Sri Darshan Kothari vs. The State Of Telangana

Held

The High Court held that while it has the power to entertain writ petitions involving questions of fact, it cannot adjudicate complicated questions of fact, especially when disputed facts exist. The Court noted that the Investigating Officer suspected the petitioner's Paytm account as a suspect account in the crime and had issued a notice to freeze it under Section 91 of the Cr.P.C. to obtain documents. The Court found that there were disputed questions of fact regarding the petitioner's role and the nature of the transactions in his account, which could not be adjudicated in writ jurisdiction. Therefore, the Court was not inclined to set aside the impugned notice. However, considering that the petitioner was unable to operate his account and the investigation in Cr.No. 1432 of 2020 was complete, the Court directed the Investigating Officer to complete the investigation concerning the petitioner's role in any loan app fraud cases expeditiously, preferably within four weeks. If the petitioner was found not to have committed any offence, the Investigating Officer was to direct the defreezing of the account. The petitioner was also granted liberty to file an application under Section 451 of the Cr.P.C. before the competent court for defreezing his account. The Court explicitly stated that the Investigating Officer cannot call for incriminating material from an accused under Section 91 of the Cr.P.C.

Facts

The petitioner, Sri Darshan Kothari, filed a writ petition challenging the action of the Cyber Crime Police Station (Respondent No. 2) directing Paytm (Respondent No. 3) to freeze his bank account. This action was taken pursuant to a complaint registered as Cr.No. 1432 of 2020 for offences under the Telangana State Gaming Act and IPC, related to online gambling and loan app fraud. The petitioner stated he is a part-time crypto currency trader and not an accused in the registered case or charge sheet. He argued that crypto currency trading is not prohibited and cited a Supreme Court judgment. The police, however, maintained that the account was suspect due to widespread loan app fraud and harassment leading to suicides in Telangana, with investigations revealing Chinese nationals using Indian directors to operate these apps. The petitioner sought to have his account unfrozen.

Key Issues

1. Whether the freezing of the petitioner's Paytm account by the Respondent No. 2 directing Respondent No. 3 is illegal, arbitrary, unconstitutional, and in violation of the petitioner's fundamental rights under Articles 14, 19(1)(g), and 21 of the Constitution of India, particularly in light of the petitioner not being an accused in the registered FIR and charge sheet. Petitioner's arguments: The petitioner contended that his crypto currency trading is legal, citing the Supreme Court's decision in Internet and Mobile Association of India Vs. Reserve Bank of India. He further argued that since he is not named as an accused in the FIR or charge sheet, freezing his account is unjustified. He also highlighted that the sale and purchase of crypto currency are not prohibited. Revenue/State's arguments: The respondents argued that the freezing of the account was a necessary step during the investigation of loan app fraud, which has led to serious consequences, including suicides. They asserted that the account was suspected to be involved in the alleged illegal activities, and the police have the power to seize suspect property during an investigation. They also pointed to the broader context of widespread loan app fraud and the involvement of foreign nationals.