Anil Agarwal vs The State Of Telangana on 27 August, 2018

Anil Agarwal vs The State Of Telangana on 27 August, 2018

Introduction:

The present case was a common order given by the Hon’ble High Court for the state of Telangana and for the state of Andhra Pradesh in Crl.P Nos.7351, 7364, 7423, 7424, 7485, 7486, 7490, 7492, 7510, 7511, 7512, 7516, 7518, 7520, 7552, 7549, 7493 & 7559 of 2018. The petitions were filed against the order of the investigating officer, freezing the bank and demat accounts of the petitioners. In this case, the first respondent was the state of Telangana, second was the de facto complainant and the third were the banks.

Facts of the case

The de facto complainant was M/s Ravi Kumar Distilleries Limited. For generating revenue, the company has gone for public issue. For bringing public issue, the de facto complainant approached Mr. Anil Agrawal, Director of the Company M/s. Comfort Securities Limited. They made an agreement. For the purpose of public issue, the de facto complainant was made to open an account Central Depository Services (India) Limited and alleged that he was also made to sign by him on blank cheques and stamp papers by Anil Agrawal. The public issue was a success.

The allegation was that Mr. Anil has misused the cheques. Also, under the guise of giving of financial assistance he transferred the shares to himself and also take forcible possession of the certain documents. 

On the basis of the above said allegations, crime was registered for various offences. Based on the complaint and FIR, the investigating officer exercising his power under S. 102 of the Criminal Procedure Code, 1973 has freezed the demat accounts and bank accounts. But the investigating officer did not give any notice to the petitioners while doing so.

Contentions of the petitioners

1. The freezing of the accounts is against the principles of natural law of justice.
2. The investigating officer  did not record reasons for freezing the accounts  and in their absence it illegal to do so.
3. The non compliance of section 102(3) vitiates the entire proceedings.

Contentions of the respondents

1. The investigating agency has given its satisfaction in letters addressed to the third respondent. 
2. Section 102(3) was duly complied but with some delay. Even if so, non-compliance of section 102(3) does not vitiate the entire proceedings.

Issues

Whether the petitions under Section 482 Cr.P.C questioning the proceedings under Section 102 Cr.P.C is maintainable in view of the alternative remedy available under the provisions of Cr.P.C.?  

Whether the non-compliance of recording satisfaction under Section 102(1) Cr.P.C of alleged non-compliance  of Section 102(3) of Cr.P.C vitiates the entire proceedings of freezing of demat accounts and other accounts mentioned in Column No.3 of table mentioned above? If so, whether the orders passed by the 3rd respondent is liable to be set aside?

Decision

The Court has discussed the Bhajan lal’s case whereby the Supreme Court has given an inexhaustive list of categories upon falling on which the High Court may quash an fir under application under S.482 or A. 226 of the Constitution. The SC has given the following seven categories:

1. The allegations made in fir, even prima facie and taken in their entirety won’t constitute an offence or case against the accused.
2. Where the allegations in the FIR don’t constitute a cognisable offence, justifying investigation by the police under S. 156(1).
3. Where the uncontroverted allegations in the fir or complaint don’t disclose the commission of an offence.
4. Where the facts of the complaint don’t constitute a cognisable offence but a non cognisable offence.
5. Where the allegations are so unjust and so improbable that no prudent person can reach to a conclusion that the offence could have been committed.
6. Where there is an express legal bar on instituting such proceedings.
7. Where the criminal proceedings are done with mala fide intention and ulterior motive.

On the contention that no plea of jurisdiction was made in the plaint, the court held that there is a difference between jurisdictional and adjudicatory fact. No plea is necessary to decide a jurisdictional fact because it strikes at the very root of the jurisdiction and may render the whole case to ultra vires. It is the bounded duty of every court to decide the question of jurisdiction first.

The High court has observed that the demat accounts are well part of the word property in view of the case of State of Maharashtra vs. Tapas D.Neogy. on the contention that the property was not the property of the accused the court held that Section 102(1) gives power to seize any property relating to the offence.

The High court has found that the remedy is there for the petitioners under Section  if the case is at the stage of investigation or under Section 451 pending trial.

On the question of compliance of section 102(3) was done by the time the petitioners approach the court. So, the remedy available is under section 457 of the code. The high court felt that the petitioners would have approached the trial court rather than invoking the inherent powers of the High court. 

In the case of National Securities Clearing Corporation Ltd vs. State of Maharashtra and Ors, the court observed that ”a petition under Section 482 Cr.P.C is not maintanable when a remedy under Sections 457 and 451 Cr.P.C is available against the order passed under Section 102 Cr.P.C”.

In view of several decisions the High court was of the view that the present case was nor maintainable due to the availability of alternative remedy.

Further on the issue of reasons the court found that the investigating agency satisfied itself and that is evident from letters addressed to the second respondent. And on the issue of non-serving of notice, the High court held that Section 102(1) does not require any notice to be served to the respondents.

On the non-compliance of Section 102(3), the court observed that the notice to the magistrate is just to enable him to order for the proper disposal of the property and the same was achieved when the petitioners themselves moved applications. Even if assuming that the requirement was nor fulfilled, it cannot vitiate the entire proceedings. 

On the issue of link between the accounts and crime, the court held that accused is a director of said companies and the link is sufficient enough to seize the property.

The court directed the respondent to avail alternative  remedies at the  trial court and dismissed the petitions.

Conclusion

The present case is one of the important cases regarding the powers and exercise of powers under section 102 of the investigating officer. The court clarified that accounts are also the property for the purpose of section 102. It was also cleared that inherent powers of the High court can be invoked only to avoid grave injustice and in the absence of alternative remedy.

References

https://judgments.ecourts.gov.in/

This Case Analysis is done by Avula Veerabhadra Reddy, a second year student of Central University of South Bihar and an intern at legal vidhiya

Admin