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2023 Supreme(Mad) 2731
IN THE HIGH COURT OF JUDICATURE AT MADRAS
R. HEMALATHA, J.
Manikandan – Appellant
Versus
State Rep by The Inspector of Police, Salem – Respondent
Crl. RC. No.1137 of 2023
Decided On : 08-08-2023
For the Petitioners:J. Jayan, Advocate. For the Respondent: R. Vinothraja, GA.
Bank accounts may only be frozen based on procedural safeguards and reasonableness, and legitimate business transactions should not lead to punitive actions against the account holder.
Headnote:
Bank Account Freezing - Criminal Revision Case - Sections 397 and 401 of Criminal Procedure Code, 1973 - 15.09.2022, 17.09.2022
Fact of the Case:
The petitioner, the 5th accused in a criminal case, had his bank account frozen by the Investigating Officer, causing a standstill in his business transactions. The freezing was based on his business dealings with a jewelry shop owned by the 1st accused.
Finding of the Court:
The court found that the freezing of the petitioner's bank account was unjustified as he had legitimate business transactions with various jewelry shops, and the freezing had a crippling effect on his business.
Issues: The key issue was the validity of freezing the petitioner's bank account based on his business transactions with a jewelry shop owned by the 1st accused.
Ratio Decidendi: The court held that freezing bank accounts must be based on procedural safeguards and reasonableness. It emphasized that legitimate business transactions should not result in punitive actions against the account holder.
Final Decision: The Criminal Revision Case was allowed, the orders dated 25.05.2023 were set aside, and the freeze on the petitioner's bank account was lifted.
JUDGMENT
(Prayer: Criminal Revision Case filed under Sections 397 and 401 of Criminal Procedure Code, 1973 against the orders dated 25.05.2023 passed by the learned Judicial Magistrate Court No.3, Salem, in Crl. M.P. No.1783 of 2023.)
1. The present Criminal Revision case is filed against the orders dated 25.05.2023 passed by the learned Judicial Magistrate No.3, Salem, in Crl. M.P. No.1783 of 2023.
2. The present petitioner is the 5th accused in Crime No.8/2020 on the file of the Central Crime Branch, Salem, which was registered based on the complaint dated 11.01.2020, by one Abdul Kudoos Asfar, s/o. Mohammed Sirajudeen, residing at D.No.454/4, Water Board Colony, Alagapuram, Katoor, Salem 636 016.
3. According to the defacto complainant, the 1st accused Ravi Kumar, canvassed various investment schemes floated by him in gold and share markets and lured him (the defacto complainant) into investing. Though the defacto complainant invested huge amount, the 1st accused did not return the said amount as promised by him and he came to know subsequently that he was cheated. His further allegation is that the 1st accused purchased a BMW car bearing Registration No.TN 72 AS 7999 and several immovable properties in the name of his wife.
4. The present petitioner is shown as A5 and he is the brother-inlaw of the 1st accused. The present petitioner is a gold smith and he used to make jewels on the orders placed by various jewellery shops. According to him, the Inspector of Police, Central Crime Branch, Salem City, froze his bank account on 15.09.2022 and 17.09.2022 even though he is not at all involved in the alleged offence committed by the 1st accused Ravi Kumar.
5. Mr. J. Jayan, learned counsel for the petitioner contended that the Investigating Officer while freezing the bank account, did not take into account the fact that the petitioner received money on 17.09.2022 from Vasavi Jewellers for making jewels and that on account of freezing of the bank account of the revision petitioner, his business transaction has come to a stand still.
6. Per contra, Mr.R.Vinothraja, learned Government Advocate for the respondent drew the attention of this court to the confession statement of the present petitioner (A5) and contended that on 15.09.2020 he received a sum of Rs.2,30,000/- from Sri Mahalakshmi Jewellers. The 1st accused is the proprietor of the said Mahalakshmi Jewellers. He therefore prayed for dismissal of the present petition.
7. It is settled law that bank accounts of any individual, entity or business may be frozen even if the account holder has no involvement in the alleged crime. The tenability of such actions is however conditioned on compliance with certain procedural safeguards and the requirement of ‘reasonableness’. It is an oddly peculiar position to take that an account holder who enters into a bonafide and genuine transaction with another party be punished for no fault of his own due to freezing of his bank accounts. In the instant case the contention of the revision petitioner is that he has transactions with several jewellery shop owners and Mahalakshmi Jewellers is one such customer. It is to be pointed out that in most business transactions or even in a person’s day to day dealings, it is not possible for any person to trace and verify the source of the other party’s income before entering into each transaction. In the present case, the petitioner is a gold smith and he is having an account bearing No. 059150310875114 with Tamil Nadu Mercantile Bank. On 15.09.2022 he received a sum of Rs.2,30,000/- from Sri Mahalakshmi Jewellers and on 17.09.2022 he received a sum of Rs.5,11,100/- and another sum of Rs.2,03,200/- from Vasavi Jewellers. It is not the case of the prosecution that the owner of Vasavi Jewellers was also involved in the crime. In such circumstances freezing of the bank account of the present petitioner on 17.09.2022 is totally wrong. As far as the transaction between the present petitioner and Sri Mahalakshmi Jewe
