Failure To Inform Jurisdictional Magistrate About Direction To Freeze/Seize Bank Account Can Invalidate It's Freezing: Kerala High Court

The Kerala High Court has held that the failure to inform the Magistrate about the seizure/freezing of a person's bank account can have a negative impact on the validity of the seizure. The court made these observations while hearing a plea challenging the freezing of a person's bank account and directed the police to inform the concerned bank whether the requirements of Section 102 CrPC had been followed. Section 102 CrPC deals with the power of the police officer to seize certain property alleged to have been stolen or found under circumstances which create suspicion of the commission of any offence. The provisions entail that the police must forthwith report to the concerned Magistrate (having jurisdiction) about the seizure of such property. Police cannot be permitted to arrogate unregulated power to freeze bank accounts on mere conjectureReferring to a 2020 decision of a coordinate bench in Madhu K v. Sub Inspector of Police and Others, a single judge bench of Justice V.G. Arun observed, "As rightly observed in the judgment, the police acting under Section 102 Cr.P.C cannot be permitted to arrogate to himself an unregulated and unbridled power to freeze the bank account of a person on mere surmise and conjecture, since such unguarded power may bring about drastic consequences affecting the right to privacy as well as reputation of the account holder". "The above discussion leads to the conclusion that, while delay in forthwith reporting the seizure to the Magistrate may only be an irregularity, total failure to report the seizure will definitely have a negative impact on the validity of the seizure. In such circumstances, account holders like the petitioner, most of whom are not even made accused in the crimes registered, cannot be made to wait indefinitely hoping that the police may act in tune with Section 102 and report the seizure as mandated under Sub-section (3) at some point of time," the high court added. On impact of failure of police officer to report seizure to MagistrateThe court further referred to the Supreme Court's decision Shento Varghese v Julfikar Husen and Others (2024), where the apex court had held that the seizure would not be vitiated due to delay in reporting to the Magistrate. Referring to the Supreme Court's discussion on the expression "forthwith", the High Court said that it was not open for any person to contend that the delay in complying with Section 102 Cr.P.C would vitiate the seizure as such; however it gives rise to the ancillary question on the impact of non compliance of Section 102(3) by the failure on the part of the police officer concerned to report the seizure of bank account to the jurisdictional Magistrate. "In my opinion, this question has to be addressed in the light of Article 300A of the Constitution of India, which stipulates that no person shall be deprived of his property except by authority of law. The authority of law in the cases under consideration is conferred by Section 102 Cr.P.C. Therefore, abject violation of the procedure prescribed therein will definitely effect the validity of the seizure," the court underscored. The petitioner had approached the High Court aggrieved by the sudden freezing of his bank account based on the intimation received from police. The police gave this direction based on certain Cyber Crime Incident Reports were filed by persons who were allegedly subjected to online financial fraud.Court's earlier directions on freezing of bank accountThe high court also took note of the court's decision in Dr. Sajeer v Reserve Bank of India (2023), wherein the high court had considered a batch of pleas by persons who were aggrieved of having their bank accounts frozen due to a person/persons with whom they had no acquaintance, transferring certain amounts to the formers' accounts using the UPI platform, as part of a cyber financial crime.The accounts of the petitioners therein, who mostly comprised of retailers and small businessmen, were frozen pursuant to the advisory issued by the competent Investigating and Police Authorities.The High Court had while deciding the matter directed that the freezing shall be restricted to the extent of the amount mentioned in the order issued to them by the police and only to the petitioners therein. The high court also asked the police to inform the banks whether continued freezing of the account is required, and if required for what further time. The high court further said that the Bank shall adhere with the intimation received and if no such intimation is received by the Bank within 8 months, the parties can approach the high court again.Police to inform bank whether seizure/freezing of bank account was reported to MagistrateTaking note of these directions, Justice Arun said that it shall apply in the present matter. The High Court further directed the police to inform the bank whether the seizure of the bank account has been reported to the jurisdictional Magistrate and if not, the time limit ...

Failure To Inform Jurisdictional Magistrate About Direction To Freeze/Seize Bank Account Can Invalidate It's Freezing: Kerala High Court

Manju Elsa Isac

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Manju Elsa Isac

Failure To Inform Jurisdictional Magistrate About Direction To Freeze/Seize Bank Account Can Invalidate It's Freezing: Kerala High Court

Manju Elsa Isac

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Manju Elsa Isac

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