Mandatory to provide magistrate with bank account freezing info: Madras High Court

Mandatory to provide magistrate with bank account freezing info: Madras High Court

The petitioner claimed he was neither an accused nor a witness in the matter

The Madras High Court has held that while ordering the de-freezing of bank accounts seized pursuant to an investigation into a loan fraud, it is essential under Section 102(3) of CrPC that the information of the seizure should be provided to the jurisdictional magistrate.

The Supreme Court and the high court have repeatedly emphasized it.

The bench comprising Justice GK Ilanthiraiyan observed that in the present case, Karthika Agencies Export House vs The Commissioner of Police and Others, the information regarding the seizure was made after considerable delay. While the account was frozen in February 2021, the magistrate was informed about it in September. It was also not known whether the superior officer had knowledge of it.

The petitioner contended that the respondent banks had ordered to freeze his bank accounts in connection with a crime registered for the offences under Sections 120(b), 420, 465, 467, 468, 471 of IPC.

The allegation was that the accused obtained a loan from reputed banks by providing a fake address. When he failed to repay the loan amount, recovery proceedings were instituted against him. It was then that the banks realized the documents produced were fabricated and filed with a mala fide intention.

However, the petitioner claimed that he was neither an accused nor a witness in the matter. He was running an agricultural food export business in the name of Karthika Agencies Export House. The respondents had wrongly instructed to freeze his account along with that of the fraudulent company.

He challenged the order on the ground that the procedure contemplated under Section 102(3) of CrPC was not duly followed. But on the other hand, the respondents submitted that all the procedures were adhered to.

Citing the decision of the Supreme Court in the Teesta Atul Setalvad vs The State of Gujarat case, it was submitted that the provision under Section 102(3) of Cr.P.C. did not contemplate the issuance of any notice to the account holder for the purpose of investigation. And under the law, no notice can be sent to a suspect.

The court ruled that the petitioner was not an accused and was only the holder of an account. Thus, the above principle did not apply to him. Also, the petitioner was not to be served any notice. The information on the freezing of the account should have been provided to the jurisdictional magistrate.

Since this necessary procedure of law was not complied with, the court set aside the order of seizure of the bank account. It ruled that the respondent was at liberty to proceed with the investigation and freeze the petitioner's account in accordance with the law.