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IN THE HIGH COURT OF JHARKHAND AT RANCHI
SANJAY KUMAR DWIVEDI, J.
M/s Madhucon Projects Ltd. – Appellant
Versus
The Union of India – Respondent
W.P.(Cr.) No. 154 of 2020
Decided on : 02-08-2022
Freezing of Bank Account - Criminal Procedure - [FACT OF THE CASE] The petition was filed to quash the impugned letter dated 02.04.2019 directing the banks not to allow the petitioners to operate their existing bank accounts. The petitioners were awarded a project for 4-laning of Ranchi-Jamshedpur National Highway, but the project faced delays and cost overruns. The respondents froze the bank accounts under section 91 Cr.P.C. and refused to defreeze them. The petitioners argued that the freezing was done without proper application of mind and not in accordance with section 102 Cr.P.C. [FINDING OF THE COURT] The court found that the freezing of the bank account was not in compliance with the requirements of section 102 Cr.P.C. and the intimation to the court was not made forthwith as required. The court also noted that the charge sheet had already been submitted, and the investigation was complete. The court held that the freezing of the bank account was not justified and directed the respondents to defreeze the accounts. [ISSUES] The main issue was whether the freezing of the bank accounts was done in accordance with the provisions of section 102 Cr.P.C. and whether the freezing was justified in the given circumstances. [RATIO DECIDENDI] The court held that the freezing of the bank account was not in compliance with the requirements of section 102 Cr.P.C. and the intimation to the court was not made forthwith as required. The court also considered the scheme of the Code of Criminal Procedure and the consequences of non-compliance with the provisions. [FINAL DECISION] The court dismissed the petition and directed the respondents to defreeze the bank accounts, noting that the freezing was not justified and the charge sheet had already been submitted. The court also allowed the petitioners to avail appropriate remedies under the Code of Criminal Procedure and other provisions of the Act or Code.
Certainly. Based on the provided legal document, the key points are as follows:
The court emphasized that the freezing of bank accounts under section 102 Cr.P.C. must strictly comply with statutory requirements, including immediate intimation to the court, and such procedural steps must be followed carefully (!) (!) (!) .
The court found that in the case at hand, the freezing was not in accordance with the law because the required intimation to the court was not made forthwith as mandated by the provisions, and the proper application of mind was lacking (!) (!) (!) .
The court clarified that the provisions of section 102(3) Cr.P.C. are directory rather than mandatory, and once the court has been informed of the freezing through an application, the statutory requirement is considered fulfilled (!) (!) (!) .
The court highlighted that the law requires that the freezing of accounts should be for a short duration, with clear timelines and proper reporting, and indefinite freezing without proper procedure is unlawful (!) (!) (!) .
The court noted that the constitutional right to property under Article 300-A is not violated if the freezing is done in accordance with law, and the action taken in this case was found to be lawful (!) (!) .
The court observed that non-compliance with procedural requirements, such as timely reporting or proper application of the law, can vitiate the validity of the freezing order, but in this case, the statutory procedures were sufficiently met (!) (!) .
The court dismissed the petition challenging the freezing of the bank accounts on the grounds that the petitioner had not approached the trial court for relief, and the statutory remedies were available and should be exhausted before seeking judicial review (!) (!) .
The court reaffirmed that the constitutional courts have wide powers but generally should not interfere where statutory procedures and remedies are available, and that the petitioner’s remedy under the criminal procedure should be pursued in the appropriate forum (!) (!) .
Overall, the court held that the freezing of the accounts was lawful, provided the procedural requirements were followed, and the petitioner was entitled to seek redress through proper legal channels rather than through a writ petition at this stage (!) (!) .
Please let me know if you need further analysis or specific legal advice based on this document.
JUDGMENT :
1. This petition has been filed for quashing the impugned letter dated 02.04.2019 (Annexure-3) issued by the respondent in exercise of powers under section 91 Cr.P.C. directing Canara Bank (Prime Corporate Branch, Secunderabad) and all other consortium of banks funding the project of “4-laning of Ranchi-Jamshedpur National Highway, in the State of Jharkhand, not to allow the petitioners to operate their existing bank accounts, FDs, etc.
2. Further prayer is made for quashing the impugned reply of respondent dated 23.05.2019 dismissing the representation of the petitioner no.1 dated 06.05.2019.
3. Mr. R.S.Mazumdar, the learned Senior counsel appearing on behalf of the petitioners submitted that the petitioner was awarded the project for 4-laning of Ranchi-Rargaon-Jamshedpur section of 163.50 Kms on Design Built Finance Operate Transfer (DBFOT) annuity basis for semi annuity of INR 133.20 Crs. For 15 years.
4. Mr. Mazumdar, the learned Sr. counsel appearing for the petitioners further submitted that on 20.04.2011 Concession Agreement entered between petitioner no.4 (Special Purpose Vehicle of petitioner no.1) and NHAI. Project cost was to be INR 1655 crs with a concession period of 15 years (including 912 days construction period). Consortium of lenders, led by Canara Bank, were to lend INR 1151.96 crs out of which interest during construction (IDC) was stipulated to be INR 147.65 crs.
5. On 06.07.2011 Engineering Procurement and construction contract was signed between the petitioner nos.1 and 4.
6. The learned Sr. counsel appearing for the petitioners submitted that on 17.10.2011 was the scheduled appointed date for commercial operation of the project as per the concession agreement keeping which in mind, petitioner no.1 had mobilized manpower and equipment spread over 7 camp sites at the project site which entailed an expenditure of INR 102.62 crs from its own resources.
7. He further submitted that on 03.01.2012 INR.50 cr was infused by petitioner no. 1 to petitioner no.2 which was onward infused to petitioner no.3 as a subordinate debt. Thereafter as per the Engineering Procurement Construction (EPC) Agreement, petitioner no.4 extended INR 50 crs to the petitioner no.1 as material and mobilization advance which after adjustment against INR 103.62 cr spent on mobilization was further invested by petitioner no.1 in petitioner no.4 as equity through petitioner nos.2 and 3.
8. According to the learned Sr. counsel, on 04.12.2012 appointed date was declared by NHAI. 80% of land was to be handed over at this time with 100% to be handed over within 90 days. However, 80% land was actually handed over after 6 years on 31.05.2018 with NHAI had not obtained statutory environmental and forest clearance mandatorily required whereby the project faced delays, overrun of costs from the planned expenditure.
9. Mr. Mazumdar, the learned Sr. Counsel further submitted that in W.P.(PIL) No.3503 of 2014 on 14.11.2017 this Hon’ble Court directed serious fraud investigation officer (SFIO) to carry out inquiry qua this project due to delay and cost overrun. On 25.07.2018 I.A. No.6613 of 2018 was filed in W.P.(PIL) No.3503 of 2014 by NHAI before this Hon’ble Court seeking permission to terminate concessionaire agreement. On 07.08.2018, PE-02(A)/2018-R was registered on the order dated 25.07.2018 of this Hon’ble Court in W.P.(PIL) No.3503 of 2014.
10. The learned Sr. counsel submitted that on 30.01.2019 termination letter was issued by NHAI to petitioner no.4 without disposal of I.A No.6613/2018 in W.P.(PIL) No.3503 of 2014. Petitioner no.1 had completed 50% of the project by then, with 10% of the works yet to be certified. At this juncture, out of total payment of INR 1431 crs to be received by the petitioner no.1, petitioner no.4 had made payment of only INR 974.35. Out of INR 1151.96 crs to be released by banks, INR 1030.65 crs was only released, with interest during construction (IDC) deducted being INR 378.58 cr. Instead of INR 147.65 cr. (260%
The freezing of the bank account under section 102 Cr.P.C. must be in compliance with the statutory requirements, and the intimation to the court must be made forthwith as required by the law.
Power of Police Officer to seize property – Sub-section (3) of Section 102, Cr.P.C is directory in nature. Accused whose property is seized by police officer can file application to grant interim cus....
The main legal point established in the judgment is that the procedure for freezing bank accounts under the Unlawful Activities (Prevention) Act, 1967, specifically Section 25, is directory in nature....
Right to property is still a constitutional right under Article 300-A of the Constitution of India though not a fundamental right and the deprivation of the right can only be in accordance with the p....
The main legal point established in the judgment is the legality of freezing bank accounts under Section 102 Cr.P.C. and the applicability of this provision in the context of the case.
The main legal point established in the judgment is the requirement to follow the procedure laid down under Sec. 102 Cr.P.C and the need for sufficient evidence to support the freezing of a bank acco....
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.
The Investigating Officer lacks authority under Section 91 of Cr.P.C. to freeze a bank account absent compliance with Section 102, violating procedural requirements and the petitioner's rights.
Seizure of assets under S.102 CrPC requires compliance with statutory provisions and cannot be based solely on suspicion.
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