2021 (5) TMI 492 - HC - Indian Laws

Freezing of Bank Accounts of petitioner - online gambling - shell companies - HELD THAT - Initially the Investigating Officer has opposed defreezement of the account on the ground that the petitioner has not co-operated with the Investigating Officer by furnishing information and documents as sought by him in concluding investigation in Crime No.1432 of 2020. During pendency of the present petition and also in view of the orders passed by this Court, the petitioner herein has co-operated with the Investigating Officer by furnishing the information and documents as sought by him. Thus, the Investigating Officer has completed investigation and filed charge sheet. But, the learned Public Prosecutor did not file copy of the said charge sheet in the present criminal petition. Considering the said aspects, according to this Court, no useful purpose would be served in continuation of freezing of account of the petitioner company. According to this Court, the relief sought by the petitioner in defreezement of its account can be considered on imposition of certain conditions. In the latest written instructions, the Investigating Officer mentioned that they have already completed investigation and filed charge sheet in the said crime. It is found that multiple purchase orders were mentioned which belong to Indian Companies across India. The credentials of all the said companies need to be verified - It is also relevant to mention that during the course of arguments, the learned Public Prosecutor has submitted that at the address of the petitioner company mentioned by it in the ROC records, which is in the State of Maharashtra State, it was locked and there is no one including Director or responsible person to cooperate with Investigating Officer by furnishing the information and documents to conclude the investigation. Admittedly, the account of the petitioner which was freezed is in HSBC, Gurugram. In the event of defreezing the said account of the petitioner without any condition, it would be difficult for the police or trial Court to take further steps in accordance with law since the police have to verify the credentials of the said companies including the petitioner company and several other crimes registered by the police with regard to the very same online betting are pending investigation. Therefore, this Court is inclined to impose certain conditions while considering the relief sought by the petitioner to defreeze its account. Criminal Petition is allowed.

Summary

Issues Involved:
1. Legality of freezing the petitioner's bank account.
2. Petitioner's involvement in the alleged criminal activities.
3. Petitioner's compliance with investigation procedures.
4. Conditions for defreezing the petitioner's bank account.

Issue-wise Detailed Analysis:

1. Legality of Freezing the Petitioner's Bank Account:
The petitioner, a third party to Crime No.1432 of 2020, had its bank account frozen by the police. The petitioner contended that the freezing was done without following due procedure and that it was unaware of the freezing until a cheque deposit was blocked. The Investigating Officer froze the account due to alleged involvement in illegal gambling activities linked to the petitioner's director, Mr. Neeraj Kumar Tuli, who was also a director in another company implicated in the crime. The petitioner argued that Mr. Tuli had no role in its financial transactions and that the freezing caused significant business losses.

2. Petitioner's Involvement in the Alleged Criminal Activities:
The petitioner claimed it was not involved in any illegal activities and that Mr. Tuli's association with another implicated company did not affect its operations. The petitioner is a private limited company engaged in legitimate business activities and has no connection with the gambling activities under investigation. The police, however, argued that there was a nexus between the petitioner and the implicated companies, suggesting that the petitioner's account contained funds routed through illegal gambling.

3. Petitioner's Compliance with Investigation Procedures:
The petitioner initially failed to cooperate with the investigation, leading to the freezing of its account. However, following court orders, the petitioner deputed an authorized signatory, Mr. Divas Sharma, to cooperate with the Investigating Officer. The petitioner provided the required information and documents, aiding in the completion of the investigation. The police completed the investigation and filed a charge sheet, but there was no specific mention of the amount transferred to the petitioner's account.

4. Conditions for Defreezing the Petitioner's Bank Account:
The court considered the petitioner's cooperation with the investigation and the lack of specific evidence about the amount in the frozen account. The petitioner sought to withdraw ?11,59,61,954/- to meet urgent needs. The court allowed the defreezing of the account on the condition that the petitioner furnishes a bank guarantee for the mentioned amount and undertakes to cooperate with the Investigating Officer and the trial court.

Conclusion:
The court quashed the order of the learned Chief Metropolitan Magistrate, Nampally, and directed the Investigating Officer to issue instructions for defreezing the petitioner's bank account, subject to the petitioner furnishing a bank guarantee and cooperating with the investigation and trial. The court emphasized the need for conditions to ensure compliance and protect the interests of the investigation.