellant company had quit trading in the Indian markets in 2006. It is important to note that at this point, the appellant company had shares and money in its bank account with ICICI bank.
4. Subsequently, the appellant company was subject to two freeze orders under Section 102 of the Code of Criminal Procedure, 1973. The first freeze order was imposed against the appellant company on 20.10.2006, and the second freeze order was imposed on 17.08.2010. These abovementioned freeze orders, as has been discussed in detail below, were levied against the appellant company on grounds of necessity of investigation of an alleged crime. At this point, It must be noted that the said investigation of the alleged crime was initiated against one Dharmesh Doshi, who is in no way related to the appellant company, and he was never an employee/share holder/director or a key managerial person in the appellant company.
5. In so far as the first freeze order is concerned, vide orders dated 05.12.2008, 14.05.2009, 16.11.2009 and 17.08.2010, this Court allowed the appellant company to sell the shares in its account, convert it into cash, and repatriate the funds so received with interest and without a bank guarantee, while the first freeze order was still operational. In terms of the abovementioned orders, the appellant company repatriated an amount of Rs. 42.51 crores without any bank guarantee.
6. The issue posed in front of us therefore is limited to the second freeze order. The second freeze order, which was passed by the respondent herein on 17.08.2010, had incapacitated the appellant company herein to repatriate an amount of Rs. 38.52 crores, which was realized in favour of the appellant company herein pursuant to an order passed by the Securities Appellate Tribunal dated 08.05.2006.
7. Aggrieved, the appellant company had approached this Court for relief, and vide order dated 12.10.2011, this Court gave liberty to the appellant company to approach the Trial Court for release of the said amount.
8. Subsequently, the learned Trial Court, after duly taking notice of the fact that this Court had allowed the appellant company to repatriate an amount of Rs.42.51 crores, vide order dated 02.11.2012, held that the appellant company was entitled to repatriate the amount of Rs. 38.52 crores, however, the release of such funds was subject to a bank guarantee equivalent to the amount sought to be withdrawn.
9. Aggrieved by the said imposition of the bank guarantee, the appellant company approached the High Court, however, vide impugned order dated 16.08.2018, the High Court reiterated the imposition of the Bank Guarantee. The appellant company has therefore, as against the impugned order and judgment, filed the present Appeal.
ANALYSIS
10. We have heard the learned counsel for the parties, however, it must be noted that despite notice being served the respondent no.2, ICICI Bank, they have chosen not to put in appearance.
11. It is our opinion, that a bare reading of the decisions rendered by the lower Courts, would show that the imposition of the bank guarantee and the freeze orders passed by the respondent, were solely imposed on the grounds of criminal proceedings being alive against one Dharmesh Doshi, who is alleged to be connected to the appellant company.
12. While perusing through the documents on record, it has come to our notice that the said Dharmesh Doshi, on the basis of whom th
The court upheld the validity of the debit freeze on the appellant's accounts, affirming that the funds were reasonably suspected to be proceeds of crime under PMLA.
Freezing of bank accounts under Section 102 Cr.P.C is lawful during investigations without prior notice, and challenges to such orders are not maintainable when alternative remedies exist.
It is a well-settled salutary principle that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner.
Decisions made during criminal investigations, such as freezing orders by MACC, are generally not subject to judicial review unless there is evidence of bad faith.
The court established that a bank account can be frozen under suspicion of criminal activity, and failure to report the freeze to the Magistrate does not invalidate the action.
The provisions of the Criminal Law (Amendment) Ordinance, 1944, for the continuation of attachment during an appeal apply only to assets attached under the Ordinance.
The freezing of a business account requires identification of the tainted amount to ensure proportionality, and blanket freezes violate constitutional protections against arbitrary state action.
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