1992 (2) TMI 375 - HC - Indian Laws

Summary

Issues Involved:
1. Legality of the CBI's action to freeze bank accounts under Section 102 of the Code of Criminal Procedure.
2. Allegations of fraudulent subsidy claims and conspiracy.
3. Hardship and irreparable injury caused to the petitioners due to the freezing of accounts.
4. Validity of the CBI's suspicion and investigation process.

Detailed Analysis:

1. Legality of the CBI's Action to Freeze Bank Accounts under Section 102 of the Code of Criminal Procedure:
The petitioners argued that Section 102 of the Code of Criminal Procedure (CrPC) could not be used by the CBI to freeze their bank accounts. They contended that the expression "which may be found under circumstances which create suspicion of any offence" should apply only to property that, when discovered, creates suspicion of an offence. The petitioners cited two cases: Ms. Swarw Sabharwal vs. Commissioner of Police and Jagdish Chander and others Vs. State and others, to support their argument that bank accounts do not fall under the purview of Section 102 unless they directly lead to the suspicion of an offence.

2. Allegations of Fraudulent Subsidy Claims and Conspiracy:
The CBI alleged that the petitioners, particularly petitioners 1 and 4, had fabricated documents to show procurement of raw materials, manufacture of fertilizers, and sale to fictitious persons. The CBI claimed that the business was established only on paper, and the petitioners defrauded the Government of India to the tune of Rs. 3.39 crores. The CBI also alleged that the petitioners conspired with unscrupulous officers of the State Industries Department and the DFICC to fraudulently certify subsidy claims.

3. Hardship and Irreparable Injury Caused to the Petitioners Due to the Freezing of Accounts:
The petitioners argued that the freezing of their accounts caused them great hardship, irreparable injury, and damage to their reputation. They claimed that the CBI's directions prevented them from encashing matured bonds, deposit certificates, and other financial instruments, resulting in significant financial losses. They further contended that only movable property capable of being seized could be seized under Section 102, and bank accounts and deposits did not fall under this category.

4. Validity of the CBI's Suspicion and Investigation Process:
The court analyzed whether the discovery of the frozen accounts or seized articles led the CBI to suspect the commission of offences under Sections 420, 467, 468, and 471 read with Section 120B of the Indian Penal Code. The CBI's counter-affidavit detailed that petitioners 12 and 13 were paupers living on old age pension, and the seizure of properties allegedly gifted by them to petitioner 1 indicated fraudulent acquisition. The discovery of accounts in the name of fictitious persons or in bogus names, operated by petitioner 1, further pointed to the commission of offences. The court found that the allegations and evidence presented by the CBI were sufficient to invoke Section 102 and justified the freezing of accounts.

Conclusion:
The court concluded that the CBI's actions to freeze the bank accounts were based on sound footing and did not warrant interference. The court directed the CBI to file the chargesheet within three months and instructed the petitioners to cooperate with the investigation.

Final Judgment:
The petition to quash the CBI's orders to freeze the accounts was dismissed. The court emphasized the need for the CBI to expedite the filing of the chargesheet and for the petitioners to cooperate with the investigation.