Unlawful Freezing of Bank Accounts Sparks Financial Distress: Rajasthan High Court Bench Led by Justice Manoj Kumar Garg

Historical Context of the Case The Rajasthan High Court heard an important case concerning this matter last week. The case concerned the unnecessary and arbitrary suspension of bank accounts by the investigative machinery in India.

In the case of Smt. Kailash Kanwar Rathore and Others v. State of Rajasthan, the petitioners, who were the wife and sons of the main accused, Hukam Singh, were granted a judgment. As a result of a FIR (First Information Report) that was filed against Hukam Singh and others for the offenses of defrauding and criminal breach of trust, their bank accounts were blocked. In their plea, the petitioners argued that they were not directly involved in the alleged misappropriation, which primarily involved Hukam Singh and another employee named Bhim Singh.

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Although the accounts of the primary accused had already been frozen, the investigative agency did not exercise any judgment and still froze the accounts of the petitioners, halting all of their transactions. Although the accounts of the primary accused had already been frozen, the investigative agency did not exercise any judgment and still froze the accounts of the petitioners, halting all of their transactions. engaging in legitimate commercial activities.

Their initial requests to have their accounts defrozen were denied by the Chief Judicial Magistrate, and these requests were later denied by the District Judge when they appealed the decision. Legal Provisions and the Problem That Underlies Them Overall Section 102 of the Code of Criminal Procedure (Cr. Photo credit, P.C.), 1973 is identified as the primary legal provision that is being challenged in this particular instance. This clause gives law enforcement agents the authority to confiscate any property that they have reasonable grounds to think has been stolen or that has been discovered in circumstances that give rise to a reasonable inference that an offense has been committed from the circumstances.

This authority was established for the primary purpose of safeguarding property that is in danger of being disposed of or destroyed, which would render it inaccessible for use in legal actions. However, a significant provision of Section 102, paragraph (3), requires any law enforcement official who seizes property to “immediately report the seizure to the Magistrate with jurisdiction.”

The collecting agency’s flagrant contempt for the mandatory standard of submitting a First Information Report was, of course, the primary issue that the Rajasthan High Court intended to correct.

This requirement was not an exception but rather a standard. In the course of the cross-examination, the officer who was conducting the investigation revealed that there was no notification sent to the appropriate Magistrate regarding the seizing of the bank accounts, which was a clear breach of Section 102(3) of the Criminal Procedure Code. The petitioners’ argument, as well as the one that ultimately led to the court’s decision, would eventually revolve around this procedural breach. Judicial Pronouncements and Understanding of Section 102 Cr.P.C.

The court made extensive references to previous decisions from various High Courts, thereby highlighting the coercive necessity of Section 102(3) of the Criminal Procedure Code. It shone much-needed light on the automatic and, in many cases, arbitrary freezing of bank accounts as a compliance solution that suits all situations and is becoming an increasingly prevalent danger to the livelihoods of both individuals and businesses. Taking into consideration the decisions that were handed down by the Madras High Court in the case of T. Subhulakshmi vs.

Further, in response to the decision that was handed down by the Commissioner of Police and Others and the Delhi High Court in the case of Muktaben M. Mashru v. State (National Capital Territory of Delhi), the Rajasthan High Court has affirmed that a bank account is considered “property” under Section 102 of the Criminal Procedure Code.

Furthermore, the Rajasthan High Court has ruled that failing to report the seizure of such property before the Magistrate constitutes a violation of the mandatory provisions. In the event that this procedure is not followed, the freezing of the bank account in question becomes legally unsustainable. Section 102(3) interpreted any “forthwith” delay as prompt and without delay. A total failure to notify the seizure, rather than only a delay in reporting, weakens the legitimacy of the seizure and strikes at the core of the case, according to the explanation provided by the court and presented by the defendant.

Conclusion and the Next Steps Given the various comments from the judges and the clear violation of the mandatory reporting rule in Section 102(3) of the Criminal Procedure Code, the High Court of Rajasthan decided that the freezing of the petitioners’ bank accounts was not legally justified. The petition was granted by the court, and the rulings of the District Judge and Chief Judicial Magistrate that had refused to de-freeze the accounts were overturned.

The court made the ruling based on the previously presented information. The court’s ruling compelled the bank to refreeze the petitioners’ cash. Given the various comments from the judges and the clear violation of the mandatory reporting rule in Section 102(3) of the Criminal Procedure Code, the High Court of Rajasthan decided that the freezing of the petitioners’ bank accounts was not legally justified. This decision provides relief to individuals and organizations whose accounts remain restricted despite not meeting the conditions clearly outlined in the law.