M/S Imz Corporate Private Limited vs. State Of Bihar Through Principal Secretary,Deptt. Of Home,Govt. Of Bihar,Main Secretariat,Patna S.P

Held

The Court held that the direction issued by the Investigating Officer (IO) to the banks to freeze the petitioner company's bank accounts was not legally tenable and constituted an arbitrary exercise of power. The Court found that, at that stage of the investigation, there was no material collected showing prima facie that IMZ Corporate Pvt. Ltd. had received any money from clients allocated to MSD Telematics Pvt. Ltd. or that the money deposited in its accounts were proceeds of crime. The Court noted that Section 102 Cr.P.C. confers a drastic power which must be exercised in aid of investigation, not to punish the accused before collecting sufficient materials. The Court emphasized that the allegations were not of stealing property but of conspiracy and use of forged documents, and that the materials before the Court did not establish a reasonable suspicion that the bank accounts contained proceeds of crime. The Court directed respondents nos. 6 & 7 (banks) to allow the petitioner no. 1 to operate its bank accounts in the usual course of business. The Court clarified that this decision was for the purpose of the present application and did not constitute an opinion on the merits of the case. It also stated that it would be open for the IO to take appropriate action under Section 102 Cr.P.C. if further investigation yielded materials necessitating it. The writ application was allowed.

Facts

M/s IMZ Corporate Private Limited (petitioner) and its authorized representative filed a writ petition seeking directions to unfreeze its bank accounts, which had been frozen by the police based on an FIR registered by Siddharth Kasana (respondent no. 8). The FIR alleged misappropriation of funds by Ashmeet Singh, who allegedly floated IMZ Corporate Pvt. Ltd. to run a parallel business while still employed with MSD Telematics Pvt. Ltd. The informant claimed that IMZ Corporate Pvt. Ltd. was incorporated with a conspiracy and used forged documents to divert funds. The petitioner argued that the freezing of accounts was arbitrary and lacked sufficient material evidence. The police, through the Investigating Officer (IO), had directed the banks (respondents nos. 6 & 7) to freeze the accounts.

Key Issues

1. Whether the direction issued by the Investigating Officer to the banks to freeze the bank accounts of the petitioner company was legally tenable and based on sufficient materials creating reasonable suspicion of commission of an offence, under Section 102 Cr.P.C.? Petitioner's Arguments: The petitioner contended that the freezing of their bank accounts was an arbitrary exercise of power by the police. They argued that the allegations in the FIR were not substantiated by sufficient material evidence to warrant such a drastic measure. The petitioner highlighted inconsistencies in the informant's complaint, particularly regarding the resignation date of Ashmeet Singh and the nature of the alleged diversion of funds. They asserted that the police acted in "hot haste" without proper analysis of the available documents and that the funds in their accounts were not proceeds of crime. Revenue/State's Arguments: The State, represented by the police, argued that the freezing of accounts was a necessary step in the investigation of a serious economic offence involving alleged misappropriation and use of forged documents. While the judgment does not explicitly detail the State's arguments on the legal tenability under Section 102 Cr.P.C., it is implied that they believed the FIR and initial investigation provided sufficient grounds for seizing the property (bank accounts) suspected to be involved in the commission of an offence.