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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

SPECIAL CRIMINAL APPLICATION (QUASHING) NO. 195 of 2017

With
SPECIAL CRIMINAL APPLICATION NO. 196 of 2017

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE J.B.PARDIWALA

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1 Whether Reporters of Local Papers may be allowed

to see the judgment ?

2 To be referred to the Reporter or not ?

3 Whether their Lordships wish to see the fair copy of

the judgment ?

4 Whether this case involves a substantial question of

law as to the interpretation of the Constitution of
India or any order made thereunder ?

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BHAVESHBHAI DAHYABHAIMODI & 5....Applicant(s)
Versus
STATE OF GUJARAT....Respondent(s)
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Appearance:
MR TATTVAM K PATEL, ADVOCATE for the Applicant(s) No. 1 - 6
MS. THAKORE, ADDL. PUBLIC PROSECUTOR for the Respondent(s) No. 1
==========================================================

CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA

Date : 09/02/2017

ORAL JUDGMENT
1. Since the issues involved in both the captioned writ
applications are more or less the same, those were heard
analogously and are being disposed of by this common

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judgment and order.

2. Rule returnable forthwith. Ms. Thakore, the learned APP,

waives service of notice of rule for and on behalf of the
respondent-State.

3. For the sake of convenience, the Special Criminal

Application No.196 of 2017 is treated as the lead matter.

4. By this writ application under Article 226 of the

Constitution of India, the writ applicant, a public servant, has
prayed for the following reliefs;

“(A) Your Lordships may be pleased to admit/allow

present petition.

(B) Your Lordships may be pleased to issue a writ of

certiorari or any other appropriate writ, order or direction
quashing and setting aside order dated 22.11.2016
passed by 2nd Addl. Sessions Judge, Gandhinagar below
exh.1 in Spl. Criminal Application No.850/2016 and
further order de-freezing of bank accounts of present
petitioner details of which is given in paragraph No.3 , 4
of present petition and further be pleased to pass
consequential order thereof.

(C ) pending admission, hearing and final disposal of

present Special Criminal Application, order de-freezing of
bank accounts of present petitioner details of which is
given in paragraph-3,4 of present petition and further be
pleased to pass consequential order thereof.

(D) Pass such other and further order/s, which may be

just and proper in the interest of justice.”

5. The facts giving rise to this writ application may be

summarized as under;

5.1 One M.J. Christian, Police Inspector, Anti Corruption

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Bureau, lodged the first information report on 01.06.2016 at

the Gandhinagar A.C.B. Police Station against the writ
applicant herein for the offence punishable under section 13(1)
(e) and section 13(2) of the Prevention of Corruption Act read
with section 34 and 109 of the Indian Penal Code,, 1988 and
sections 3,4 and 5 of the Benami Transaction Prohibition Act,
1988.

5.2 The case of the prosecution is that the writ applicant

herein is serving as an Executive Magistrate at Gandhinagar
and he possesses the assets disproportionate to the non-
sources of his income. In the course of the investigation, the
Investigating Officer was able to find out 34 different bank
accounts made in the name of the different persons alleged to
have been used for the commission of the offence. In such
circumstances, the Investigating Officer, in exercise of his
power under section 102 of the Code of Criminal Procedure,
1973, directed the banks concerned to freeze the accounts.
The banks, acting upon the directions issued by the
Investigating Officer, has freezed all the 34 accounts. In such
circumstances, and being aggrieved by such action on the part
of the Investigating Officer, the applicant herein preferred two
applications being Criminal Misc. Applications Nos.849 of 2016
and 850 of 2016 respectively for appropriate orders directing
the banks to de-freeze the accounts. Both the applications
were ordered to be rejected by the Special Judge,
Gandhinagar. Being dissatisfied, the writ applicant has come
up with this writ application.

6. Mr. Tatvam Patel, the learned counsel appearing for the

writ applicants vehemently submitted that the Investigating

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Officer, in the first place, could not have exercised his powers
under section 102 of the Cr.P.C for freezing of the bank
accounts. He would submit that the learned Special Judge also
did not take notice of this position of law and committed an
error in rejecting the applications referred to above. Mr. Patel
submitted that a case of disproportionate wealth could only be
proved from the entries effected in the books of accounts so as
to trace the past bank dealings of the accused and of his near
relatives during the check period, but not freezing the
accounts unless the Investigating Officer is of the view that by
permitting the accused or his relatives to continue to operate
the accounts, any damage would be caused to the entries
already effected in the past, which are relevant for the check
period and, therefore, no purpose would be served in the
progress of investigation by freezing the accounts and
obstructing the accused and his relatives from operating the
accounts abruptly.

7. In support of his submissions, he has placed reliance on

the decision of this Court in the case of Paresha G. Shah vs.
State of Gujarat & Ors., Special Criminal Application No.150
of 2015, decided on 15th June, 2015, a decision of the Madras
High Court in the case of B. Ranganathan vs. State & Ors.,
2003 Criminal Law Journal, 2779 and a Division Bench decision
of the Delhi High Court in the case of Ms. Swaran Sabharwal
vs. Commissioner of Police, 1988 Criminal Law Journal,
241(1).

8. On the other hand, both the writ applications have been

vehemently opposed by Ms. Thakore, the learned APP
appearing for the State. The learned APP would submit that

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the Investigating Officer was well within his power under

section 102 of the Cr.P.C to instruct the banks to freeze the
accounts for the purpose of effective investigation. She would
submit that no error, not to speak of any error of law could be
said to have been committed by the learned Special Judge in
rejecting the two applications filed by the applicants for the
purpose of de-freezing of the bank accounts. Ms. Thakore
submitted that the bank accounts will not be kept freezed for
an indefinite period, but at least, till the time, the charge-sheet
is filed. Ms. Thakore submitted that if this Court is inclined to
permit the applicants to operate their accounts, then the
interest of the prosecution may be protected or safeguarded
by asking the public servant, i.e., the main accused to furnish a
solvent surety of the amount of Rs.20,00,000/-. She submits
that in the course of the investigation, it has revealed that the
total amount in the 34 different bank accounts aggregates to
Rs.20,00,000/-. She submits that probably, in future, few more
bank accounts may surface, said to have been used in the
commission of the offence.

9. Having heard the learned counsel appearing for the

parties and having considered the materials on record, the
only question that falls for my consideration is whether the writ
applicants are entitled to the relief prayed for in the two writ
applications.

10. In the case of Paresha G. Shah (supra), this Court

observed as under;
“Like any other property a bank account is freezable.
Freezing the account is an act in investigation. Like any
other act, it commands and behoves secrecy to preserve
the evidence. It does not deprive any person of his liberty

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or his property. It is necessarily temporary i.e. till the

adequate material is collected. . It clothes the authority
with the power to preserve a property suspected to have
been used in the commission of the offence in any
manner. The property, therefore, requires to be
protected from dissemination, depletion or destruction by
any mode. Consequently, under the guise of being given
information about the said action, no accused, not even a
third party, can overreach the law under the umbrella of
a sublime provision meant to protect the innocent and
preserve his property. It is also not necessary at all that a
person must be told that his bank account, which is
suspected of having been used in the commission of an
offence by himself or even by another, is being frozen to
allow him to have it closed or to have its proceeds
withdrawn or transferred upon such notice.

In the aforesaid context, I may quote with profit a

decision of the Supreme Court in the case of State of
Maharashtra v. Tapas D.Neogy, (1999)7 SCC 685. The
issue before the Supreme Court was, whether a police
officer investigating into an offence can issue prohibitory
order in respect of a bank account of the accused in
exercise of powers under Section 102 of the Code. The
Supreme Court, after an exhaustive consideration of the
provisions of Section 102 of the Code, took the view that
the bank account of an accused or of his relations could
be said to be property within the meaning of sub-section
(1) of Section 102 of the Code. I may quote with profit
the following observations made by the Supreme Court,
as contained in paras 5 to 12 of the judgment :

5. Coming now to the provisions of Section 102 of the

Code of Criminal Procedure, the said provisions are
extracted herein below in extenso:

"Sec.102. Power of Police Officer to seize certain

property. - (1) Any police officer may seize any
property which may be alleged or suspected to
have been stolen, or which may be found under
circumstances which create suspicion of the
commission of any offence. (2)Such police officer, if
subordinate to the officer in charge of a police
station shall forthwith report the seizure to that

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officer. (3) Every Police Officer acting under sub-

sec.(1) shall forthwith report the seizure to the
Magistrate having jurisdiction and where the
property seized is such that it cannot be
conveniently transported to the Court, he may give
custody thereof to any person on his executing a
bond undertaking to produce the property before
the Court as and when required and to give effect
to the further orders of the Court as to the disposal
of the same."

6. A plain reading of sub-section(1) of Section 102

indicates that the Police Officer has the power to seize
any property which may be found under circumstances
creating suspicion of the commission of any offence. The
legislature having used the expression "any property"
and "any offence" have made the applicability of the
provisions wide enough to cover offences created under
any Act. But the two pre- conditions for applicability of
Section 102(1) are that it must be `property' and
secondly, in respect of the said property there must have
suspicion of commission of any offence. In this view of
the matter the two further questions that arise for
consideration are whether the bank account of an
accused or of his relation can be said to be `property'
within the meaning of sub-section(1) of Section 102 of
the Cr.P.C. and secondly, whether circumstances exist,
creating suspicion of commission of any offence in
relation to the same. Different High Courts in the country
have taken divergent views in this regard. In the case of
Ms. Swaran Sabharwal vs. Commissioner of Police,
reported in 1988 Criminal Law Journal(Vol. 94) 241, a
Division Bench of Delhi High Court examined the
question whether bank account can be held to be
`property' within the meaning of Section 102 of the
Cr.P.C. In the said case, proceeds realised by sale of
official secrets were deposited by the accused in his
wife's account. The Court in that case came to hold that
it is not quite sure whether monies deposited in a bank
account can be seized by means of a prohibitory order
under the provisions of Section 102 but even assuming
that a bank account is a `property' within the meaning of
Section 102 of the Code of Criminal Procedure, the
further consideration must be satisfied namely the
property has been found under circumstances which

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create the suspicion of the commission of an offence. But

in that case it is not the discovery of the property that
has created suspicion of commission of an offence but on
the other hand the discovery of the bank account is a
sequel to the discovery of commission of offence
inasmuch as the police suspected that some of the
proceeds realised by the sale of the official secrets have
been passed on to the bank account of the wife of the
accused. Therefore, the Court was of the opinion that the
provisions of Section 102 cannot be invoked. In the case
of M/s. Purbanchal Road Service, Gauhati vs. The State,
reported in 1991Criminal Law Journal (Vol.97) 2798, a
learned Single Judge of the Gauhati High Court examined
the provisions of Section 102 of the Criminal Procedure
Code and the validity of an order by a Police Officer,
prohibiting the bank from paying amount to the accused
from his account. The learned Judge came to the
conclusion that word `seize' used in Section 102 Cr.P.C.
means actual taking possession in pursuance of a legal
process and, therefore, in exercise of the said power, a
bank cannot be prohibited not to pay any amount out of
the account of the accused to the accused nor can the
accused be prohibited from taking away any property
from the locker, as such an order would not be a
`seizure' within the meaning of Section 102 of the
Criminal Procedure Code. The learned Single Judge
agreed with the view taken by Allahabad High Court in
the case of Textile Traders Syndicate Ltd., Bulandshahr
vs. The State of U.P., AIR 1960 Allahabad 405 (Vol.47). In
the Allahabad Case on which Gauhati High Court relied
upon (AIR 1960 Allahabad 405), what was decided by the
Court is, once money passes on from the accused to
some other person or to the bank, money itself becomes
unidentifiable and, therefore, there cannot be any
question of seizure of the same by the Police Officer.

7. In the case of M/s Malnad Construction Co., Shimoga

and Ors. vs. State of Karnataka and Ors., 1994 Criminal
Law Journal(Vol.100) 645, a learned Single Judge of
Karnataka High Court examined the provisions of Section
102 of the Criminal Procedure Code and relying upon the
Gauhati High Court's decision, referred to supra, came to
hold that the `seizure' in Section 102 would mean taking
actual physical possession of the property and such a
prohibitory order to the banker of the accused not to

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operate the account is not contemplated under the Code

and consequently, the police has no power to issue such
order. Thus the High Courts of Karnataka, Allahabad,
Gauhati and Delhi have taken the view that the
provisions of Section 102 of the Criminal Procedure Code
cannot be invoked by the Police Officer in course of
investigation to issue any prohibitory order to the banker
or the accused from operating the bank account.

8. In P.K. Parmar and ors. vs. Union of India and anr.,

1992 Criminal Law Journal 2499 (Vol.98), a learned Single
Judge of Delhi High Court considered the power of police
officer under Section 102 of the Criminal Procedure Code,
in connection with the fraudulent acquisition of
properties and opening of fictitious bank accounts and
withdrawal of huge amounts as subsidy from
Government by producing bogus documents by the
accused. The learned Judge took note of the earlier
decision of Delhi High Court in Ms. Swaran Sabharwal vs.
Commissioner of Police, 1988 Criminal Law Journal 240
(Vol.94), and analysed the provisions of Section 102 of
the Criminal Procedure Code and the facts of the case
were as under. It was revealed that during investigation
the prosecution came to know that without actually
manufacturing phosphate and fertilizers, the accused
withdrew as much as Rs.3.39 crores as subsidy from the
Govt. of India by producing bogus documents. The Court
ultimately came to the conclusion that the recovery of
assets in the bank links prima facie with the commission
of various offences with which they have been charged
by the CBI and, therefore, the police officer could issue
directions to various banks/financial institutions freezing
the accounts of the accused. The learned Judge in the
aforesaid case has really considered the amount of
money which the accused is alleged to have swindled by
producing bogus documents which prompted him to hold
that the power under Section 102 Cr.P.C. can be
exercised.

9. In Bharath Overseas Bank vs. Minu Publication, 1988

Madras Law Weekly (Crl.) 106, a learned Single Judge of
the Madras High Court considered the same question and
came to the conclusion that the expression `property'
would include the money in the bank account of the

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accused and there cannot be any fetter on the powers of

the police officer in issuing prohibitory orders from
operating the bank account of the accused when the
police officer reaches the conclusion that the amount in
the bank is the outcome of commission of offence by the
accused. The Court considered the fact as to how in
modern days, commission of white collar crimes and
bank frauds are very much on the increase and banking
facilities have been extended to the remotest rural areas
and, therefore the expression `property' may not be
interpreted in a manner so as to exclude the money in a
bank which in turn would have the effect of placing legal
hurdles, in the process of investigation into the crimes.
According to the learned Judge, such literal interpretation
of the expression `property' could not have been the
intent of the framers of the Criminal Procedure Code. In
paragraph 11 of the said judgment, the learned Judge
referred to the object behind investing the police with
powers of seizure. It will be appropriate to extract the
same in extenso:
"It would now be useful to refer to the object behind
investing the police with powers of seizure. Seizure
and production in court of any property, including
those regarding which an offence appears to have
been committed or which appears to have been
used for the commission of any offence or any other
property will have a two-fold effect. Production of
the above property may be necessary as evidence
of the commission of the crime. Seizure may also
have to be necessary, in order to preserve the
property, for the purpose of enabling the Court, to
pass suitable orders under S.452 of the Criminal
Procedure Code at the conclusion of the trial. This
order would include destruction of the property,
confiscation of the property or delivery of the
property to any person claiming to be entitled to
possession thereto. It cannot be contended that the
concept of restitution of property to the victim of a
crime, is totally alien to the Criminal Procedure
Code. No doubt, the primary object of prosecution is
punitive. However, Criminal Procedure Code, does
contain several provisions, which seek to re-
imburse or compensate victims of crime, or bring
about restoration of property or its restitution. As
S.452, Crl.P.C. itself indicates, one of the modes of

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disposing of property at the conclusion of the trial,

is ordering their return to the person entitled to
possession thereto. Even interim custody of
property under Ss.451 and 457, Crl.P.C., recognises
the rights of the person entitled to the possession
of the properties. An innocent purchaser for value is
sought to be re-imbursed by S.453, Crl.P.C.
Restoration of immovable property under certain
circumstances, is dealt with under S.456, Crl.P.C.
Even, monetary compensation to victims of crime
or any bona fide purchaser of property, is provided
for under S.357, Crl.P.C. Wherein when a Court
while convicting the accused imposes fine, the
whole or any part of the fine, if recovered, may be
ordered to paid as compensation to any person, for
any lose or injury, caused by the offence or to any
bona fide purchaser of any property, after the
property is restored to the possession of the person
entitled thereto. This two fold object of investing
the police with the powers of seizure, have to be
borne in mind, while setting this legal issue."

10.This Judgment of the learned Single Judge of the Madras

High Court was followed in a later decision in the case of
Bharat Overseas Bank Ltd. vs. Mrs.Prema Ramalingam,
1991 Madras Law Weekly (Criminal) 353, wherein the
learned Judge agreeing with Padmini Jesudurai, J in
Bharat Overseas Bank's case came to hold that money in
bank account is `property' within the meaning of Section
102 of the Criminal Procedure Code, which could be
seized by prohibiting order. In the aforesaid case, the
learned Judge has also noticed the fact that the Judgment
of Padmini Jesudurai, J, in 1988 LW(Crl.)106, was upheld
by the Division Bench subsequently.
11. In the case of Dr. Gurcharan Singh vs. The State of
Punjab, 1978(80) Punjab Law Reporter, 514, a Division
Bench of the Punjab & Haryana High Court differing with
the view taken by the Allahabad High Court in AIR 1960
Allahabad 405, came to hold that the bank account would
be `property' and as such would be capable of being
seized under Section 102 of the Code of Criminal
Procedure.
12. Having considered the divergent views taken by
different High Courts with regard to the power of seizure

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under Section 102 of the Code of Criminal Procedure, and

whether the bank account can be held to be `property'
within the meaning of said Section 102(1), we see no
justification to give any narrow interpretation to the
provisions of the Criminal Procedure Code. It is well
known that corruption in public offices has become so
rampant that it has become difficult to cope up with the
same. Then again the time consumed by the Courts in
concluding the trials is another factor which should be
borne in mind in interpreting the provisions of Section
102 of the Criminal Procedure Code and the underlying
object engrafted therein, inasmuch as if there can be no
order of seizure of the bank account of the accused then
the entire money deposited in a bank which is ultimately
held in the trial to be the outcome of the illegal
gratification, could be withdrawn by the accused and the
Courts would be powerless to get the said money which
has any direct link with the commission of the offence
committed by the accused as a public officer. We are,
therefore, persuaded to take the view that the bank
account of the accused or any of his relation is `property'
within the meaning of Section 102 of the Criminal
Procedure Code and a police officer in course of
investigation can seize or prohibit the operation of the
said account if such assets have direct links with the
commission of the offence for which the police officer is
investigating into. The contrary view expressed by
Karnataka, Gauhati and Allahabad High Courts, does not
represent the correct law. It may also be seen that under
the Prevention of Corruption Act, 1988, in the matter of
imposition of fine under sub-section (2) of Section 13, the
legislatures have provided that the Courts in fixing the
amount of fine shall take into consideration the amount
or the value of the property, which the accused person
has obtained by committing the offence or where the
conviction is for an offence referred to in clause (e) of
sub- section(1) of Section 13, the pecuniary resources or
property for which the accused person is unable to
account satisfactorily. The interpretation given by us in
respect of the power of seizure under Section 102 of the
Criminal Procedure Code is in accordance with the
intention of the legislature engrafted in Section 16 of the
Prevention of Corruption Act referred to above. In the
aforesaid premises, we have no hesitation to come to the
conclusion that the High Court of Bombay committed
error in holding that the police officer could not have

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seized the bank account or could not have issued any

direction to the bank officer, prohibiting the account of
the accused from being operated upon. Though we have
laid down the law, but so far as the present case is
concerned, the order impugned has already been given
effect to and the accused has been operating upon his
account, and so, we do not interfere with the same.

At this stage, it deserves to be noted that the Supreme

Court considered a Division Bench decision of the Delhi
High Court in the case of Swaran Sabharwal v.
Commissioner of Police, 1988 Cri.L.J. 241 (Del).The
Division Bench of the Delhi High Court took the view that
the suspicion of an offence did not arise on account of
discovery of the property (bank account). There were no
circumstances attendant upon the bank account or its
operation that had led the officer to suspect that some
offence had been committed somewhere. The discovery
of the bank account was a sequel to the discovery of the
commission of the offence. The police suspected that
some of the proceeds realized by the sale of official
secrets had been passed on to the petitioner by her
husband. The Division Bench of the Delhi High Court
finally concluded that it was not sufficient to attract 102
of the Code as it could not be said that the bank account
had been traced or discovered in circumstances which
had made the police aware of the commission of an
offence.”

11. In the Devision Bench decision of the Delhi High Court in

the case of Ms. Swaran Sabharwal (supra), the Court observed
as under;

“6. We are not able to accept this argument. In the first

place, we are not quite sure whether monies deposited in
a bank account can be "seized" by means of a prohibitory
order as has been done in the present case under the
provision of section 102. But assuming that a bank account
is "property" within the meaning of the section, it should
be property "found under circumstances which create the
suspicion of the commission of an offence", to justify
under section 102. In other words, it applies where a police
officer comes across certain property in circumstances

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which create in his mind a suspicion that an offence has

been committed. Thus in the cases cited by counsel,
action under section 102 was upheld where a public
servant was found in possession of moneys in his bank
account far in excess of his known source of income,
when a person was found in possession of a large
quantity of small coins for sale in contravention of the
defense of India Rules, where a trader was found to have
stored a large number of bags of rice in contravention of
rules and orders and where a person was found standing
on a public road with a bag containing several bundles of
the currency notes. The position here is different. Here, it
is not the discovery of the property that has created the
suspicion of an offence. There are no circumstances
attended upon the bank account or its operation that
have held the officer to suspect that some offence has
been committed somewhere. The discovery of the bank
account hear is a sequel to the discovery of the
commission of the offence. The police suspect that some
of the proceeds realised by the sale of official secrets
have been passed on to the petitioner by her husband.
This, we think, is not sufficient to attract section 102 as it
cannot be said that the bank account has been traced or
discovered in circumstances which have made the police
aware on the commission of an offence.

7. We may further point out that no justification seems to

exist for "seizing" the amounts in the bank account. All
that the respondents seem to want to establish from the
bank account is that some funds were transferred by the
petitioner's husband to her. This can be proved at any
time by comparison of the two account and since the
entries in the accounts are always available, no purpose
seems to be served by restarting the operation of the
bank account. Since, as we point out below, it is not the
case of the moneys in the bank constitute "case
property", i.e., the property involved in the commission
of the crimes with which Ram Swarup is charged, the
seizure of the monies by the issue of a prohibitory order
can not be upheld.

8. Again even if the provisions of section 102 are held

applicable, the respondents have not followed the
requirements of the section. Reading that provision, by
adapting in to the case of seizure of a bank account, the

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police officer should have done two things : he should

have informed the concerned magistrate forthwith
regarding the prohibitory order. He should have also give
notice of the seizure to the petitioner and followed her to
operate the bank account subject to her executing a
bond undertaking to produce the amounts in court as
and when required or to hold them subject to such orders
as the court may make regarding the disposal of the
same. This was not done. Even a copy of the prohibitory
orders was not given to the petitioner. The police did not
seek the directions of the Magistrate trying the offence.
Not only that, when the petitioner herself approached the
Magistrate who was trying the petitioner's husband under
the official Secrets Act, her request to be allowed to
operate the account was opposed by the police
contending that the bank account was not "case
property" and that the petitioner's remedies lay
elsewhere than in the court of the Magistrate. The
Magistrate accepted the plea of the police and dismissed
the application of the petitioner and directed to seek
remedy elsewhere before the appropriate authority. The
petitioner having lost before the Magistrate, had no other
recourse except to file a writ petition praying for the
setting aside of the prohibitory order. “

12. It may not be out of place to state that the Devision

Bench decision of the Delhi High Court referred to above has
been considered in the case of Paresha G. Shah (supra) and
distinguished. The case of Paresha G. Shah (supra) arose from
the proceedings under the Prevention of Money Laundering
Act.

13. In B. Ranganathan (supra), a learned Single Judge of the

Madras High Court took the view that a case of
disproportionate wealth could only be proved from the entries
effected in the books of accounts so as to trace the past bank
dealings of the accused and of his near relatives during the
check period, but not freezing the accounts unless the

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Investigating Officer is of the view that by permitting the

accused or his relatives to continue to operate the accounts,
damage would be caused to the entries.

14. Again, at this stage, it may not be out of place to state

that such apprehension has not been expressed by the
Investigating Officer.

15. Ms. Thakore, the learned APP, clarify that out of 34 bank
accounts, ordered to be freezed, the entries of 27 such
accounts have been obtained and they are under scrutiny
through the financial adviser, whereas the entries of the
balance 7 accounts are yet to be scrutinized.

16. In B. Ranganathan (supra), the court held as under;

“12. From the import of the Section 13 of the said Act

barely dissected, it is clear that Section 13(2) is the penal
Section for the commission of an offence under Section
13(1)(e) which offers an opportunity for the public servant
to satisfactorily account for either the pecuniary
resources or property disproportionate to his known
sources of income thereby meaning that in these types of
cases of acquisition or being in possession of
disproportionate wealth to the known sources of income,
the cases could only be registered on reasonable
suspicion and could be proved subject to the opportunity
for the accused to satisfactorily account for the same and
therefore prima facie no case could be made out by the
prosecution bluntly either on registering a case or even
during the course of investigation since according to the
warranting ingredients of the Section, the accused
cannot be preliminarily held to have committed the
offence as it could be in other cases arising out of the IPC
or the other criminal acts or even from out of the
Prevention of Corruption Act itself. Therefore, the framers of
law have been careful enough to impose a pre-condition
or a subjective clause to the effect that the commission

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of the offence by the accused could only be complete,

provided on a fair and reasonable opportunity being
afforded to the public servant in spite of which if he fails
to satisfactorily account for the pecuniary resources after
the case has been put up by the prosecution but not on a
case being registered on suspicion. Therefore, on a case
registered on reasonable suspicion of the accused being
in possession of property disproportionate to his known
sources of income, the pecuniary resources of which he
cannot satisfactorily account for, it is not correct to
conclude that either the commission of offence is
complete as it is in most of the other cases or could it be
said that the Investigating Officer shall have all such
freedom as he would have in other cases in the exercise
of such powers pending investigation.
13. From this background, the case of the petitioner has
to be studied in the context of Sections 17 and 18 of the
Prevention of Corruption Act and Section 102 of the Code
of Criminal Procedure. Regarding the freezing of the bank
accounts operated by the petitioner and his family
members hitherto, it has become necessary on the part
of this Court to ascertain the powers and juris diction of
the Investigating Officer particularly in view of the fact
that the first respondent/ Investigating Officer is the
Inspector of Police in rank, and therefore it is relevant to
consider the authorisation granted by the Superintendent
of Police, Directorate of Vigillance and Anti corruption
Special Investigation Cell and the very freezing order
passed by the first respondent.
14. No doubt, the Superintendent of Police, Vigillance
and Anti Corruption, in exercise of his powers conferred
under Section 18 of the Prevention of Corruption Act,
1988, has empowered the first respondent to investigate
an offence specified under Section 17 of the said Act
against the petitioner and to exercise powers under
Section 18 of the Prevention of Corruption Act `for the
purpose of investigation into such offences to inspect any
Bankers' Book in so far as they relate to the accounts of
the person suspected to have committed those offences
and of any other persons suspected to be holding money
on behalf of such person and to take or cause to be taken
certified copies of the relevant entries, therefrom ...
considered necessary for the purpose of the investigation
into aforesaid offences.' No explanation need be
necessary that the specific acts that the first respondent/

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Inspector is empowered to do are spelt out in the above

authorisation made by the Superintendent of Police,
Vigillance and Anti Corruption Special Cell, in his letter
dated 16.8.2002, which does not, in any manner,
empower the first respondent to freeze the accounts
operated by the petitioner and his family members.

15. However, based on this authorisation given by the

Superintendent of Police, Vigillance and Anti Corruption
Special Investigation Cell, Chennai, the first respondent
has not only carried out the searches at various places
during the course of investigation, during which the first
respondent would allege that the bank accounts
numbering six in different persons' names and
businesses have been detected and pursuant to the
detection of the operation of the said accounts, the first
respondent Inspector of Police has caused the requisition
to the respective Banks to freeze the said six accounts
and that the account holders should not be allowed to
operate the accounts.

16. The point that is to be ascertained is `whether the

first respondent could exercise his power and jurisdiction
to that extent as to freeze the accounts of not only the
petitioner, who is an accused but also the other family
members or the businesses?'
17. At the outset, it may be remembered that the first
respondent has not been specifically empowered or
authorised to do such acts of freezing the accounts or
obstruct the account holders from operating the accounts
and while so, it has to be considered `whether the
authorisation made by the Superintendent of Police,
dated 16.8.2002 implies such powers to be exercised by
the first respondent/Inspector of Police, who is
empowered to investigate into the case?'
18. The authorisation given by the Superintendent of
Police to the first respondent is specific to the effect of
carrying out certain acts for the purpose of investigation
that is to inspect any bankers' book and to take the
copies of the relevant entries therefrom, which are
considered necessary for the purpose of the investigation
into the aforesaid offences. It could be stated that if
freezing of the accounts would have also been thought of

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by the authorising Officer, in one sentence, he could

have included the freezing of the accounts of the
petitioner and others also in the said authorisation letter.
But it was not intended on the part of the empowering
authority, the Superintendent of Police, Vigillance and
Anti Corruption Special Investigation Cell and therefore it
is safe to conclude that the said Superintendent of Police
has not authorised the first respondent/Inspector of
Police with such drastic powers to be exercised by him
since the empowering officer would have thought of
serious consequences to follow in the aftermath of such
drastic steps taken by the Inspector of Police. The
Superintendent of Police would have also further
considered that for the purpose of the case of the
possession of disproportionate wealth to the known
sources of income, the object sought to be achieved is to
prove from the sources of income whether
disproportionate wealth has been acquired by the
accused or in his possession by inspection of bankers'
book and by certified copies of the relevant entries taken
and not freezing the accounts or obstructing the account
holder from running his life or day-to-day business or in
operating the accounts since he is susceptible to be
crippled and thrown out of his routine by such unwanted
drastic steps falsely initiated by the first respondent
without there being anything to achieve by such acts.
19. A case of disproportionate wealth could only be
proved from the entries effected in the books of accounts
so as to trace the past bank dealings of the accused and
of his near relatives during the check period but not
freezing the accounts unless the Investigating Officer is
of the view that by permitting the accused or his
relatives to continue to operate the accounts any
damage would be caused to the entries already effected
in the past which are relevant for the check period and
therefore no purpose is also going to be served in the
progress of investigation by freezing the accounts and
obstructing the accused and his relatives from operating
the accounts abruptly. The net result would be that the
daily routine of personal life or business of the account
holders would be paralysed with no scope for making any
progress in the investigation by such of the acts of
ordering to freeze the accounts. Therefore, at this
juncture, the only conclusion that could be arrived at by
this Court is that neither the first respondent is

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authorised to indulge in such acts of freezing the bank

accounts of the petitioner and his family members as per
the authorisation made by the Superintendent of Police,
dated 16.8.2002 nor could the first respondent assume
such powers himself and therefore it is safe to conclude
that the act perpetrated by the first respondent in
freezing the accounts of the petitioner and others listed
herebefore is without authorisation and without
jurisdiction and they could be termed only as illegal.

20. At this juncture, it is relevant to point out from the

proviso to Section 18 of the Prevention of Corruption Act,
1988 which is specific to the effect that `no power under
this section in relation to the accounts of any person shall
be exercised by a police officer below the rank of a
Superintendent of Police, unless he is specially
authorised in this behalf by a police officer of or above
the rank of a Superintendent of Police.' No clarification is
required that this proviso to Section 18 requires special
authorisation by officer not less than the rank of
Superintendent of Police to any police officer who is
below the rank of Superintendent of Police. Since as
aforementioned, the first respondent is not specifically
authorised by the Superintendent of Police, the
requisition made by him to the banks to freeze the
accounts of the petitioner and others mentioned in his
letter dated 3.1.2003 is an act done in excess than what
he was empowered or not authorised to and the same is
illegal.
21. Yet another legal aspect pointed out on the part of
the petitioner by his counsel is the procedure that is to
be adopted on seizure of bank account. In case of seizure
of a bank account, the police officer should do two
things: he should inform the concerned Magistrate
forthwith regarding the prohibitory order. He should also
give notice of the seizure to the accused and allow
him/her to operate the bank account subject to his/her
executing a bond undertaking to produce the amounts in
court as and when required or to hold them subject to
such orders as the court may make regarding the
disposal of the same. An order under Section 102,
without doing so is liable to be set aside, as held in
Ms.SWARAN SABHARWAL vs. COMMISSIONER OF POLICE
reported in 1988 Crl.L.J.241 (Delhi) (extracted supra).

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This procedure that is to be followed and felt mandatory

has also not been followed by the first respondent.”

17. I also take notice of an order passed by a Co-ordinate

Bench of this Court in the very same case, wherein the bank
account of a partnership firm was ordered to be freezed since
the Investigating Officer noticed that the son of the public
servant is one of the partners in the said partnership firm. The
partnership firm, being dissatisfied with such action, had to
come before this Court, and this Court, vide judgment and
order dated 2nd September, 2016 passed in the Special
Criminal Application No.6404 of 2016, held as under;

“Section 102 of the Code of Criminal Procedure at

the outset deserves reference and reproduction,
which is as under:-
102. Power of police officer to seize certain
property.-(1) Any police officer may seize any
property which may be alleged or suspected to
have been stolen, or which may be found under
circumstances which create suspicion of the
commission of any offence.
2. Such police officer, if subordinate to the officer in
charge of a police station, shall forthwith report
the seizure to that officer.
3. Every police officer acting under sub-section (1)
shall forthwith report the seizure to the
Magistrate having jurisdiction and where the
property seized is such that it cannot be
conveniently transported to the Court or where
there is difficulty in securing proper
accommodation for the custody of such property,
or where the continued retention of the property
in police custody may not be considered
necessary for the purpose of investigation, he
may give custody thereof to any person on his
executing a bond undertaking to produce the
property before the Court as and when required
and to give effect to the further orders of the
Court as to the disposal of the same:

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Provided that where the property seized under

sub-section (1) is subject to speedy and natural
decay and if the person entitled to the
possession of such property is unknown or
absent and the value of such property is less
than five hundred rupes, it may forthwith be sold
by auction under the orders of the
Superintendent of Police and the provisions of
sections 457 and 458 shall, as nearly as may be
practicable, apply to the net proceeds of such
sale.
4. The Apex Court in the case of State of
Maharashtra vs. Tapas D. Neogy reported in
(1999) 7 SCC 685 was considering the
applicability of section 102 of the Code of Criminal
Procedure to hold that if circumstances exist in
relation to the Bank Account, section 102(1) of the
Code is attracted empowering police officer
investigating the offence to seize the bank account
and issue order prohibiting the account from being
operated upon if such assets have direct links with
the commission of offence for which the police
officer is investigating into.

Profitable it would be to reproduce the relevant

findings and observations of the Apex Court in the
said matter, which reads as under:-

The law relating to the prevention of corruption

and matters connected therewith were being
dealt with by the Prevention of Corruption Act,
1947, which was amended in the year 1964
based on the recommendations of the
Santhanam Committee. In the Criminal Law
Amendment Ordinance, 1944, there are
provisions to enable attachment of ill-gotten
wealth obtained through corrupt means,
including from transferees of such wealth. To
make the existing anti corruption laws more
effective by widening their coverage and by
strengthening the provisions, the Parliament
enacted the Prevention of Corruption Act, 1988,
which received the assent of the President of
India on September 9th 1988. Under the Act, the
definition of the expression "public servant"
stood widened and penalty for offences under

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Sections 161 to 165A of the Indian Penal Code

was enhanced. Under Section 13 of the Act, a
public servant who commits criminal misconduct,
is liable to be punished with imprisonment for a
term which shall be not less than one year but
which may extent to seven years and shall also
be liable to fine. Without providing the amount of
fine which could be imposed under sub-section
(2) of Section 13 the legislature have indicated
the matters to be taken into consideration for
fixing the fine under Section 16 of the Act and it
categorically provides that for fixing the amounts
of fine under sub-section (2) of Section 23 or
Section 14, the Court shall take into
consideration the amount or the value of the
property which the accused person has obtained
by committing the offence. Under Section 18 of
the Act, power has been conferred on the Police
Officer to inspect any bankers book and to take
or cause to be taken certified copies of the
relevant entries therefrom and the bank
concerned shall be bound to assist the police
officer in the exercise of his powers under
Section 18. Under Section 22 of the Act, the
provisions of the Code of Criminal Procedure
have been made applicable to any proceeding in
relation to an offence punishable under the Act."
"We have analysed the aforesaid provision of the
Prevention of Corruption Act, 1988 as in our view
the object engrafted in the different provisions of
the Prevention of Corruption Act, 1988 has to be
taken into account while interpreting the
provisions contained in Section 102 of the Code
of Criminal Procedure."
4. "There is no specific provision in the Act itself as
to how or in what manner the said property can
be dealt with by the Investigating Officer even if
he comes to the conclusion that the assets in the
possession of the "public servant" is directly
linked with the commission of the offence. It is
therefore, only by applying the provisions of
Section 102 of the Criminal Procedure Code if the
said provision is held to be conferring power of
seizing and or prohibition operation of bank
account, the Investigating Officer can pass order
of seizing the bank account or issue prohibitory

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orders to the banks not allow the account holder

to operate the account."
xxx xxx xxx
xxx xxx xxx
12. Having considered the divergent views taken
by different High Courts with regard to the power
of seizure under Section 102 of the Code of
Criminal Procedure, and whether the bank
account can be held to be property within the
meaning of said Section 102(1), we see no
justification to give any narrow interpretation to
the provisions of the Criminal Procedure Code. It
is well known that corruption in public offices has
become so rampant that it has become difficult
to cope up with the same. Then again the time
consumed by the Courts in concluding the trials
is another factor which should be borne in mind
in interpreting the provisions of Section 102 of
the Criminal Procedure Code and the underlying
object engrafted therein, inasmuch as if there
can be no order of seizure of the bank account of
the accused then the entire money deposited in
a bank which is ultimately held in the trial to be
the outcome of the illegal gratification, could be
withdrawn by the accused and the Courts would
be powerless to get the said money which has
any direct link with the commission of the
offence committed by the accused as a public
officer. We are, therefore, persuaded to take the
view that the bank account of the accused or any
of his relation is property within the meaning of
Section 102 of the Criminal Procedure Code
and a police officer in course of investigation can
seize or prohibit the operation of the said
account if such assets have direct links with the
commission of the offence for which the police
officer is investigating into. The contrary view
expressed by Karnataka, Gauhati and Allahabad
High Courts, does not represent the correct law.
It may also be seen that under the Prevention of
Corruption Act, 1988, in the matter of imposition
of fine under sub-section
(2) of Section 13, the legislatures have provided
that the Courts in fixing the amount of fine shall
take into consideration the amount or the value
of the property, which the accused person has

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obtained by committing the offence or where the

conviction is for an offence referred to in clause
(e) of sub- section(1) of Section 13, the
pecuniary resources or property for which the
accused person is unable to account
satisfactorily. The interpretation given by us in
respect of the power of seizure under Section
102 of the Criminal Procedure Code is in
accordance with the intention of the legislature
engrafted in Section 16 of the Prevention of
Corruption Act referred to above. In the aforesaid
premises, we have no hesitation to come to the
conclusion that the High Court of Bombay
committed error in holding that the police officer
could not have seized the bank account or could
not have issued any direction to the bank officer,
prohibiting the account of the accused from
being operated upon. Though we have laid down
the law, but so far as the present case is
concerned, the order impugned has already been
given effect to and the accused has been
operating upon his account, and so, we do not
interfere with the same.
4. In wake of this judgment it can be held that the
officer concerned would definitely have the power
of seizure of the bank account of any of the accused
or of his relatives for the same being property
within the meaning of section 102 of the Code of
Criminal Procedure, and therefore, it would not be
correct to say that the officer concerned would have
no authority under section 102 of the Code of
Criminal Procedure even if such assets have direct
links with the commission of offence for which
investigation is going on.
5. So far as the investigations in relation to the
account of the present petitioner firm are
concerned, the Court needs to notice that those
persons who are alleged as accused, presently are
under the scanner of the Investigating Officer.
Investigating Officer would be within his right to
seize or prohibit operation of any of those accounts,
if such assets have direct links with the commission
of offence for which he is investigating the matter.
However, before the account of the partnership firm
is actually seized, the Court also must bear in mind
75% of the portions of the share in the profit and

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loss of the partnership business is of those partners,

who have so far nothing to do with the crime in
question. Since some of the accused are already
partners, the officer would surely be entitled to
scrutinize the entire gamut of facts and also
particularly the entries effected in the books of
accounts to know the past dealings of the accused
through banking channel and can make a request
to the Bank for getting all the details of those
partners.
6. Some of the safeguards against such extreme step
of abrupt seizure are (i) Intimating the concerned
Magistrate forthwith regarding this prohibition order
and (ii) giving of notice of seizure to the accused
and (iii) allowing him to operate, subject to his
furnishing the bank guarantee with an undertaking
of producing the amount, allegedly linked with the
crime, in Court as and when required as directed
along the line prescribed by the Delhi High Court in
the case of Ms.Swaran Sabharwal vs.
Commissioner of Police reported in 1988
Cri.L.J.241(1).
7. Learned Additional Public Prosecutor submits that
certified copy of the entire account is likely to be
made available to the investigating officer by
tomorrow. It is also urged that screening of the
certified copies would also require minimum 8 to 10
days time. This Court notices that more than the
seizure, the screening of the account is a very
serious step and so far, except the fact that some of
the accused are the partners of this firm, complicity
of other partners is also yet not coming on record.
The daily business work stood paralyzed due to this
order of freezing of account. The Investigating
Officer at the most would be entitled to insist on
freezing of the account to the extent of amount of
Rs.1.44 crore considering the case of
disproportionate wealth.
8. Resultantly, the following operative order:-

(a) The order directing freezing of the account

NO.01320104221 of the partnership firm is quashed
on the condition that the petitioner firm shall
separately open an account with the amount of
Rs.1.44 crores which shall not be touched by the
partnership firm till further order from the

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competent Court. Alternatively, the Investigating

Officer may also insist on petitioner furnishing bank
guarantee of the said amount of Rs.1.44 crore with
an undertaking to produce before the Court as and
when required.
(b) In wake of first alternative, the said amount of
Rs. 1.44 crore shall be invested in a nationalised
bank by way of a fixed deposit by the bank
concerned in the name of the firm itself. The fixed
deposit receipt shall be handed over to the
Investigating Officer, who shall retain it as a seized
property.
(c) Initially, such fixed deposit shall be for a period
of one year and the same shall be extended with a
direction of the concerned Court on expiry of such
period, if the final report by then is not submitted.
(d) The officer concerned shall make a request to
the concerned Bank to expeditiously provide him
with the certified copy of the entire account at an
appropriate time. If he is in a position to point out
the complicity of any of the partners in the crime in
question, on issuance of notice, he shall be
permitted to take the steps in accordance with law.
(e) The Investigating Officer shall intimate the
learned Magistrate concerned forthwith of this step
of freezing of account and subsequent
development. He shall keep the concerned Court
appraised of the development thereafter in future
as well.”

18. Without going into any further controversy, I am of the

view that the ends of justice would be met if the applicant of
the Special Criminal Application No.196 of 2017, i.e., the main
accused is directed to execute a bond of Rs.20,00,000/- with a
solvent surety of the like amount to the satisfaction of the
Special Judge, Gandhinagar. I, accordingly, direct the writ
applicant of the Special Criminal Application No.196 of 2017 to
act accordingly. He shall execute the bond of the amount of
Rs.20,00,000/- with the solvent surety of the like amount to the
satisfaction of the learned Special Judge, Gandhinagar within a

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period of eight days from today. No sooner the main accused,

i.e., the writ applicant of the Special Criminal Application
No.196 of 2017 furnishes such solvent surety, the Investigating
Officer shall inform the banks concerned to de-freeze the
accounts and permit the account holders to operate their
accounts. Each of the writ applicants herein, including the
other bank account holders, are directed that they shall not
cause any damage to the entries, which are already effected in
the past and are relevant for the check period.

19. Both the writ applications are, accordingly, disposed of.

Rule is made absolute to the aforesaid extent.

Direct service is permitted.

(J.B.PARDIWALA, J.)

Vahid

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