AJN 00-CRI-WP570.11 : 1 : IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL WRIT PETITION NO.570 OF 2011 Adarsh Co-operative Housing Society Limited, a Society registered under the Maharashtra Co-operative Societies Act, 1960, having its address at: CTS No. 652, Block VI, Colaba Division, Captain Prakash Pethe Marg, Adjacent to Backbay Bus Depot, Colaba, Mumbai – 400 005. ) ) ) ) ) ) ) ) ) ... Petitioners Versus 1 Union of India, near CGO Building, Marine Lines, Aayakar Bhavan, Mumbai – 400 020. ) ) ) ) 2 State of Maharashtra through the Office of the Government Pleader, Public Works Department, High Court, Mumbai – 400 023. ) ) ) ) ) 3 Central Bureau of Investigation, Anti Corruption Branch, Tanna House, 11-A, Nathalal Parekh Marg, Colaba, Mumbai – 400 039. ) ) ) ) ) ... Respondents Mr. V.A. Thorat, senior counsel with Mr. S.L. Maneshinde and Mr. Saket Mane i/b M/s. Vidhi Partners for the petitioners. AJN 00-CRI-WP570.11 : 2 : Mr. D.J. Khambatta, Additional Solicitor General with Mr. D.N. Salvi, Afroz Shaha and Mr. C.S. Damne for respondents 1 and 3. Mr. P.A. Pol, Public Prosecutor for respondent 2-State. CORAM: MRS. RANJANA DESAI & RANJIT MORE, JJ. DATE ON WHICH THE JUDGMENT IS RESERVED : 19TH JULY, 2011. DATE ON WHICH THE JUDGMENT IS PRONOUNCED: 27TH JULY, 2011. JUDGMENT :- (Per Smt. Ranjana Desai, J.) 1. The petitioner is a society registered under the Maharashtra Co-operative Societies Act, 1960 (for convenience, “the petitioner-society”). Respondent 1 is the Union of India. Respondent 2 is the State of Maharashtra and Respondent No.3 is the Central Bureau of Investigation, Anti Corruption Branch (for short, “the CBI”), who is currently investigating certain matters connected with the petitioner-society and its members. 2. In this petition filed under Article 226 of the Constitution of India, the petitioner-society has, inter alia, prayed that the letter dated 31/1/2011 issued by CBI in AJN 00-CRI-WP570.11 : 3 : respect of accounts of the petitioner-society maintained with the State Bank of India in Wodehouse Road Branch and Cuffe Parade Branch be quashed. By the said letter, CBI has issued a direction to the State Bank of India to stop operation of the said accounts of the petitioner- society. 3. Gist of the facts stated in the petition will have to be noted. (a) The petitioner-society is a society registered under the Maharashtra Co- operative Societies Act, 1960. It has 102 members. The petitioner-society and its members were allotted, on occupancy basis, 6428.5 sq. meters of land owned by the Government of Maharashtra situate in the Backbay Reclamation Area in Block No.VI in Colaba, Mumbai. The petitioner- society paid a total amount of Rs. AJN 00-CRI-WP570.11 : 4 : 16,33,22,292/-. It was duly granted all necessary permissions. Occupation Certificate was granted on 16/9/2010. A complaint was registered by the Ministry of Defence, Government of India with the CBI requesting the CBI to conduct enquiry about the alleged irregularities concerning the petitioner-society. Upon the complaint being received, the CBI conducted a preliminary enquiry. (b) On 29/1/2011, the CBI registered FIR against several persons connected with the petitioner-society under Sections 120-B, 420, 468 and 471 of the Indian Penal Code, 1860 (for short, “the IPC”) and under Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 (for short, “the P.C. Act”) alleging that, the accused abused their official position, AJN 00-CRI-WP570.11 : 5 : manipulated and fabricated the records to achieve their objective of getting the land allotted in favour of the petitioner-society in an illegal manner. It is further alleged that various clearances from Municipal Authorities and other State Government Authorities were taken in an illegal manner. It was alleged that the accused abused their official position and obtained for themselves and for their close relations, property rights over flats in the petitioner- society at a very low cost compared to the market value. (c) The investigation was started. The office of the petitioner-society was searched and several documents, writings, etc. were seized. Similarly, residences of the accused were searched. The CBI seized all the documents required by the petitioner- AJN 00-CRI-WP570.11 : 6 : society for operating its bank accounts such as bank passbooks, cheque books, statement of bank accounts, etc. On 31/1/2010, the CBI wrote to the State Bank of India, Wodehouse Road Branch and Cuffe Parade Branch directing them to stop operation of the said bank accounts and not to allow their operation without further instructions from the CBI. The CBI did not serve any notice on the petitioner- society prior to freezing of the said accounts. The petitioner-society came to know about the said direction issued by the CBI through a letter addressed by the State Bank of India to it on 1/2/2011. Being aggrieved by this action of the CBI, the petitioner-society has approached this court. 4. We have heard Mr. Thorat, learned senior counsel AJN 00-CRI-WP570.11 : 7 : appearing for the petitioner-society and Mr. Khambatta, learned Additional Solicitor General appearing for respondents 1 and 3. We have perused the affidavit-in- reply of Mr. Ravindra Singh, Addl. Superintendent of Police, CBI, dated 15/3/2011 and affidavit-in-rejoinder and additional affidavit of Lt. (Commander) (Retd.) G.S Grewal. We have also carefully perused the written submissions filed by the petitioner-society and the CBI. 5. Mr. Thorat, learned senior counsel submitted that the unlawful and unjust freezing of accounts of the petitioner- society must be set aside. Counsel submitted that it is alleged in the FIR that 13 persons who are members of the petitioner-society conspired with each other with the intention to illegally get land allotted in its favour. The period during which the offences are alleged to have been committed is prior to 2004. The amount lying deposited in the petitioner-society's two accounts in the State Bank of India have been deposited on or about 1/11/2010 in the form of contribution from the members of the petitioner- AJN 00-CRI-WP570.11 : 8 : society for the purpose, inter alia, of meeting the expenses of litigation initiated against the petitioner- society. Thus, ex facie, there is no connection between the said amount and the alleged offences. 6. Counsel further submitted that the petitioner-society is a society registered under the Maharashtra Co- operative Societies Act, 1960. It is a separate and legal entity. It is statutorily required to open bank account so as to discharge its financial commitments through its operation. It is required to make payments towards (a) security agencies for the purpose of security of its building and compound, (b) maintenance of building and its precincts. The building has a lift. If it is not maintained, it will become junk, (c) pending invoices of contractors and other service providers who have rendered their service towards construction of the building, (d) payment towards advocates and counsel engaged by the petitioner-society in various litigations concerning the petitioner-society, (e) salary of the staff of the petitioner-society and (f) AJN 00-CRI-WP570.11 : 9 : payment of statutory dues. Due to the freezing of its accounts, the petitioner-society has not been able to make the above payments. 7. Counsel further submitted that freezing of the accounts has caused injustice to the petitioner-society. It is deprived of its right to engage a lawyer of its choice. There is thus violation of its fundamental rights guaranteed by the Constitution of India under Articles 14, 19 and 21. In this connection, counsel relied on the judgments of the Supreme Court in Madhav Hayawadanrao Hoskot v. State of Maharashtra1, Maneka Gandhi v. Union of India2 and Hussainara Khatoon & Ors. v. Home Secretary, State of Bihar, Patna.3 Counsel pointed out that the petitioner-society had addressed a letter to the bank requesting it to allow it to open a new account, however, permission was denied. 8. Counsel submitted that the CBI has not collected any 1 AIR 1978 SC 1548. 2 AIR 1978 SC 597. 3 AIR 1979 SC 1369. AJN 00-CRI-WP570.11 : 10 : material against the petitioner-society to establish causal connection between the funds deposited in its bank accounts and the alleged offence. The only evidence is found in paragraphs 12 and 13 of the affidavit of Mr. Singh, where it is stated that this amount would be utilized to tamper with the evidence which submission is too farfetched. Relying on the judgment of learned Single Judge of the Madras High Court in His Holiness Sri Kanchi Kamakoti Peetadipathi Jagadguru Sri Sankaracharya Swamigal Srimatam Samasthanam represented by its Manager v. The State of Tamil Nadu represented by the Secretary to Government Home Department and Ors.,4 counsel submitted that bank account cannot be frozen on this ground. Seizure under Section 102 of the Code of Criminal Procedure, 1973 (for short, “the Code”) can be done in respect of assets which are a direct outcome of the crime. 9. Counsel submitted that the petitioner-society is not the accused in the FIR. There is no reference to the bank 4 (2005) 1 CTC 657. AJN 00-CRI-WP570.11 : 11 : accounts in the FIR. Retention of money in the accounts, by no stretch of imagination can be said to be a requirement for investigation into the source of funds or to determine whether any account is benami. It is alleged that the accused have generated money from benami transactions, however, there is no allegation that this amount is deposited in the petitioner-society's accounts which are seized. 10. Counsel submitted that no notice was given to the petitioner-society prior to freezing of accounts. Relying on the judgment of this court in Shashikant D. Karnik v. State of Maharashtra 5 , counsel submitted that therefore the seizure is bad. Counsel also relied on Anwar Ahmad v. State of U.P.6, B. Ranganathan v. State & Ors.7 and R. Chandrasekar v. Inspector of Police, Salem & Anr.8 Counsel submitted that in the circumstances, this court should direct the CBI to forthwith defreeze the seized accounts. 5 2007 (2) Bom.C.R.87. 6 1976 Cri.L.J. 620. 7 2003 Cri.L.J. 2779. 8 2003 Cri.L.J. 294. AJN 00-CRI-WP570.11 : 12 : 11. Mr. Khambatta, learned Additional Solicitor General appearing for the Union of India and the CBI, on the other hand, submitted that no case is made out for defreezing the accounts. He submitted that scope of Section 102 of the Code is very wide. It contemplates seizure of any property. Property of an accused or even property of a non-accused could be seized provided, it is found in circumstances which create suspicion about commission of an offence. Drawing our attention to the definition of the term 'suspicion' given in P. Ramanatha Aiyar's Advanced Law Lexicon Vol.4 (2005), counsel submitted that attachment of the property may be backed with slight or no evidence. In this connection, counsel also relied on judgment of the Division Bench of the Andhra Pradesh High Court in K. Munivelu v. The Government of India 9 . Counsel submitted that State of Maharashtra v. Tapas Neogy 10 is the case on the point. Counsel also relied on the Full Bench decision of 9 AIR 1972 AP 318. 10 (1999) 7 SCC 685. AJN 00-CRI-WP570.11 : 13 : this court in Vinoskumar Ramchandran Valluvor v. State of Maharashtra 11 , where it is held that Section 102 of the Code does not require issuance of a notice to a person before attachment of property. Counsel submitted that during the course of investigation, prima facie, it appeared that various public servants/private persons had acquired flats in the petitioner-society in benami names. In Writ Petition No.3359 of 2010 concerning the petitioner- society, on 17/3/2011, a Division Bench of this court directed the concerned officer to amend the FIR so as to invoke the provisions of the Benami Transactions (Prohibition) Act, 1988 (for short, “the Benami Act”). Counsel submitted that the investigation is at a crucial stage. It is to investigate the offences under the Benami Act that the accounts of the petitioner-society had to be seized. Counsel submitted that the accused are charged for offences under the P.C. Act. In the light of observations of the Supreme Court in Tapas Neogy, counsel submitted that the trial court may after conclusion of the trial, exercise its powers under Section 11 2011 (2) Bom. C.R. (Cri.) 179. AJN 00-CRI-WP570.11 : 14 : 13 read with Section 16 of the P.C. Act while imposing fine. The trial court may take into consideration the amount or the value of the property which the accused has obtained or the pecuniary sources of the property which the accused is unable to satisfactorily account. It is, therefore, necessary to ensure that the money lying in the bank accounts of the petitioner-society is secured. If the seizure is lifted at this stage that will adversely affect the investigation. 12. Counsel submitted that it is true that the Supreme Court has held that the right to legal services is a fundamental right, but nowhere has it said that it includes the right of person to engage a counsel of his choice irrespective of the fact whether he has funds or not. Counsel submitted that the petitioner-society has so far not been prejudiced. This is evident from the fact that so far it has been defended by some of the finest lawyers of the country. In this connection, counsel also relied on the following two decisions of the Supreme Court of the AJN 00-CRI-WP570.11 : 15 : United States (i) United States v. Monsanto12 and (ii) Caplin & Dysdale v. United States13. Counsel submitted that the judgments cited by Mr. Thorat are not applicable to the facts of this case. Counsel submitted that in the circumstances, the petition deserves to be dismissed. 13. The members of the petitioner-society and others have been charged with offences punishable under Sections 120-B, 420, 468 and 471 of the IPC and under Section 13(2) read with section 13(1)(d) of the P.C. Act. It is, inter alia, alleged that the accused conspired with the Defence Service officers and functionaries of Government of Maharashtra and others with the intention to illegally get the land allotted in favour of the petitioner-society in which they were the members. The concerned public servants abused their official position, manipulated and fabricated the records to achieve their objective of getting the land allotted in favour of the petitioner-society in an 12491 US 600 (1989). 1349 U.S> 617 (1989) AJN 00-CRI-WP570.11 : 16 : illegal manner and also got various clearances from the Municipal Authorities and other State Government Authorities in an illegal manner and in lieu of this, abused their official position and obtained for themselves and for their close relations, property rights over flats at a very low cost compared to the market value. 14. From the affidavit of Mr. Ravindra Singh, Additional Superintendent of Police, CBI, it appears that during the course of investigation, CBI carried out searches of the office/residential premises of the main accused. Office of the petitioner-society was also searched on 30/1/2011. During preliminary investigation, it prima facie appeared that various public servants/private persons have acquired flats in the petitioner-society in benami names. In Writ Petition No.3359 of 2010, on 17/3/2011, a Division Bench of this court directed that due steps be taken to amend the FIR so as to invoke the provisions of the Benami Act, so that every membership of the petitioner- society is investigated into. Accordingly, CBI submitted a AJN 00-CRI-WP570.11 : 17 : corrigendum to the FIR submitted to the Special Court, Mumbai, to include the provisions of the Benami Act in the FIR. It is stated by Mr. Singh in his affidavit that with a view to verifying benami transactions, purportedly made by the suspected accused persons, the operation of the bank accounts of the petitioner-society maintained with State Bank of India were seized after observing due process of law in order to verify the various transactions. To complete the narration of facts, we must note the information supplied to us by Mr. Khambatta, learned Addl. Solicitor General. Apart from the accounts of the petitioner-society, the CBI has frozen the accounts of the following accused i.e. (i) Mr. R.C. Thakur, (ii) Brig. (Retd.) Madan Mohan Wanchu, (iii) Mr. Kanhalyalal Gidwani, (iv) Mr. P.V. Deshmukh, (v) Mr. Ramanand Tiwari, (vi) Mr. Subhash Lal and (vii) Mr. Jairaj Phatak. 15. It is necessary to quote paragraphs 10, 11 and 12 of Mr. Singh's affidavit which clearly spell out CBI's stand and the reason why the accounts were seized. AJN 00-CRI-WP570.11 : 18 : “10. It is true that Adarsh Co-op Hsg. Soc. LTD., petitioner here in is not accused in this case. However, all transaction related to the accused persons in this case are flowing from this account and the operations there of are being carried out by the office bearers of the Society. Who are the accused in this case, therefore, to investigate the issue of Benami Transactions and other aspects the seizure of this accounts was considered necessary. 11. Investigation revealed that accused K.L. Gidwani and his two sons, are having flat in Adarsh Co-op Hsg. Soc. for which an amount of Rs. 56 lakhs (appx.) have been paid by each of his sons whereas Rs. 82 lakhs (appx.) has been paid by Shri K.L. Gidwani himself. Prima facie it is revealed that Shri Gajanan S. Koli, Amol V. Kharbhari and Shri Kiran Bhadange have been shown to have given loan of Rs. 51.3 lakhs by Shri Sunil Gidwani, Rs.52.04 lakhs by Shri Amit Gidwani and Apeksha Impex P. Ltd., (belonging to accused K.L. Gidwani). Rs.52.4 lakhs was given to Shri Kiran Bhadange by Devi Gidwani and Apeksha Impex P. Ltd. Shri Amol V. Kharbhari even dose not have a PAN no of his own and has not even filed any IT return. This prima facie indicates that all the three flats are benami and belonging to Shri K.L. Gidwani. Similar more transactions of Benami Transaction are evident which needs to AJN 00-CRI-WP570.11 : 19 : be proved further under Benami Transaction Act. 12. If we allow to operate the society account, the proceeds of crime would be utilized to tamper with the evidence and also would get benefit of using the amount in their own ways to indulge in illegal activities.” 16. The above case of the CBI will have to be kept in mind while dealing with the submissions of counsel for the petitioner-society. Since we are concerned with the interpretation of Section 102 of the Code, it is necessary to quote sub-section (1) thereof for ready reference. 102. Power of police officer to seize certain property. - (1) Any police officer may seize any property which may be alleged or suspected to have been stolen, or which may be found under circumstances which create suspicion of the commission of any offence. 17. In Tapas Neogy, the Supreme Court was considering whether a police officer investigating into an offence can issue prohibitory order in respect of the bank AJN 00-CRI-WP570.11 : 20 : account of the accused in exercise of power under Section 102 of the Code. The Supreme Court held that the bank account of the accused or any of his relations is 'property' within the meaning of Section 102 of the Code and a police officer in course of investigation can seize or prohibit the operation of the said account if such assets have direct links with the commission of the offence which the police is investigating into. The Supreme Court found that Section 102 is cast in the widest terms. The following observations of the Supreme Court are material. “6. A plain reading of sub-section (1) of Section 102 indicates that the police officer has the power to seize any property which may be found under circumstances creating suspicion of the commission of any offence. The legislature having used the expression “any property” and “any offence” have made the applicability of the provisions wide enough to cover offences created under any Act. But the two preconditions for applicability of Section 102(1) are that it must be “property” and secondly, in respect of the said property there must have been suspicion of commission of any offence. AJN 00-CRI-WP570.11 : 21 : 18. Thus, the Supreme Court has noted that the use of the words 'any property' and 'any offence' in sub-section (1) of Section 102 of the Code indicates its wide applicability. Seizure under Section 102 can be effected in respect of property which may be alleged or suspected to have been stolen or in respect of property found under circumstances which create suspicion about the commission of an offence. As rightly pointed out by Mr. Khambatta, learned Additional Solicitor General, in P. Ramanatha Aiyar's Advanced Law Lexicon Vol.4, (2005) , the word 'suspicion' is defined as being imagination of the existence of something without proof, or upon very slight evidence or upon no evidence at all. In this connection, reliance placed on the judgment of the Division Bench of the Andhra Pradesh High Court in K. Munivelu is apt. In that case, the Andhra Pradesh High Court has stated that the word 'suspicion' regarding a fact is the first and initial stage for believing the existence of certain thing or alleged fact. Information is then collected by investigation and examined to come to a final AJN 00-CRI-WP570.11 : 22 : conclusion on the basis of the information that the thing or condition or fact exists. 19. Admittedly, provisions of Benami Act have been applied to this case. Section 3 of the Benami Act prohibits benami transactions. Section 2(a) defines benami transactions. Section 5 provides that property held benami is liable to acquisition and no money will be payable for such an acquisition. Section 2(c) defines 'property' as follows: “2(c) 'property' means property of any kind, whether moveable or immoveable, tangible or intangible and includes any right or interest in such property.” This definition is of wide amplitude. 20. We have already quoted relevant portions of the affidavit of Mr. Singh, the Superintendent of Police, CBI. He has stated that investigation has, prima facie, revealed that the various public servants/private persons have AJN 00-CRI-WP570.11 : 23 : acquired flats in the petitioner-society in benami names and all the transactions related to the accused persons are flowing from the accounts which are seized. It is further stated that the operations of these accounts are being carried out by the office bearers of the petitioner- society, who are the accused and the said accounts are seized with a view to verifying the benami transactions. Thus, if the investigating agency, at this crucial stage of investigation as regards benami transactions, entertains any suspicion about the bank accounts of the petitioner- society, which are in the light of Tapas Neogy, a 'property' within the meaning of Section 102 of the Code, their seizure cannot be faulted. In the circumstances of the case, investigating agency would be right in concluding that the said bank accounts create suspicion about commission of an offence. The contention that the offence is alleged to have been committed prior to 2004 and the money has been deposited in the accounts by the members in the form of contribution on or about 1/11/2010 for meeting the expenses of the AJN 00-CRI-WP570.11 : 24 : petitioner-society and, therefore, the offence has no casual connection with the amounts deposited in the seized accounts must be rejected. We are also unable to accept the submission that retention of money in the accounts is not necessary for investigating into the source of funds or to determine whether any account is benami. It is improper at this stage to draw such conclusions. Investigating agency must be given a free hand to determine the course of its investigation. We cannot trench upon its domain. 21. It is also necessary to bear in mind that the accused have been charged under Section 13(2) read with Section 13(1)(d) of the P.C. Act. Section 16 of the P.C. Act states the matters which the court has to take into consideration for fixing fine. Section