Facts of the Case

The petitioner, Ajmal, Director of M/s MGS Associates Ready Mix Trading Private Limited, filed a writ petition before the Kerala High Court challenging the freezing of the company's bank account by ICICI Bank. The account had been frozen upon the request of the Station House Officer in connection with the investigation of Crime No. 8/2021 registered for offences under Sections 406 and 420 of the Indian Penal Code.

The petitioner contended that the freezing of the bank account was arbitrary, illegal, contrary to banking laws, and violative of the principles of natural justice. He sought directions for immediate de-freezing of the account along with compensation for the alleged illegal action.

During the hearing, the State informed the Court that the investigation had already been completed and a final report had been filed before the Judicial First Class Magistrate, Nilambur, where it had been taken on file as C.C. No. 1/2022.

Issues Involved

  1. Whether the freezing of the petitioner's bank account during criminal investigation was illegal and arbitrary.
  2. Whether the High Court should direct immediate de-freezing of the bank account through a writ petition.
  3. Whether the petitioner should instead seek relief before the jurisdictional Magistrate after completion of investigation.

Petitioner's Arguments

  • The petitioner argued that the freezing of the company's bank account was carried out without following the prescribed legal procedure.
  • It was contended that the action violated the principles of natural justice and applicable banking laws.
  • The petitioner sought immediate directions to ICICI Bank to unblock and de-freeze the account.
  • The petitioner also prayed for compensation and damages on account of the continued freezing of the account.

Respondent's Arguments

  • The State submitted that the investigation relating to Crime No. 8/2021 had already been completed.
  • It was informed that the final report had been filed before the competent Magistrate and the criminal case had already been taken on file.
  • Therefore, the respondents contended that the petitioner could seek appropriate relief before the Magistrate by filing an application for de-freezing of the bank account.

Court Order / Findings

The Kerala High Court observed that since the investigation had already been completed and the final report had been filed before the Judicial First Class Magistrate, the appropriate remedy available to the petitioner was to approach the Magistrate seeking de-freezing of the bank account.

The Court disposed of the writ petition without granting the relief sought in the writ proceedings. However, it expressly preserved the petitioner's right to file an appropriate application before the Magistrate.

The Court further directed that if such an application is filed, the Magistrate shall consider and decide the same expeditiously in accordance with law. The petitioner was also permitted to raise all contentions regarding the alleged illegality of the freezing order before the Magistrate, who shall examine those contentions on their own merits.

Important Clarification

  • After completion of investigation and filing of the final report, a person seeking de-freezing of a bank account should ordinarily approach the jurisdictional Magistrate.
  • The High Court may decline to exercise writ jurisdiction where an effective statutory remedy is available before the criminal court.
  • The petitioner remains entitled to challenge the legality of the freezing order before the Magistrate.
  • The Magistrate is required to decide such applications without unnecessary delay.

Sections Involved

  • Section 406 of the Indian Penal Code, 1860
  • Section 420 of the Indian Penal Code, 1860

Link to Download the Order-

https://www.mytaxexpert.co.in/uploads/1784968662_1993compressed.pdf

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