* T H E H O N ' B L E S R I J U + W.P.No. 21293 of 2007 % 2 7 - 0 3 - 2 0 0 6 # PACL India Ltd. having its Registered Office at 27, 3rd floor, Amber Tower, Sansar Chand Road, Jaipur, Rajasthan, having its Regional Office at Pooja Edifice, 201, 2nd Floor, Door No. 1-10-20/2B, Begumpet, Hyderabad, rep. by its Development Manager, Mr.B.Viswanadham. … … . . . V s . $ The AXIS Bank A body corporate constituted under the Banking Companies (Acquisition and Transfer of undertaking Act, No.40 of 98) Having its Regd. office at Trishul 3rd floor, Samrateshwar Temple, Law Garder, Ellis Bride, Ahmedabad. … … … . R e s < G I S T : > H E A D N O T E : ! C o u n s e l f o r p e t i t i o n e r ^ C o u n s e l f o r r e s p o n d e n ? C A S E S R E F E R R E D : - 1. 2002 ALT (CRL) –1-492 2. 2000 (2) ALT (CRI) 419 3. (1999) 7 SUPREME COURT CASES 685 4. 1998 CRI LJ (DEL) DB 5. 1991 CRI LJ 2798 (GAU) 6. AIR 1960 ALL 405: 1960 CRL LJ 871 7. 1994 CRI LLJ 645 (KANT) 8. 1992 CRI LJ 2499 (DEL) 9. 1988 MLW (CRI) 106 10. 1991 MLW (CRI) 353 11. (1978) 80 PUNJ LR 514 (DB) IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) PRESENT THE HON'BLE MR JUSTICE P.S.NARAYANA WRIT PETITION NO : 21293 of 2007 Between: PACL India Ltd. having its Registered Office at 27, 3rd floor, Amber Tower, Sansar Chand Road, Jaipur, Rajasthan, having its Regional Office at Pooja Edifice, 201, 2nd Floor, Door No. 1-10-20/2B, Begumpet, Hyderabad, rep. by its Development Manager, Mr.B.Viswanadham. ..... PETITIONER AND 1 The AXIS Bank A body corporate constituted under the Banking Companies (Acquisition and Transfer of undertaking Act, No.40 of 98) Having its Regd. office at Trishul 3rd floor, Samrateshwar Temple, Law Garder, Ellis Bride, Ahmedabad. 2 The AXIS Bank, Kurnool Branch, 40/581, S.B. Complex, R.S. Road Kurnool, rep. by its Branch Manager. 3 The AXIS Bank, Nellore Branch, Opp: Sarvodaya College, Near RTC Bus Stand, Nellore. Rep. by its Branch Manager. 4 The AXIS Bank, Branch Office at D.No.59A1-7, Ground Floor, Matha Towers, Ring Road, Near Benz Circle, Vijayawada, Krishna District, rep. by its Branch Manager. 5 The AXIS Bank, Branch at 11-4-16& 7, Sri Harsha Complex, Vyra Road, Khammam, Khammam District. rep. by its Branch Manager. 6 The AXIS Bank, Rajahmundry Branch, Rajahmundry, East Godavari Dist. rep. by its Branch Manager. 7 Punjab National Bank, M.G.Road, Secunderabad, rep. by its Branch Manager. 8 Punjab National Bank, Branch at Addanki Bus Stop, Kurnool Road Ongole, Prakasam District, rep. by its Branch Manager. 9 State Bank of India, Ramnagar, Visakhapatnam 530 020, rep. by its Branch Manager. 10 The Superintendent of Police, Vikarabad, Ranga Reddy District. 11 The Sub Divisional Police Officer, Vikarabad, Ranga Reddy District. .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to to issue an appropriate writ, order or direction more particularly one in the nature of Writ of Mandamus declaring the action of the respondents 2 to 9 in freezing the accounts of the petitioner company basing on the letter of the 10th respondent dated 21.8.2007 is illegal, arbitrary, ultravirous, malafide and against the principles of natural justice, and pass such other order or orders. Counsel for the Petitioner:MR.HARSHA VARDHAN REDDY BEERAM Counsel for the Respondent No.: MR.DEEPAK BHATTACHARJEE The Court made the following : ORAL ORDER: 1. This Court issued Rule Nisi on 3.12.2007. 2. PACL India Limited, the petitioner, filed the present Writ Petition praying for issuance of an appropriate Writ Order or direction more particularly one in the nature of Writ of Mandamus declaring the action of the respondents 2 to 9 in freezing the accounts of the petitioner company basing on the letter of the 10th respondent dated 21.8.2007 as illegal arbitrary, ultravirous, malafide and against the principles of natural justice and pass suitable orders. 3. 11th respondent-the Sub-Divisional Police Officer, Vikarabad, Ranga Reddy District addressed letters to the concerned following institutions as R1 to R9, and the letter dated 21.8.2007 addressed to Punjab National Bank, M.G.Road, Secunderabad-R7 reads as under: “Government of Andhra Pradesh (Police Department) From To P. Venkateshwara Rao The Branch Manager Sub-Divisional Police Officer Punjab National Bank Vikarabad Sub-Division Secunderabad Branch Sir, Sub: Investigation of Criminal Case-Please furnish the upto date Bank statement and freezing the collection accounts of PACL INDIA LIMITED-Secunderabad Branch-Regarding. Ref: Account No. 3631002100011615 of PACL INDIA LIMITED of Secunderabad Branch. *** I, invite your attention with reference to the above cited subject, there are complaints against PACL INDIA LIMITED and in this regard a case was registered and investigation and enquires are being done. There is lot of public money is involved in these transactions. Hence, it is requested to freeze the Bank Accounts of PACL INDIA LIMITED and also to furnish the up to date Bank statements. It is also requested that these accounts should not be opened by any of them till further intimation is given. The required information may please be furnished at the earliest fro the purpose of investigation under Section 91 and 102 Cr.P.C. Yours faithfully, P. Venkateswara Rao, Sub-Divisional Police Officer, Vikarabad Sub-Division Ranga Reddy District.” 4. In the light of such similar letters, which had been addressed to the respective banking institutions there has been freezing of accounts of the writ petitioner. SUBMISSIONS OF SRI ASHOK B. 5. The learned Senior Counsel representing the Writ Petitioner had taken this Court through the contents of the affidavit filed in support of the Writ Petition, the respective stands taken in the counter affidavits and also the provisions of the A.P. Protection of Depositors of Financial Establishments Act, 1999 (hereinafter in short referred to as ‘the Act’) and also A.P. Protection of Depositors of Financial Establishments Rules, 1999 (in short hereinafter referred to as “Rules” for the purpose of convenience), and would maintain that in the light of the facts and circumstances, the freezing of accounts of the writ petitioner cannot be sustained. The ingredients of Section 3 of the Act are not satisfied at all. The learned senior counsel also had taken this Court through Sections 2©, 3, 4, 5 and 6 of the Act as well, and further made elaborate submissions pointing out the order made by a competent Criminal Court in this regard and would maintain that in the light of the same, the action of the institutions in taking a stand that they are just following the directions of the police to freeze the accounts in exercise of the powers, which in fact had been exercised by the police, under Section 102 of the Code of Criminal Procedure, 1973, definitely cannot be sustained. The learned senior counsel also would contend that at any rate this is just abuse of process of law and no ad interim order had been made and no further progress in the investigation at least had been made and in a way the action taken at this juncture cannot be sustained. The learned senior counsel also placed strong reliance on a decision of Rajasthan High Court in this regard. SUBMISSIS OF SRI ASHOK ANAND KUMAR: 6. Sri Ashok Anand Kumar, the learned counsel representing R1 to R6 had taken this Court through the contents of the counter affidavit filed by R1 to R6 and would maintain that the order made by the police, as such, had not been called for in question and hence, the Writ Petition, as framed, cannot be maintained and the Writ Petition is liable to be dismissed on this ground alone. The learned counsel also while further elaborating the submissions had taken this court through Sections 3,4,5,6,7,8,9,10,11 and 12 of the Act, in general and further emphasized on the language employed under Section 13 of the Act, in particular. While elaborating the submissions the learned counsel would maintain that by virtue of Section 13 of the Act, procedure under the Code of the Criminal Procedure 1973 to be followed. Even in the present case, the action of the police cannot be found fault with and further inasmuch as the banking institutions are bound to follow such directions and the impugned action being in accordance with law and a well justified action, and such action being in public interest as well, the same cannot be found fault with. The learned counsel also distinguished the decision of the Rajasthan High Court on facts. The learned counsel further relied upon several decisions to substantiate the stand taken by R1 to R6 in the counter affidavit. SUBMISSIONS OF SRI AMAR KUMAR 7. Sri Amar Kumar, leaned counsel representing R7 substantially adopted the stand taken by Sri Ashok Anand Kumar and had taken this Court through the contents of the counter affidavit filed by R7 and would maintain that inasmuch as the power of the police cannot be doubted at all and the freezing of accounts being the only grievance against the banking institutions, the Writ Petition is liable to be dismissed. SUBMISSIONS OF NARENDER REDDY: 8. Sri Narender Reddy, learned counsel representing R9 would maintain that the banking institutions are not interested in harassing the customers, however, when the police exercised the powers under the provisions of the Code of Criminal Procedure, 1973, the banking institutions are bound to follow such directions. SUBMISIONS OF AGP FOR HOME: 9. The learned AGP for Home had taken this Court through the contents of the counter affidavit filed by R11 and also had drawn the attention of the Court to Section 91 read with Section 102 of the Code of Criminal Procedure, 1973, and would maintain that the order made by the Criminal Court being not on merits, would not come in the way at all and the orders of the Government are being awaited and in the light of the facts and circumstances and also in public interest, the action which had been taken by R2 to R11 being in accordance with law and since the said action had not been called in question, specifically in the relief portion, the relief prayed for as such cannot be granted and the Writ Petition is liable to be dismissed. 10. Heard the counsel and perused the respective stands taken in the affidavit and in the counter affidavits filed by the parities and also the material produced before this Court. 11. The petitioner is a Public Limited Company. One of the main objects of the petitioner-Company is to sale and purchase of the land, development of the land, taking up construction work in the purchased land and to sale the same to the proposed buyers/customers. The petitioner company is having various offices across the country having its Regional Office at Hyderabad in Pooja Edifice, 201, 2nd Floor, Door No.1-10-20/2B, Begumpet, Hyderabad. The petitioner company in the State of A.P has purchased several hundred acres of agricultural land for allotment to its customers. 12. Further it is stated that the business of the petitioner company had been lawfully conducted as per the various laws, by-laws and rules and regulations of the respective Government and District administration. The business of the petitioner company for sale and purchase of the land had been held to be absolutely lawful, as per authoritative pronouncement made by the Hon’ble High Court of Rajasthan in the Civil Petition No. 6735/99 decided on 28.11.2003 and the operative portion of the said judgment reads as hereunder: “Thus, on the facts and circumstances we agree with learned Sr. counsels for the petitioner company and also Mr. Dhankar, learned senior counsel in D.B. Civil Writ Petition No. 6747 of 1999 that the scheme of the company does not fall within the definition of Collective Investment Scheme, as defined in Section 11AA and Sub-Section (1B) of Section 12 of the Act, 1992 as well as Regulations, 1999 have no application. As we have taken the view that scheme of petitioner company does not come within the definition of Collective Investment Scheme given in Section 11AA. Regulations, 1999 have no application in case of this petitioner company. Thus, now we need not go into the alternative prayer to examine the validity of provision of Section 11AA, sub-section (1BO of Section 12 and legality of Regulation of 1999. In the result, notices dated 30.11.1999 and 10.12.1999 are quashed and both the writ petitions are allowed.” 13. The competitor and the rivals of the petitioner company have never left any opportunity to harass the petitioner company and hamper the business of the petitioner company by lodging a false complaint by manipulating one or two customers of the petitioner company. 14. It is further averred that under some ill advise of the some of the rivals and competitors of the petitioner company a complaint was lodged by one Mr. N. Pandu Ranga Reddy S/o Narayana Reddy R/o 7/2/34, Kothagodi, Vikarabad Mandal, Ranga Reddy District (AP). The complaint mainly stated that the petitioner company refused to allot the land despite having received the entire sale consideration of Rs. 50,000/- from the complainant. In fact the said complainant never made any demand from the petitioner company for refund of money, however, under the ill influence of some rivals company, the complainant had lodged the complaint before the sub-Divisional of Police Officer, Vikarabad, Ranga Reddy District. On the basis of the complaint of Mr. N. Pandu Ranga Reddy, the Sub-Inspector of Police registered a crime in FIR No. 195/07 PS Vikarabad, Ranga Reddy District. 15. It is further stated that the police in collusion with the rivals of the petitioner company prevail upon the complainant and got the aforesaid case registered against the petitioner company under Section 420, 406 and 511 IPC and Section 5 of the A.P. Protection of Depositors of Financial Act, 1999. 16. Further it is stated that the petitioner company came to know that the agents/the field workers of the petitioner company are being harassed by the respondent police, the petitioner immediately through its employees contacted the said complainant Sri N. Pandu Ranga Reddy. The complainant Sri N. Pandu Ranga Reddy on 24.8.2007 filed an affidavit before the Sub-Divisional Police Officer and made a statement that the complainant wish to withdraw the complaint since he had filed the said complainant under the ill influence of some persons. 17. Further it is averred that it would be pertinent to mention that the alleged deposit of Rs. 50,000/- was made by the said complainant only on 13.7.2007 for purchase of a plot and just after three days he had lodged the aforesaid complaint with the police station, which clearly go to show that the respondent police along with the complainant with oblique motives and with certain extraneous consideration wanted to implicate the petitioner and its officials and agents in the criminal case. However, the entire money of Rs. 50,000/- had been returned within a period of 10 days after the deposition. Hence, the intention of the petitioner company could not have been said to be malafide. 18. Further it is stated that under the grab of aforesaid complaint and by registering the said FIR No. 195/07 PS. Vikarabad, Ranga Reddy District (AP) the respondents and the rivals of the petitioner had been successful in implicating the petitioner, its agents and employees in false criminal cases registered under Sections 420, 406 and 511 IPC R/w Section 5 of A.P. Protection of Depositors of Financial Establishments Act, 1999. The entire episode mentioned above goes to show that the complainant Sri N. Pandu Ranga Reddy with dishonest intention and under the ill influence of the rivals of the petitioner had deliberately approached the petitioners and its agents with a request to register the names of the complainant and its customers for allotment of a plot and offered Rs. 50,000/- on 13.7.2007 and after three days i.e., 17.8.2007 lodged a complaint without any correspondence, without any notice and without any demand of the return of the said deposits from the petitioner. 19. Further it is stated that the respondent police without having any authority of law issued request letter dated 21.8.2007 with a direction to the respondents 2 to 9 and all its branches wherever the petitioner is maintaining the accounts to freeze the accounts of the petitioner so that the petitioner itself is not able to meet the demand/request of other customers for payment. The said letter dated 21.8.2007 written by the respondent police to the bankers of the petitioner, then the respondents 2 to 9, is absolutely without any notice or intimation and the respondent banks freezed the accounts of the petitioner company without any proper authority and contrary to the provisions of Sections 3, 4 and 5 of the Act. 20. Further it is averred that the respondent police had filed a petition before the Court of the Principal Sessions Judge, R.R. District, Hyderabad, praying to issue directions to the respondents. 2 to 9 and all its branches to freeze the accounts standing in the name of the petitioner stating that the case of cheating, criminal breach of trust and collection of deposits under the Act, had been registered in the Crime No. 195 of 2007 under Section 420, 406 and 511 of IPC and under Section 5 of the Act. The respondents- police 10 and 11 have admitted before the Sessions Judge that the respondent banks have frozen the accounts of the petitioner. 21. The learned Sessions Judge had heard all the parties in the aforesaid matter and had passed a detailed order on merits vide its order dated 19.9.2007 in Crl.M.P.No. 384 of 2007 in Crime No. 195 of 2007 and the relevant portion is as hereunder: “It is premature to decide whether the scheme floated by the PACL India Limited Company can be treated, as Collective Investment Scheme, especially, when the investigation is in progress. However, a perusal of the provisions of Section 3 and 4 of the Act and Rules 3 and 6 of the Rules there under, made it clear that the role of the Special Court comes into picture, under Sub-Section (3) of Section 4 of the Act, 1999, only after the competent authority, under the Act, applies to make the ad- interim orders of attachment of the properties of the accused absolute, within 15 days, after the receipt of the orders of the Government attaching the properties of the accused. In fact, in the memo, itself the public prosecutor mentioned that the Deputy Superintendent of Police, Vikarabad has sent a letter/notice under Section 91 and 102 of the Code of Criminal Procedure to hold all the Banks accounts standing in the name of the PACL India Limited Company and accordingly, the Branch Managers of the eight branches mentioned in the memo have stopped payments. It is also mentioned in the memo that the Government of Andhra Pradesh is being addressed for passing ad-interim attachment orders of the banks accounts and properties of PACL India Limited Company and the matter is pending with the Government. Under these circumstances, this Court can not pass orders freezing the accounts of the PACL India Limited Company with the banks mentioned in the memo. In view of the above facts and circumstances, the memo is not maintainable under law and is dismissed.” 22. It is further averred that the petitioner after having received the aforesaid order passed by the learned Principal Sessions Judge, R.R. District, Hyderabad had made a request in person, in writing and also through its Advocate to defreeze the accounts, however, the respondents-banks have disobeyed the order passed by the Principal Sessions Judge, R.R.District, Hyderabad and have not allowed the petitioner to deposit or withdraw the amount even for its day to day requirement. The action of all the respondents banks are not only arbitrary and violative to the fundamental rights of the petitioner but also contrary to Sections 3, 4 and 5 of the said Act, which has been observed and held by the Principal Sessions Judge, R.R. District, Hyderabad. 23. The petitioner being aggrieved by the aforesaid action of the respondents 2 to 9 for freezing the accounts of the petitioner company basing on the letter of the 10th respondent is left with no other option but to approach this Court by invoking jurisdiction of this Court under Article 226 of the Constitution of India. 24. In the counter affidavit filed by R1 to R6, substantial allegations had been denied. It is averred that the petitioner Company opened the following collection accounts, duly following the banking norms: “(a) Account No. 24401110200003612 with the respondent No.2 Branch, (b) Account No. 152010200007429 with the Respondent No.3 Branch, (c) Account No. 69010200019895 with the Respondent NO. 4 Branch, (d) Account No. 2730102000003537 with the Respondent No. 5 Branch; and (e) Account No. 1070102000009249 with the Respondent NO.6 Branch of the Bank. The Writ Petitioner has been operating the Accounts with the respondents 2 to 6. 25. While this being so, respondents 2 to 6 received the letters dated 21.8.2007 and 1.10.2007 intimating respondents 2 to 6 that Crime No. 195/2007 of P.S., Vikarabad, was registered under Section 420, 406 and 511 IPC and Section 5 of the A.P. Protection of Depositors of Financial Establishments Act, 1999 and the investigation and enquiries are being conducted by the police. According to the respondent No. 11 herein, the Crime No. 195 of 2007 on the file of the P.S. Vikarabad is pending enquiry and investigation and lot of public money is involved in the transaction. The respondents 2 to 6 were requested by the respondent No. 11 to seize the bank accounts of the Writ Petitioner and furnish the up to date bank statements and therefore, their accounts shall not be operated by any of them till further intimation is given, exercising their powers of investigation under Section 91 and 102 of Cr.P.C. 26. It is further stated that under Section 102 Cr.P.C any Police Officer can seize any property, which is alleged or suspected to have been stolen or which may be found under the circumstances, which create suspicion of the commission of an offence. The term ‘any property’ is wide enough to cover the seizure of the amounts in the Bank accounts. Therefore any Police Officer is entitled to exercise his powers conferred under Section 102 Cr.P.C and issue a prohibitory order to the respondents 1 to 6 to freeze the Bank accounts. Hence, the prohibitory orders issued by the respondents 10 & 11 are not illegal or without jurisdiction. It is further submitted that Section 91 confers power to the respondents 10 and 11 to direct the respondents to produce the statement of account. Hence, the orders impugned in this writ Petition are per-se not illegal or without jurisdiction. 27. It is further averred that no Writ of Mandamus can be issued to question a prohibitory order passed by the respondents 10 and 11 in exercise of their power conferred under Section 102 Cr.P.C. This Writ Petition does not seek to enforce any rights conferred under Part II of the Constitution of India. The Writ Petitioner has an alternative and an efficacious remedy provided under the Criminal Procedure Code. Hence, this Writ Petition is not maintainable. 28. It is also stated that the right to conduct business, as enshrined under Article 19(1)(g) of the Constitution of India can be made with reasonable restrictions. The right of police to investigate an offence and exercise their powers lawfully conferred under Section 102 of Cr.P.C are reasonable restrictions stipulated under Article 19 of the Constitution of India. 29. Further it is averred that the FIR No. 185 of 2007 on the file