No Nexus with Offence, No Freezing of Bank Accounts
Section 102 Cr PC Not a Recovery Dues Mechanism
No Blanket Police Powers to Freeze Accounts & Mutual Funds
Criminal Law of Section 102 Cr PC cannot be used for recovery
Freezing of Accounts & Financial Assets under Section 102 Cr PC is lawful only when there is a direct link between the accounts and the alleged offence.
Blanket Freezing of Accounts & Financial Assets and use for criminal process for recovery of civil dues is not legal and valid.
Criminal Process of Freezing Accounts Not a Debt Recovery Tool
Accused requested the first informant to lend stock holdings for six months and assured to pay interest. However, the accused had dealt with some of the shares instead of returning to the first informant. This has led to the registration of the crime.
In 2018, the IO freezed bank accounts and mutual funds of the accused. The Magistrate allowed the application for defreezing the accounts on furnishing bank guarantee of Rs.6.55 crores.
The well recognized principles that the criminal proceedings are not for realization of the disputed dues and the criminal court is not expected to act as a recovery agent to realize the dues of the complainant, particularly without trial, also come into play.
Bombay HC – Salutary Principles Reiterated on Seizure of the Property by the Police Officer under Section 102 Cr PC – The pre-condition for exercise of power under Section 102 (1) is the existence of direct link between the seized property and the alleged offence. (vii) A property not suspected of commission of the offence, which is being investigated by the Police Officer, cannot be seized. (viii) Section 102 does not enable the police to seize the property, with a view to do justice and hand it over to the person whom they believe to be legitimately entitled thereto.
The order of seizure can be challenged on the ground that the officer who effected the seizure lacked jurisdiction to act under Section 102(2) or that seized article does not satisfy the definition of, “property” or on the ground that the property which was seized could not have given rise to suspicion concerning the commission of the offence.
What IO has seized is the amount in the bank accounts, and the mutual fund units standing to the credit of the accounts of accused Nos.1 and 2, with various asset management companies. The shares which were allegedly lent have not been seized. That brings to the fore the question of nexus of the seized accounts and the mutual funds with the commission of the alleged offences.
Judgment dated 7.5.2026 of the High Court of Bombay in Criminal Application No.790 of 2024 of Geeta Kampani Vs. State of Maharashtra and another with connected criminal application.
