High Court of KeralaSingle Judge2020-08-25Writ petition allowed; freezing of bank account...

South Indian Chamber of Commerce and Industries Members Welfare Charitable Society No. IV/109/1, Muttambalam Kara, Mutttambalam Village, Mutttambal P.O., Kottayam Taluk, Kottayam District, PIN - 686 002 represented by its President Shri Wilson Jacob v. M.C.Alex and others

Case / Petition Number:WP(C).No.13548 of 2020

Neutral Citation:/

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: T. V. Anil Kumar
Judgment Date: 2020-08-25
Court Decision / Holding: The writ petition is allowed. The bank accounts frozen by the fifth respondent are declared illegal and orders to de-freeze the accounts of Axis Bank (R3) and ICICI Bank (R4) are issued forthwith. All pending interlocutory applications are closed.
Final Disposition: Writ petition allowed; freezing of bank accounts quashed; de-freeze orders issued; interlocutory applications closed.

Parties to the Case

Appellants / Petitioners

South Indian Chamber of Commerce and Industries Members Welfare Charitable Society No. IV/109/1, represented by its President Shri Wilson Jacob
Wilson Jacob, S/o.K.C.Jacob

Respondents

M.C.Alex, S/O.Chacko
District Registrar of Cooperative Societies, Kottayam
Branch Manager Axis Bank, Kottayam Branch
Manager ICICI Bank, Kottayam Branch
Sub Inspector of Police, Kottayam East Police Station
Station House Officer, Kottayam East Police Station
District Police Chief, Kottayam

Legal Representation & Advocates

Counsels for Petitioners

• Adv. Sri. M.P. Madhavankutty

Counsels for Respondents

• Adv. Sri C.A. Chacko
• Adv. Sri P. Paulochan Antony
• Adv. Sri Suresh Sukumar
• Adv. Sri Lal K. Joseph
• Adv. Sri A.A. Ziyad Rahman
• Adv. Sri Anzil Salim
• Adv. Sri Chacko Mathews K.
• Adv. Sri Udayakumar.K.B. (P.P.)

Case Synopsis & Summary

This writ petition under Article 226 of the Constitution of India challenges a banking freeze imposed on the petitioners’ accounts in Axis Bank (R3) and ICICI Bank (R4) in connection with Crime No. 2003/2018 at Kottayam East Police Station, alleging misappropriation by the second petitioner, the former Treasurer of the Society. The first petitioner is the charitable South Indian Chamber of Commerce and Industries Members Welfare Charitable Society, represented by its President, and the second petitioner is Wilson Jacob. The 5th respondent, a Sub‑Inspector, ordered freezing of the Society’s accounts on the basis of investigations and alleged irregularities, supported by Ext.R1(a) and related documents, while the District Registrar of Co‑operative Societies noted irregularities in the Society’s management. The petitioners contend that the freeze targets the Society’s assets, not the tainted money in personal hands, and therefore lacks direct nexus to the alleged offences under IPC sections 465, 468 and 471. They argue that Section 102 Cr.P.C. requires a direct nexus and that freezing the Society’s accounts harms its welfare purpose and members’ interests. The court considered Article 226 jurisdiction despite Section 457 Cr.P.C.’s alternate remedy, and held the freezing illegal, quashing the order and directing banks to de‑freeze forthwith, closing interlocutory applications. The decision emphasizes that any asset freeze must be legally tethered to the specific nexus with the alleged offence and should avoid compromising welfare activities.

Provisions of Law Cited

Article 226 of the Constitution of IndiaSection 102 of the Cr.P.C.Section 457 of the Cr.P.C.Indian Penal Code sections 465, 468, 471

Legal Doctrines & Maxims

Nexus requirement under Section 102 Cr.P.C. for freezing bank accounts
Writ jurisdiction under Article 226 not barred by Section 457 Cr.P.C. where glaring illegality is alleged

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioners submit that the freezing of the Society’s bank accounts is illegal and unwarranted since the accounts belong to the welfare organization and there is no direct nexus tying the Society’s assets to the alleged misappropriation. They argue that the second petitioner is accused of forged signatures in audit reports and meeting minutes, but there is no evidence that tainted funds were deposited in or diverted through the Society’s bank accounts. Citing Section 102 Cr.P.C., they contend that freezing must be based on direct nexus with the offence, supported by material showing reasonable suspicion. They emphasize the Society’s welfare function and the potential harm to its members if funds are frozen. They acknowledge Section 457 Cr.P.C. as an alternate remedy but assert that writ jurisdiction is available for glaring illegality. The petition seeks de-freezing and relief from continuing investigation pressures on the Society, asserting that the improper freezing affects the organization’s functioning and trust among members.

Contentions of Respondents

The respondents argue that freezing was warranted to prevent dissipation of tainted funds and to preserve assets in the wake of alleged misappropriation by the second petitioner. They rely on complaints and district registrar reports indicating financial irregularities in the Society’s accounts, suggesting a nexus between the misappropriated funds and the Society’s assets. They contend that the accounts under freeze could be used to siphon funds, warranting protective action under Section 102 Cr.P.C. They emphasize the ongoing investigation and the necessity to curb improper conduct, including forging audit reports and minutes. Although the Society disputes direct linkage, the respondents maintain that freezing is a prudent, legally permissible measure pending the investigation and potential prosecutions, and that the remedy under Section 457 Cr.P.C. is not exclusive of writ jurisdiction in cases of glaring illegality.”},

Cited Precedents (4)

Case Name	Citation	Treatment	Explanation
Teesta Atul Setalvad & ors. v. State of Gujarat & ors.	(2017 KHC 6866)	Positive	Used to establish the principle that bank accounts should be frozen only if there is a direct nexus with the offence.
Enrica Lexie M.T. v. Doramma	[(2012)6 SCC 760]	Mentioned Only	Cited by petitioners to discuss alternate remedies; not central to the decision.
Whirlpool Corporation v. Registrar of Trade Marks, Mumbai & ors	(1998 KHC 1225)	Mentioned Only	Cited as part of comparative discussion on remedies; not a core authority for the ruling.
Maharashtra Chess Association v. Union of India & ors	(2019 KHC 6725)	Mentioned Only	Cited in discussion of remedy options; not directly controlling the outcome.

Diagnostic Tool

Beta

Does this judgment govern your specific facts?

Don't risk relying on a distinguishable precedent. Enter your facts or proposition below. We will test it against South Indian Chamber of Commerce and Industries Members Welfare Charitable Society No. IV/109/1, Muttambalam Kara, Mutttambalam Village, Mutttambal P.O., Kottayam Taluk, Kottayam District, PIN - 686 002 represented by its President Shri Wilson Jacob v. M.C.Alex and others and instantly map out authorities that support, challenge, or govern your position.

Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE T.V.ANILKUMAR** **TUESDAY, THE 25TH DAY OF AUGUST 2020 / 3RD BHADRA, 1942** ## **WP(C).No.13548 OF 2020(P)** ## **PETITIONERS:** **1 SOUTH INDIAN CHAMBER OF COMMERCE AND INDUSTRIES MEMBERS WELFARE CHARITABLE SOCIETY NO.IV/109/1, MUTTAMBALAM KARA, MUTTAMBALAM VILLAGE, MUTTAMBALAM P.O., KOTTAYAM TALUK, KOTTAYAM DISTRICT, PIN - 686 002, REPRESENTED BY ITS PRESIDENT, SHRI. WILSON JACOB. 2 WILSON JACOB, S/O.K.C.JACOB, AGED 53 YEARS PRESIDENT, SOUTH INDIAN CAMBER OF COMMERCE AND INDUSTRIES, MEMBERS WELFARE CHARITABLE SOCIETY, KARUCHIRA VADAKKETHIL HOUSE, NO.3, PERCH VILLA, MOOLAVATTAM KARA, NATTAKOM VILLAGE, KOTTAYAM TALUK, KOTTAYAM DISTRICT, PIN - 686 012.** ## **BY ADV. SRI.M.P.MADHAVANKUTTY** ## **RESPONDENTS:** **1 M.C.ALEX, S/O.CHACKO AGED 58 YEARS MUTHALAKKONATHU HOUSE, ROSALAYAM, MALLOOSHERRY P.O., MALLOOSHERRY KARA, AYMANOM VILLAGE, KOTTAYAM TALUK, KOTTAYAM DISTRICT, PIN - 686 041.** - **2 DISTRICT REGISTRAR OF CO-OPERATIVE SOCIETIES COLLECTORATE P.O., KOTTAYAM, PIN - 686 002.** **3 BRANCH MANAGER AXIS BANK, KOTTAYAM BRANCH, KOTTAYAM DISTRICT, PIN - 686 001.** ## **W.P.(C)No.13548 of 2020** ## **:-2-:** - **4 MANAGER, ICICI BANK KOTTAYAM BRANCH, KOTTAYAM DISTRICT, PIN - 686 001.** - **5 SUB INSPECTOR OF POLICE KOTTAYAM EAST POLICE STATION, KOTTAYAM DISTRICT, PIN - 686 002.** - **6 STATION HOUSE OFFICER KOTTAYAM EAST POLICE STATION, KOTTAYAM DISTRICT, PIN - 686 002.** - **7 DISTRICT POLICE CHIEF KOTTAYAM, PIN - 686 001. R1 BY ADV. SRI.C.A.CHACKO R3 BY ADV. SRI.P.PAULOCHAN ANTONY R4 BY ADV. SRI.SURESH SUKUMAR R4 BY ADV. SRI.LAL K.JOSEPH R4 BY ADV. SRI.A.A.ZIYAD RAHMAN R4 BY ADV. SRI.ANZIL SALIM R4 BY ADV. SHRI.CHACKO MATHEWS K. ADV.SRI. UDAYAKUMAR.K.B. (P.P.)** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 25.08.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **W.P.(C)No.13548 of 2020** ## **:-3-:** ## **Dated this the 25[th] day of August, 2020** ## **J U D G M E N T** The first petitioner is a charitable Society represented by the President, second petitioner. The first respondent was the former Treasurer of the Society. 2. On the motion of the first respondent, Ext.P3 FIR was registered against the first petitioner as Crime No.2003/2018 of Kottayam East Police Station for commission of offences punishable under Sections 465, 468 and 471 IPC. As part of the investigation of the crime, the Bank accounts of the 1[st] petitioner, Society held in Axis Bank (the 3[rd] respondent) and ICICI Bank (the 4[th] respondent) were freezed on the allegation that the funds of the Society were misappropriated by the first petitioner, by manipulating the records of the Society with the intention of making wrongful ## **W.P.(C)No.13548 of 2020** ## **:-4-:** gain to him. 3. The petitioners have approached this Court invoking Article 226 of the Constitution of India for a declaration that the orders issued by the 5[th] respondent Sub Inspector of Police, Kottayam East Police Station freezing the bank accounts are illegal and liable to be set aside. Further a direction is also sought to be issued to the respondents-bankers to de-freeze the accounts maintained in the name of the first petitioner, Society. 4. I heard the learned counsel for the petitioners, the learned counsel for the first respondent and also the learned Public Prosecutor. 5. The first respondent filed a counter seeking to sustain the order of freezing. The learned Public Prosecutor submitted statements of facts dated 14.7.2020. The grievance ventilated by the first respondent could be gathered from ## **W.P.(C)No.13548 of 2020** ## **:-5-:** Ext.R1(a) complaint submitted by him before the 5[th] respondent Sub Inspector of Police. The gist of the allegations is that the second petitioner, who is the President of the Society, forged the signatures in the audit report of the Society for the years 2015-16 and 2016-17 and submitted the same before the District Registrar, Kottayam. It is also stated that he submitted the minutes of the Annual General Body Meeting dated 3.10.2018 before the Registrar of Societies by putting false signatures of the members. The crux of the accusation is that these documents were manipulated with a view to making wrongful gain out of the funds of the Society and he thus misappropriated the same. 6. Learned counsel for the first respondent in this respect invited my attention to Annexure R1(b) proceedings of the District Registrar of Cooperative Societies, Kottayam, dated 8.5.2020 which indicates that certain financial irregularities ## **W.P.(C)No.13548 of 2020** ## **:-6-:** with respect to the management of bank accounts of the Society were traced out against the second petitioner. 7. On the other hand, the learned counsel for the petitioners submitted that the accounts freezed belong to the Society and there is no allegation in Ext.R1(a) that the assets in the accounts have any direct link with the offences in question. It is strenuously contended that the second petitioner has not misappropriated any amount and that the accounts maintained in the name of the Society have nothing to do with the tainted money allegedly misappropriated by him. 8. In this connection, the statement of facts submitted by the fifth respondent is also relevant. On going through the statement, there is nothing to indicate that the assets in the bank accounts of the Society have any close or direct link with the offences in question. The Investigating Officer has ## **W.P.(C)No.13548 of 2020** ## **:-7-:** stated that the matter is under investigation and unless the accounts are kept freezed, there is chance of funds being misused. 9. The principle underlying Section 102 of Cr.P.C. is that bank account of a person could be freezed only when the transactions in the account have direct nexus with the offence alleged against the accused. This legal position is clear from the decision in **Teesta Atul Setalvad & ors. v. State of Gujarat & ors. (2017 KHC 6866)** . Nobody has a case that the second petitioner, after the alleged misappropriation, has amassed the suspected money in his personal account. The Society is not an accused in the crime also. The account of the Society is being maintained for the welfare of the members. In such scenario, it may not be proper to allege that the assets in the accounts maintained by the Society have direct nexus to the offence in question and are liable to be freezed. ## **W.P.(C)No.13548 of 2020** ## **:-8-:** 10. If at all the second petitioner is involved in the offences and has embezzled cash, it is open to the authorities to prosecute him in accordance with law. But that is no good ground for issuing an order freezing the assets of the Society. This would adversely affect the very interest of the members of the Society. In this view of the matter, I am of the opinion that the freezing of bank accounts of the Society made by the fifth respondent is quite illegal. If the fifth respondent has chosen to proceed against the second petitioner alleging his assets to be closely linked with the criminal charges, it would then have been a different matter. Even for such an action also, there must be materials supporting reasonable suspicion. 11. Learned counsel for the first respondent submitted that appropriate remedy open to the petitioners is to approach the Magistrate having ## **W.P.(C)No.13548 of 2020** ## **:-9-:** jurisdiction and invoke Section 457 of Cr.P.C. for appropriate relief and in this respect, he relied on decision reported in **Enrica Lexie M.T. v.** **Doramma [(2012)6 SCC 760]** . In reply to that, the learned counsel for the petitioners submitted two decisions, reported in **Whirlpool Corporation v. Registrar of Trade Marks, Mumbai & ors (1998 KHC** **1225)** and **Maharashtra Chess Association v. Union of** **India & ors (2019 KHC 6725)** . After having considered the arguments on either side, I am of the opinion that the writ jurisdiction of this Court cannot be said to be barred in a case where a glaring illegality committed by the seizing Officer is alleged and sought to be substantiated despite Section 457 of the Cr.P.C. providing an alternate remedy in such situation. 12. Having regard to the facts and circumstances of the case, I am satisfied that this was not a fit case for the fifth respondent to have ## **W.P.(C)No.13548 of 2020** **:-10-:** resorted to freezing of bank accounts maintained with the respondent Banks (R3 and R4). In the circumstances, the freezing of accounts is only to be held as illegal and quashed. In the result, this writ petition is allowed declaring the act of the fifth respondent in freezing the bank accounts to be illegal. There will be a direction to respondents 3 and 4 to de- freeze the accounts forthwith. All pending interlocutory applications are closed. Sd/- **T.V.ANILKUMAR JUDGE** ami/ ## **W.P.(C)No.13548 of 2020** **:-11-:** ## **APPENDIX** ## **PETITIONERS' EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE BYLAWS OF THE 1ST PETITIONER SOCIETY.** **EXHIBIT P2 TRUE COPY OF THE INJUNCTION ORDER BEARING I.A.NO.3442/2018 IN O.S.NO.765/2018 BEFORE THE ADDITIONAL MUNSIFF'S COURT, KOTTAYAM.** **EXHIBIT P3 TRUE COPY OF THE FIRST INFORMATION REPORT IN CRIME NO.2003/2018 BEFORE THE KOTTAYAM EAST POLICE STATION.** **EXHIBIT P4 TRUE COPY OF THE BAIL ORDER DATED 21.12.2018 IN CRL. M.P.NO.3271/2018 BEFORE THE SESSIONS COURT, KOTTAYAM.** **EXHIBIT P5 TRUE COPY OF THE LETTER DATED 05.06.2020 BEFORE THE 3RD RESPONDENT BANK SENT BY THE 5TH RESPONDENT.** **EXHIBIT P6 TRUE COPY OF THE LETTER DATED 05.06.2020 TO THE 4TH RESPONDENT BANK.** **EXHIBIT P7 TRUE COPY OF THE LETTER DATED 08.06.2020 ISSUED BY 3RD RESPONDENT.** **EXHIBIT P8 TRUE COPY OF THE REPRESENTATION DATED 10.06.2020 BEFORE THE 7TH RESPONDENT BY THE 2ND PETITIONER.** ## **W.P.(C)No.13548 of 2020** ## **:-12-:** **EXHIBIT P9** **TRUE COPY OF THE I.A.NO.3442/2018 IN O.S.NO.765/2018 BEFORE THE MUNSIFF'S COURT, KOTTAYAM DATED 1.11.2018.** **EXHIBIT P10** **TRUE COPY OF THE LETTER ADDRESSED TO THE 2ND RESPONDENT DATED 27.5.2019** **EXHIBIT P11 TRUE COPY OF THE RECEIPT DATED 2.7.2019 EXHIBIT P12 TRUE COPY OF THE LETTER ADDRESSED TO THE 2ND RESPONDENT 5.10.2018** **EXHIBIT P13 TRUE COPY OF THE RECEIPT DATED 8.10.2018 EXHIBIT P14 TRUE COPY OF THE RESOLUTION DATED 20.7.2020 PASSED BY THE EXECUTIVE COMMITTEE OF THE 1ST PETITIONER** **EXHIBIT P15 TRUE COPY OF THE UNDERTAKING DATED 21.7.2020 OF THE 2ND PETITIONER** **EXHIBIT P16 TRUE COPY OF THE PUBLIC NOTICE BEARING NO.2/2004 DATED 13.9.2004** **RESPONDENTS' EXTS.:** **EXHIBIT R1(a) TRUE COPY OF COMPLAINT DATED 26.5.2020 MADE BEFORE THE 6TH RESPONDENT** **EXHIBIT R1(b) TRUE COPY OF REPORT DATED 8.5.2020 OF 2ND RESPONDENT** **EXHIBIT R1(c) TRUE COPY OF FIR IN CRIME NO.514/2020 OF KOTTAYAM EAST POLICE STATION ALONG WITH FIS DATED 4.6.2020**