Karnataka High Court upholds freezing of Gujarat bizman's bank account

The mere non-reporting of the freeze order forthwith to the magistrate would not vitiate the freeze order, the High Court of Karnataka has noted.

Justice M Nagaprasanna said this while dismissing the petition filed by a businessman from Bhavnagar, Gujarat.

The petitioner, Ansari Sablu Haidarali, claimed that the West CEN police had ordered the debit freeze of his bank account with Karnataka Bank in Gujarat in relation to an online fraud case.

D S Rupa, a resident of Bengaluru, was reportedly a victim of online fraud and claimed to have transferred Rs 2.28 crore to various accounts through WhatsApp for an alleged cryptocurrency business. 

Since the businessman was one of the recipients of the amount, a debit freeze order was issued by the Investigating Officer (IO) in the case. The moment he was disabled to operate the account, the petitioner filed an application before the court under CrPC sections 451 and 457. 

The petitioner contended that he was into oil trading and was not aware of the money that had fallen into his account from the complainant. He moved the high court after the magistrate rejected his application on account that he was a direct beneficiary of fraud. 

The petitioner claimed that the IO had not sent the communication to the magistrate about the debit freeze as necessary under CrPc section 102. The provision mandates that the IO forthwith report to the magistrate about the property seizure.

On other hand, the prosecution submitted that the petitioner had admittedly received Rs 40 lakh into his account from the complainant. It was also submitted that non-reporting would definitely not vitiate the account freeze.

The court observed that being a direct beneficiary of the alleged fraud, the petitioner’s account cannot be permitted to be de-frozen. It cited Shento Varghese vs Julfikar Husen in which the Supreme Court held that seizure orders, merely because they were not immediately reported to the magistrate, would not vitiate the seizure order, but if the Investigating Officer had no reasonable explanation for the delay, he might become open to appropriate departmental action.

“Therefore, all that the Investigating Officer in the case at hand would face is a departmental enquiry if there is delay and the delay is not satisfactorily explained, he shall be proceeded against with the departmental enquiry in accordance with the direction of the Apex Court. The petitioner cannot harp upon non-reporting to get the freezement order vitiated,” the court said.