Police Can Freeze Bank Accounts U/S 102 CrPC For Crimes Under Prevention Of Corruption Act: Kerala High Court

Post By 24law
March 12, 2025

Pranav B Prem

In a significant ruling, the Kerala High Court has upheld the power of police officers to freeze bank accounts under Section 102 of the Code of Criminal Procedure (CrPC) while investigating offences under the Prevention of Corruption Act (PC Act). The Court rejected the argument that freezing must be done solely through the Criminal Law Amendment Ordinance, 1944.

The judgment, delivered by Justice C. Jayachandran, came in response to a petition filed by an accused, Sreekala K., challenging the freezing of her bank accounts. The petitioner contended that the freezing order issued by the Deputy Superintendent of Police, Vigilance and Anti-Corruption Bureau, was invalid as it did not adhere to the provisions of the 1944 Ordinance.

Freezing Under Section 102 CrPC vs. Attachment Under 1944 Ordinance

The petitioner argued that since Section 18A of the PC Act extends the applicability of the 1944 Ordinance to offences under the Act, any seizure or attachment must be conducted under the Ordinance, not under Section 102 of CrPC. The amicus curiae, Advocate John S. Ralph, supported this argument, stating that the Ordinance provides additional safeguards, including a mandatory judicial order and an opportunity for the accused to be heard.

However, the Court dismissed this contention, highlighting the distinct objectives of the two provisions. The judgment stated: “While Section 102 provides for ‘seizure’ of property which is suspected to have been stolen or found in circumstances creating suspicion of commission of an offence, the Criminal Law Amendment Ordinance provides for ‘attachment’ of money or property believed to have been procured by the accused by means of the scheduled offence.” The Court further observed that while Section 102 CrPC serves as a step in the investigation process to seize evidence, the Ordinance primarily aims to secure illicit gains for potential forfeiture upon conviction. Relying on the Supreme Court’s decision in State of Maharashtra v. Tapas D. Neogy (1999), the Court reiterated that bank accounts fall within the definition of property that can be seized under Section 102 CrPC.

Case Background

The case involved allegations that the petitioner abetted her husband, the first accused, in misappropriating ₹7.6 crores from the Kerala Bar Council Welfare Fund. The prosecution alleged that approximately ₹96 lakhs was funneled through her bank accounts. She was charged under Sections 109, 120B, 409, 420, and 477A of the Indian Penal Code, along with Sections 13(2) and 13(1)(c) of the PC Act. The petitioner challenged the freezing order, arguing that it was issued without judicial authorization and without reporting to the Magistrate, as required under Section 102(3) CrPC.

Non-Compliance With Section 102(3) CrPC Does Not Vitiate Seizure

The Court also addressed the argument that failure to report the seizure to the Magistrate rendered it illegal. The petitioner relied on Nazeer K.T. v. The Manager, Federal Bank (2024), where a single-judge bench held that non-compliance with Section 102(3) CrPC affects the validity of the seizure.

However, the Kerala High Court dismissed this argument by referring to the Supreme Court’s ruling in Shento Varghese v. Julfikar Husen and Others (2024), which clarified: “The obligation to report the seizure to the Magistrate under Section 102(3) CrPC is not a jurisdictional pre-requisite to exercise the power of seizure nor is the seizure subject to compliance of Section 102(3).” The Court noted that non-compliance might impact the property holder’s ability to seek disposal but does not automatically invalidate the seizure. The Court emphasized that it is the police's duty to report seizures promptly but clarified that failure to do so does not render the seizure illegal. “If the provision is not complied with, the right of the property holder to seek disposal of the property is seriously affected,” the judgment stated.

Final Decision and Directions

Dismissing the petition, the Court upheld the freezing order but directed the investigating officer to comply with Section 102(3) CrPC within one month. It clarified that the petitioner could still file an application under the Code of Criminal Procedure seeking disposal of the frozen accounts, which would be considered by the Special Court.