Introduction
The High Court of Judicature at Patna recently addressed a case involving the freezing of bank accounts in connection with an investigation under the Bihar Prohibition and Excise Act, 2016. The case highlights the legal procedures involved in such actions and the rights of individuals when their financial assets are frozen during an investigation.
The Case: An Overview
The case originated from an FIR (First Information Report) filed on June 6, 2022, at the Patliputra Police Station in Patna, Bihar. The FIR named Mohan Kumar @ Shiv Mohan Rai and Lal Mohan Kumar as the accused, citing offenses under specific sections of the Bihar Prohibition and Excise Act, 2016. These sections likely pertain to offenses related to the illegal manufacture, possession, or sale of alcohol, given the context of the Excise Act.
Mohan Kumar and Lal Mohan Kumar, the petitioners in this case, hold savings accounts at the State Bank of India's Patliputra Branch. The Investigating Officer in the Excise Act case directed the bank to freeze these accounts on July 18, 2022. Consequently, the bank froze the accounts, and certain fixed deposit receipts belonging to the petitioners were also frozen. The reason given for this action was the suspicion that the money deposited in the accounts was linked to illegal activities related to Excise Act offenses.
Petitioners' Arguments
The petitioners, Mohan Kumar and Lal Mohan Kumar, approached the High Court seeking relief. Their primary contention was that their bank accounts and fixed deposit receipts were frozen without being given a prior notice or a hearing. They argued that they had the right to be heard before such action was taken, which is a fundamental principle of natural justice.
Additionally, the petitioners claimed that the Investigating Officer did not properly comply with Section 102 of the Criminal Procedure Code (CrPC). This section deals with the power of the police to seize property, including bank accounts, during an investigation. They argued that the procedure laid down in this section was not followed, making the freezing of their accounts illegal.
State's Response
The respondent-State, representing the authorities, opposed the petitioners' claims. They argued that the petitioners were involved in offenses under the Excise Act and were using the bank accounts to deposit illegally obtained money. The State asserted that the freezing of the accounts was a necessary step to prevent further illegal transactions and to preserve the allegedly ill-gotten funds.
The State also contended that the petitioners' grievance could not be addressed under Article 226 of the Indian Constitution, which grants the High Court the power to issue writs. Instead, they suggested that the petitioners should seek a remedy under Section 457 of the CrPC, which deals with the procedure for the release of property seized by the police.
Furthermore, the State acknowledged that there was a procedural lapse in complying with Section 102 of the CrPC, specifically the failure to furnish a report to the jurisdictional Magistrate. However, they maintained that all other requirements of the section had been met.
High Court's Decision
The High Court, after hearing the arguments from both sides, examined the facts and the legal provisions involved. The court noted that the petitioners were indeed accused in the Excise Act case and that the Investigating Officer believed the money in their accounts was derived from illegal activities.
The High Court focused on the question of whether the petitioners were entitled to notice before their accounts were frozen. It also considered the State's argument that the petitioners should have pursued a remedy under Section 457 of the CrPC.
Ultimately, the High Court ruled in favor of the petitioners. The court found that the failure of the Investigating Officer to comply with all the requirements of Section 102 CrPC, particularly the failure to report the seizure to the jurisdictional Magistrate, was a significant flaw in the procedure.
The High Court stated that this violation of the statutory provision was serious enough to warrant its intervention, even if the petitioners had an alternative remedy under Section 457 CrPC. The court emphasized that when there is a clear violation of the law, the High Court can exercise its writ jurisdiction to provide a remedy.
Outcome
The High Court set aside the order freezing the petitioners' bank accounts and fixed deposit receipts.
Read the full judgement Below;
https://patnahighcourt.gov.in/viewjudgment/MTUjNTMwNSMyMDIzIzEjTg==-1YO--ak1--nZp--ak1--0Fs=
