2022 (8) TMI 656 - HC - SEBI

Insider trading - Freezing of bank account - bank accounts of the petitioner and her fixed deposits were freezed by the 1st respondent during the course of investigation - amounts for creation of fixed deposits and savings accounts in question with Karur Vysya Bank and HDFC Banks in the name of the petitioner were the proceeds of the crime and hence were seized during the investigation - petitioner seeking Writ of Mandamus directing the 1st respondent to defreeze the bank account and fixed deposits of the petitioner and savings bank account held in the respondent Nos. 2 to 4/Banks and for consequential directions - HELD THAT - Admittedly the petitioner was not shown as accused by the 1st respondent in CC registered against her sons. She was neither the promoter nor the Director of Satyam Computers Services Limited Considering the contentions of the learned Special Public Prosecutor of CBI as stated in the counter affidavit by the 1st respondent and the observations of the Hon ble Apex Court 2018 (5) TMI 931 - SUPREME COURT in the above aspect that she had made the off market transactions way back in the year 2003 at a price of around Rs.340 per share and the price of the shares rose sharply in the year 2006 touching the figure of Rs.966.80 and that the petitioner if she was in position of Unpublished Price Sensitive Information (UPSI) would have sold the shares during peek price inspite of selling at depressed price in the year 2003 and cleared her name in the proceedings launched by SEBI and considering that no attachment orders were issued by the Court during the trial or in the final judgment and considering the age of the petitioner who was at the fag end of her life and the submission of the learned counsel for the petitioner that she required money for her expenditure during her old age it is considered fit to direct the 1st respondent to defreeze the bank accounts and fixed deposits of the petitioner and permit her to operate the accounts and fixed deposits Writ Petition is allowed directing the 1st respondent to defreeze the bank accounts and fixed deposits of the petitioner by giving a direction to respondent Nos.2 to 4 to allow the petitioner to operate the accounts and fixed deposits.

Summary

Issues:
Petitioner seeking Writ of Mandamus to defreeze bank accounts and fixed deposits held by her in respondent banks.

Analysis:
The petitioner, aged about 85 years, filed a writ petition seeking the defreezing of her bank accounts and fixed deposits which were frozen during the investigation against her sons in a case registered by the Central Bureau of Investigation (CBI). The petitioner was not made an accused in the case, and the charge sheet did not connect her accounts to the alleged crime. She had also been cleared of any wrongdoing in a separate case related to insider trading by the Hon'ble Apex Court. The petitioner argued that the freezing of her accounts was arbitrary and illegal, as the money in those accounts was her personal savings for old age expenses.

The 1st respondent, represented by the Special Public Prosecutor for CBI, contended that the petitioner was a beneficiary of a fraud scheme involving her sons and other promoters of a company. They alleged that the funds in the petitioner's accounts were proceeds of crime and were part of a larger fraudulent scheme where shares were offloaded and funds transferred through various entities. The respondent argued that the accounts could not be defreezed as they were linked to the criminal activities of the accused.

Upon reviewing the arguments and evidence presented, the Court noted that the petitioner was not accused in the case against her sons and had been cleared of any involvement in the insider trading case. The Court also considered the advanced age of the petitioner and her need to access her funds for daily expenses. Based on these factors and the absence of any attachment orders issued by the Court, the Court directed the 1st respondent to defreeze the petitioner's bank accounts and fixed deposits, allowing her to operate them.

In conclusion, the Court allowed the writ petition, directing the defreezing of the petitioner's accounts and fixed deposits held in respondent banks. No costs were awarded, and any pending miscellaneous petitions were to be closed as a result of the judgment.