M/S. Sohan Marketing vs. The State Of Andhra Pradesh

Held

The Court allowed the writ petition, holding that the indefinite freezing of the petitioners' bank accounts was neither legally permissible nor investigatively productive. The Court found force in the petitioners' submission that Section 102 of the Cr.P.C. was not applicable for an indefinite freeze, especially when the investigation had been ongoing for over a year without plausible material justifying the continuation of the freeze. The Court noted that the investigating authority had already obtained the required material from the bank and the petitioners. The Court reasoned that continued freezing would not provide any specific advantage to the investigation and would cause severe hardship to the petitioners' business operations. The Court directed the respondents to de-freeze the petitioners' bank accounts and permit them to operate them. However, the Court clarified that this order did not preclude the 2nd respondent from continuing the investigation and prosecuting the petitioners if they were ultimately found guilty.

Facts

The petitioners, proprietors of businesses dealing in fishing nets and materials, supplied goods to fishermen who obtained loans under the Mudra Scheme. The fishermen alleged they received less value than promised and filed a complaint leading to an FIR against mediators and a bank manager. The petitioners were later implicated in a remand report. The petitioners' bank accounts were frozen by the 3rd respondent Bank based on a letter dated 24.09.2018 from the 2nd respondent, an investigating authority. The petitioners argued their role was limited to supplying goods as per invoices, and they had paid all statutory taxes, including GST. They contended the freezing of accounts was illegal and detrimental to their business. The investigation into the FIR was ongoing.

Key Issues

1. Whether the 2nd respondent's action of directing the 3rd respondent Bank to freeze the petitioners' bank accounts under Section 102 of the Cr.P.C. is illegal, arbitrary, and contrary to law, given the ongoing investigation and the nature of the petitioners' alleged involvement? Petitioner's arguments: The petitioners contended that Section 102 of the Cr.P.C. was wrongly invoked for an indefinite freeze of bank accounts, especially when their role was limited to supplying goods. They argued that if their complicity was established, they could be prosecuted, but the indefinite freezing was not legally permissible and severely hampered their business operations. They asserted that the freeze was purposeless and hazardous to their business activities. Revenue/State's arguments: The judgment does not record specific arguments made by the revenue or state, other than their actions leading to the freezing of the accounts.