M/S. JERMYN CAPITAL LLC DUBAI versus CENTRAL BUREAU OF INVESTIGATION & ORS.
[2023] 6 S.C.R. 565, Supreme Court of India, 2023
Outcome: Appeal(s) allowed (Granted)
Segment: Ratio
A
B
C
D
E
F
G
H
565
M/S. JERMYN CAPITAL LLC DUBAI
v.
CENTRAL BUREAU OF INVESTIGATION & ORS.
(Criminal Appeal No. 1434 of 2023)
MAY 09, 2023
[KRISHNA MURARI AND SANJAY KUMAR, JJ.]
Code of Criminal Procedure, 1973 – s.102 – Freeze orders
and bank guarantee in furtherance there of were imposed against
the appellant company on grounds of necessity of investigation of
an alleged crime initiated against one ‘D’ allegedly connected to
the appellant company – Held: Accused-‘D’ was never an employee/
share holder/director or a key managerial person in the appellant
company – Since ‘D’ was in no way connected to the appellant
company, the trial faced by him, was in his individual capacity, and
not vicariously on behalf of the appellant company – No criminal
proceedings whatsoever are pending against the appellant company
pertaining to the dispute at hand – Furthermore, ‘D’ has been
discharged of the alleged offences by the Trial Court – Even
assuming that his discharge is subsequently reversed, and he is
convicted, such a conviction would still have no bearing on the
properties of the appellant company, since it is not alleged to be a
part of the crime – The purpose of the freeze order and the bank
guarantee in extension of the freeze order, can only be in operation
to aid in the investigation against the alleged crime – Since the
appellant company is in no way connected to the alleged crime, the
freeze order against its properties is redundant qua the investigation
– As the
investigation against the appellant company is redundant,
hence, the freeze of the appellant company’s assets and the bank
guarantee imposed in furtherance thereof also becomes redundant
– Therefore, the condition imposed upon the appellant to furnish a
bank guarantee by the Courts below is not sustainable and is set
aside – Orders impugned modified – Appellant permitted to withdraw
the amount along with 4% simple interest.
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
No.1434 of 2023.
From the Judgment and Order dated 16.08.2018 of the High Court
of Gujarat at Ahmedabad in CRLMA No.602 of 2013.
   [2023] 6 S.C.R. 565
565
A
B
C
D
E
F
G
H
566
SUPREME COURT REPORTS
[2023] 6 S.C.R.
Mukul Rohatgi, Sr. Adv., Sunil Fernandes, Ms. Nupur Kumar,
Divyansh Tiwari, M. Thangathurai, Ms. Priyansha Sharma, Ms. Diksha
Dadu, Advs. for the Appellant.
Shailesh Madiyal, Rajesh Ranjan, Mukul Singh, Pratyush
Shrivastava, Arvind Kumar Sharma, Rajat Nair, Ms. Swati Ghildiyal,
Ms. Devyani Bhat, M/s K J John and Co., Advs. for the Respondents.
The Judgment of the Court was delivered by
KRISHNA MURARI, J.
Leave Granted.
2. The present Appeal is directed against the judgment and final
order dated 16.08.2018 passed by the High Court of Gujarat at
Ahmedabad, (hereinafter referred to as “High Court”) in Criminal
Application No. 602 of 2013.
FACTS
3. The brief facts relevant for the purpose of the present appeal
are that the appellant company is a Foreign Institutional Investor and
was permitted by Securities and Exchange Board of India (for short
‘SEBI’) to buy and sell shares and securities in the Indian Stock Market.
However, due to certain litigations, the appellant company had quit trading
in the Indian markets in 2006. It is important to note that at this point, the
appellant company had shares and money in its bank account with ICICI
bank.
4. Subsequently, the appellant company was subject to two freeze
orders under Section 102 of the Code of Criminal Procedure, 1973. The
first freeze order was imposed against the appellant company on
20.10.2006, and the second freeze order was imposed on 17.08.2010.
These
abovementioned freeze orders, as has been discussed in detail
below, were levied against the appellant company on grounds of necessity
of investigation of an alleged crime. At this point, It must be noted that
the said investigation of the alleged crime was initiated against one
Dharmesh Doshi, who is in no way related to the appellant company,
and he was never an employee/share holder/director or a key managerial
person in the appellant company.
5. In so far as the first freeze order is concerned, vide orders
dated 05.12.2008,14.05.2009,16.11.2009 and 17.08.2010, this Court
A
B
C
D
E
F
G
H
567
allowed the appellant company to sell the shares in its account, convert
it into cash, and repatriate the funds so received with interest and without
a bank guarantee, while the first freeze order was still operational. In
terms of the abovementioned orders, the appellant company repatriated
an amount of Rs. 42.51 crores without any bank guarantee.
6. The issue posed in front of us therefore is limited to the second
freeze order. The second freeze order, which was passed by the
respondent herein on 17.08.2010, had incapacitated the appellant
company herein to repatriate an amount of Rs. 38.52 crores, which was
realized in favour of the appellant company herein pursuant to an order
passed by the Securities Appellate Tribunal dated 08.05.2006.
7. Aggrieved, the appellant company had approached this Court
for relief, and vide order dated 12.10.2011, this Court gave liberty to the
appellant company to approach the Trial Court for release of the said
amount.
8. Subsequently, the learned Trial Court, after duly taking notice
of the fact that this Court had allowed the appellant company to repatriate
an amount of Rs.42.51 crores, vide order dated 02.11.2012, held that the
appellant company was entitled to repatriate the amount of Rs. 38.52
crores, however, the release of such funds was subject to a bank
guarantee equivalent to the amount sought to be withdrawn.
9. Aggrieved by the said imposition of the bank guarantee, the
appellant company approached the High
Court, however, vide impugned
order dated 16.08.2018, the High Court reiterated the imposition of the
Bank Guarantee. The appellant company has therefore, as against the
impugned order and judgment, filed the present Appeal.
ANALYSIS
10. We have heard the learned counsel for the parties, however, it
must be noted that despite notice being served the respondent no.2, ICICI
Bank, they have chosen not to put in appearance.
11. It is our opinion, that a bare reading of the decisions rendered
by the lower Courts, would show that the imposition of the bank guarantee
and the freeze orders passed by the respondent, were solely imposed on
the grounds of criminal proceedings being alive against one Dharmesh
Doshi, who is alleged to be connected to the appellant company.
M/S. JERMYN CAPITAL LLC DUBAI v. CENTRAL BUREAU
OF INVESTIGATION & ORS. [KRISHNA MURARI, J.]
A
B
C
D
E
F
G
H
568
SUPREME COURT REPORTS
[2023] 6 S.C.R.
12. While perusing through the documents on record, it has come
to our notice that the said Dharmesh Doshi, on the basis of whom the
condition of bank guarantee was imposed, has now been discharged of
the alleged offences by the Trial Court. It is also important to note that
the said Dharmesh Doshi , who has been discharged of the alleged crime,
was never an employee/share holder/director or a key managerial person
in the appellant company.
13. Since the said Dharmesh Doshi was in no way connected to
the appellant company herein, the trial faced by him, was in his individual
capacity, and not vicariously on behalf of the appellant company.
14. In such a circumstance, wherein the appellant company and
the accused Dharmesh Doshi are two separate entities, and the appellant
company is in no way connected to the concerned Investigation, the
operation of the freeze order against the appellant company, is not legally
tenable.
15. Further, It must also be noted that the appellant company herein,
till date, has not been named in the FIR or the chargesheet in which the
abovementioned Dharmesh Doshi is an accused. It must also be noted
that Mr. Shailesh Madiyal, learned counsel appearing for the respondent
CBI, on the basis of Instructions, made a statement before us in open
Court stating that no criminal proceedings whatsoever are pending against
the appellant company pertaining to the dispute at hand.
16. In such a
circumstance, even if we were to assume that the
accused Dharmesh Doshi’s discharge is subsequently reversed, and he
is convicted, such a conviction would still have no bearing on the properties
of the appellant company herein, since the appellant company is not
alleged to be a part of the crime.
17. Since the appellant company is not connected to the alleged
crime, and has not found mention in the FIR or the chargesheet, the
freeze order against the appellant company’s properties is redundant
qua the investigation, since the appellant company itself is not necessary
for the conclusion of the investigation.
18. It has also come to our notice that the operation of the freeze
order has been active for a period of 17 years and has caused huge
losses to the appellant company. The purpose of the freeze order, and
the bank guarantee in extension of the freeze order, can only be in
A
B
C
D
E
F
G
H
569
operation to aid in the investigation against the alleged crime. Since the
investigation against the appellant company, as has been discussed above,
is redundant, hence, the freeze of the appellant company’s assets and
the bank guarantee imposed in furtherance of the freeze order also
becomes redundant.
19. In the light of above mentioned facts and discussions, the
condition imposed upon the appellant to furnish a bank guarantee by the
Courts below, is not liable to be sustained and is therefore set aside.
20. The orders impugned herein stand modified to that extent and
the appeal, accordingly, stands allowed.
21. As a consequence, the appellant shall be permitted to withdraw
the aforesaid amount along with 4% simple interest, which shall be payable
from 08.05.2006 till the date of actual payment.
Divya Pandey
Appeal allowed.
(Assisted by : Roopanshi Virang, LCRA)
M/S. JERMYN CAPITAL LLC DUBAI v. CENTRAL BUREAU
OF INVESTIGATION & ORS. [KRISHNA MURARI, J.]