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Synopsis

The Kerala High Court has upheld the legality of freezing bank accounts by the investigating authority under Section 102 of the Code of Criminal Procedure (Cr.P.C.) in cases involving the Prevention of Corruption Act, 1988.

The court, presided over by Justice C. Jayachandran, relying on the Supreme Court’s verdict in State of Maharashtra v. Tapas D.Neogy (1999), reiterated that under Section 102 Cr.P.C, a police officer in the course of investigation is empowered to seize or prohibit the operation of the accused’s bank account.

The court noted: “if there can be no seizure under Section 102 Cr.P.C, of the bank account of the accused, then, the money deposited in a bank, which is ultimately held in the trial, to be the outcome of illegal gratification, could be withdrawn by the accused and the Courts would be powerless to get the said money, which has a direct link with a commission of offence.”

The case arose from a writ petition challenging the freezing of bank accounts by the police under Section 102 Cr.P.C., which empowers police officers to seize property suspected to be linked to an offence. The petitioners argued that The petitioners argued that with the introduction of Section 18A to the Prevention of Corruption Act, making the Criminal Law Amendment Ordinance, 1944 applicable, the proper procedure for attaching bank accounts was through the Ordinance and not Section 102 Cr.P.C. It was contended that the recourse to Section 102 Cr.P.C. for freezing bank accounts was illegal and contrary to the legislative intent of the Prevention of Corruption Act. The petitioners also highlighted the failure of the police to inform the Magistrate of the seizure, as required under Section 102(3) Cr.P.C., which they claimed invalidated the freezing of the accounts.

Drawing a clear distinction between the investigative nature of Section 102 Cr.P.C. and the asset-securing mechanism of the Criminal Law Amendment Ordinance, 1944. The court clarified that the1944 Ordinance does not override the investigative powers conferred under Section 102 Cr.P.C.

The court observed: “it is explicit that the two provisions serve two different purposes. While Section 102 provides for 'seizure' of the property, which is suspected to have been stolen or which is found in circumstances creating suspicion of commission of an offence, the Criminal Law Amendment Ordinance provides for 'attachment' of the money or the property, which is believed to have been procured by the accused, by means of the scheduled offence. While Section 102 provides a step in aid of investigation, the Criminal Law Amendment Ordinance only secures the money, which is alleged to have been procured by the accused, by means of the scheduled offence, in the form of an attachment, so that the same can be forfeited, if the accused is ultimately found guilty of the scheduled offence. … The two operates on two different fields and one cannot substitute the purpose intended to be served by the other.”

Addressing the alleged violation of Section 102(3) Cr.P.C., the court referred to the Supreme Court's ruling in Shento Varghese v. Julfikar Husen (2024), which established that non-compliance with Section 102(3) Cr.P.C. cannot render the seizure illegal, unless specific prejudice to the accused is demonstrated. “non-reporting of seizure under Section 102(3) Cr.P.C. cannot automatically lead to the legal consequence of such seizure getting vitiated and thus illegal,” the court affirmed.

While dismissing the petition, the court issued specific directions to the Investigating Officer:

1. to trace out the document, if any, reporting the seizure to the special court concerned in terms of Section 102(3) Cr.P.C. and to produce the same before the court which is seisin of the matter; or
2. to report such seizure to the special court within one month from the date of receipt of a copy of this judgment.

The court also allowed the petitioner to file an application under the relevant CrPC provisions, seeking custody or disposal of the property, which would be considered by the Special Judge in accordance with the law.

 

Cause Title: Sreekala K. v. Central Bureau of Investigation & Ors. [W.P(Crl.) No.1284/2022]

Appearance: Advocates N.J. Mathews, Ashik K. Mohamed Ali, Muhammed Rifa P.M., and Ramseena N. appeared for the petitioner. Senior Advocate K. Jaju Babu and Special Public Prosecutor Sreelal Warriar represented the respondents.