Case Note & Summary
The petitioners, Manish Khandelwal, Sunil Khandelwal, and B.M. Financial Services (I) Pvt. Ltd., filed a Criminal Writ Petition before the Bombay High Court challenging the judgment and order dated 19th March 2018 passed by the learned Additional Sessions Judge, City Civil and Sessions Court at Mumbai in Revision Application No. 795 of 2016, which rejected their application for defreezing their bank accounts. The petitioners' bank accounts were frozen by the Economic Offences Wing of the State of Maharashtra in connection with an investigation into a complaint of cheque bouncing under Section 138 of the Negotiable Instruments Act, 1881. The petitioners argued that the freezing of accounts under Section 102 of the Code of Criminal Procedure, 1973 was illegal because the offence under Section 138 NI Act is non-cognizable and bailable, and the bank is not a third party under Section 102 CrPC. The respondents, including the State of Maharashtra, ICICI Bank, and HDFC Bank, opposed the petition. The court analyzed the provisions of Section 102 CrPC and Section 138 NI Act, and held that freezing of bank accounts under Section 102 CrPC is not permissible for investigation of a non-cognizable offence under Section 138 NI Act, as the bank is not a third party and the offence is not cognizable. The court allowed the petition, set aside the impugned order, and directed the defreezing of the petitioners' bank accounts.
Headnote
A) Criminal Procedure Code - Freezing of Bank Accounts - Section 102 CrPC - Offence under Section 138 NI Act - Freezing of bank accounts under Section 102 CrPC is not permissible for investigation of a non-cognizable offence under Section 138 of the Negotiable Instruments Act, 1881, as the bank is not a third party and the offence is not cognizable. The court held that the freezing order was without jurisdiction and liable to be set aside. (Paras 1-24) B) Negotiable Instruments Act - Cheque Bouncing - Section 138 NI Act - Non-Cognizable Offence - The offence under Section 138 of the Negotiable Instruments Act, 1881 is non-cognizable and bailable, and investigation under Chapter XII of CrPC is not permissible without a complaint. The court held that the freezing of accounts for such an offence is illegal. (Paras 1-24) C) Criminal Procedure Code - Defreezing of Accounts - Section 102 CrPC - No Prima Facie Case - The court held that since the offence under Section 138 NI Act is non-cognizable and the bank is not a third party, there is no prima facie case for freezing the accounts, and the petitioners are entitled to defreezing. (Paras 1-24)
Issue of Consideration
Whether the freezing of bank accounts under Section 102 of the Code of Criminal Procedure, 1973 is permissible for investigation of an offence under Section 138 of the Negotiable Instruments Act, 1881, and whether the petitioners are entitled to defreezing of their accounts.
Final Decision
The petition is allowed. The impugned judgment and order dated 19th March 2018 passed by the learned Additional Sessions Judge, City Civil and Sessions Court at Mumbai in Revision Application No. 795 of 2016 is set aside. The respondents are directed to defreeze the bank accounts of the petitioners forthwith.
Law Points
- Section 102 CrPC cannot be used to freeze bank accounts for investigation of non-cognizable offences
- Section 138 NI Act is non-cognizable
- bank is not a third party under Section 102 CrPC
- freezing order must be based on prima facie case
- defreezing is permissible if no investigation required
