FIRST FINANCIAL SERVICES LTD VS THE STATE OF TELANGANA ON 27 AUGUST, 2018

CITATION
DATE OF JUDGEMENT	27 AUGUST 2018
COURT	TELANGANA HIGH COURT
APPELLANT	FIRST FINANCIAL SERVICES LTD.
RESPONDENT	STATE OF TELANGANA
BENCH	M. SATYANARAYANA MURTHI
REFERRED	UNDER SECTIONS 406, 420, 447, 385, 467, 468, 469,471, 120B R/W 34 OF IPC.

CASE ANALYSIS

FACTS OF THE CASE

The defacto complainant is carrying on business in the name and style of M/s Liquors India Limited as well as in the form of M/s. Ravi Kumar Distilleries Limited (RKDL). For the purpose of increasing the funds for

expanding their business, the companies came up with public issues and for the purpose of bringing public issue, M/s.Ravi Kumar Distilleries Limited (RKDL), the de facto compliant contacted one Mr.Anil Agrawal, Director of the Company M/s. Comfort Securities Limited and arrived at an agreement to take out necessary steps for public issue on behalf of M/s.Ravi Kumar Distilleries Limited. For the purpose of bringing public issue, the defacto complaint was made to open an account with the 3rd respondent

herein/Central Depository Services (India) Limited and alleged to have made to sign by the 2nd respondent on the blank cheques and blank

stamp papers and handed over the same to Anil Agrawal. It is also

alleged that Anil Agrawal has also rendered necessary financial assistance to the defacto complainant by making necessary payments during the relevant period and it was successful public issue and the entire amount in respect of the said public issue was received by the defacto complainant through the respondent/bank

ISSUE ARISES IN THE CASE-

It is alleged that Mr.Anil Agrawal misused the cheques of the defacto complainant which were handed over to him, by transferring the amount into fictitious accounts by transfer in the name of close associates of

Mr.Anil Agrawal and in turn he pocketed the said amounts. The accounts of said Anil Agrawal and other accounts maintained by other petitioners are

shown in the table. Thus, under the guise of giving necessary financial assistance Anil Agrawal got necessary shares of the said company

mortgaged and sold some shares for recovery of amount advanced and said Mr.Anil Agrawal got M/s.Liquors India Limited in his favour and/or in favour of his close associates by taking forcible possession of those

documents.

ARGUMENTS-

he main contention of the counsel for the petitioners is that no prior notice or intimation is issued before passing the prohibitory orders by exercising power under Section 102 (1) Cr.P.C.

73. A bare look at Section 102 Cr.P.C shows that no such prior notice or intimation is contemplated before passing prohibitory orders for freezing accounts.
74. Similar question came up before the Full Bench of Mumbai High Court in Vinoskumar Ramachandran Valluvar and Ors. Vs. The State of

Maharashtra and Ors15 it held that no prior notice or intimation is required to be issued to a person before or simultaneously with the action of attaching his bank account during investigation. In R.Chandrasekar v.

Inspector of Police, Salem16 the Full Bench of Mumbai High Court considered the same issue and finally concluded that no prior notice or simultaneous intimation be given to a person before passing an order

under Section 102(1) of Cr.P.C and it is covered by judgment of Apex Court

in State of Maharashtra vs. Tapas D.Neogy (supra 2).

75. Therefore, persuaded by the above referred judgments of High Courts and following the Apex Court judgment, I hold that no prior notice or intimation is required to be given to a person before passing an order

under Section 102(1) of Cr.P.C. Accordingly, the contention of the counsel

for petitioners is rejected.

76. Finally, the counsel for the petitioners contended that the Deputy

Superintendent of Police EOW, CID, TS did not 2011 CrilJ 2522 2003 CRI LJ 294 comply with the requirements under Section 102(3) Cr.P.C whereas the respondents counsel contended that no such plea was raised in all the

petitions and in the absence of any such plea of non-compliance of

Section 102(3) of Cr.P.C, it is not open to the petitioners to raise such contention for the first time during arguments.

The Public Prosecutor for the State of Telangana contended that when no prejudice is caused to the petitioners, this Court cannot entertain the

petitions under Section 482 Cr.P.C to set aside the order passed under

Section 102 Cr.P.C, but the contention cannot be accepted, since freezing of accounts certainly causes prejudice, as they are deprived of operating the accounts in day to day business transactions.

89. To sum up, the Deputy Superintendent of Police, EOW CID Telangana State recorded his satisfaction as to the suspension of the amounts lying to the credit of various accounts is misappropriated by Mr.Anil Agarwal who is one of the director of these companies and other shell companies and laundered the same into those companies in compliance of Section 102(1) of Cr.P.C. He also complied with the requirements under Section 102(3) of Cr.P.C by letter dated 19.07.2017 in Crl.P.No.7351 of 2018. Non compliance of Section 102(3) Cr.P.C does not vitiate the proceedings. No prior notice of intimation is required to be given before passing an order under Section 102 Cr.P.C.
90. When the investigation is not completed, at this stage, the proceedings and the order passed by the Deputy Superintendent of Police cannot be

quashed while leaving it open to the petitioners to approach the Court under Section 457 Cr.P.C during pendency of the investigation or under Section 451 Cr.P.C after completion of investigation.

91. Applying the principles laid down in the judgments referred above to the present facts of the case, the alleged non compliance under Section 102 (3) Cr.P.C is not a ground to set aside the order of freezing accounts. Therefore, I find no ground to set aside the orders passed under Section 102 Cr.P.C by exercising power under Section 482 Cr.P.C.

JUDGEMENT

In the result, all the petitions are dismissed leaving it open to the

petitioners to approach the appropriate Court at appropriate stage keeping in view the law laid down by various Courts referred above. No order as to costs.

93) As a sequel, miscellaneous petitions, pending if any shall stand closed.

SOURCE –

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This article is written by Vidhi Bharti, 3rd year student of Shri Ramswaroop memorial university, as an intern at legal vidhiya.