IQBAL SHAH v. THE STATE OF MADHYA PRADESH

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The Petitioner is a software engineer at Big Berry Media Pvt. Ltd., and the Petitioner had recently started a business ot Digital Marketing. The Petitioner is using the Petitioner's Savings Bank Account with Respondent No.2 with Account

No.290010100100723 as well Petitioner's Business Account'^The Petitioner is a user of BINANCE App on Petitioner's mobile phone with the User ID "The Godman" and had some crypto currency (USDT) in Petitioner's wallevaccount of the said application' It^is submitted that the BINANCE Exchange Application provides facilities to users to sell and purchase crypto currency^The process of sales and purchases of crypto currency is completely online with KYC verification of all the registered users^by transferring amounts from one bank to another' The Petitioner herein had placed a request to sell his crypto currency (USDI) of Rs.1,37,312,71 price Rs.86.98 per unit and quantity l57B'67 USDT and Rs.1,49,999.61 price 86.98 per unit and quantitv and 1724.53 USDT on BINANCE Exchange Application through^his user profile. It is Further the case of the Petitioner that^upon placing Petitioner's crypto currency for sale any registered^user on BINANCE can accept the request and purchase the crypto currency. One person by name Arjun Karam Singh Bahadur approached the Petitioner to purchase crypto currency^and

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Petitioner agreed to sell crypto currency to said Ariun Karam Singh Bahadur. On LA.O2-2O23 the Petitioner First sold crypto currency of Rs.1,37,312.7!, price Rs'86'98 and quantity 1578'67 USDT and then again sold crypto currency of Rs'1,49,999'61 price Rs.86.98 and quantity 174'53 USDT to the said Arjun KaramSinghBahadur.ItisfurtherthecaseofthePetitionerthat as per the procedure of BINANCE on the same date the user^said Arjun^paid

Petitioner's

an amount of Rs.1,37,3131- and Rs 1,50,000/-^to Bank i.€., Respondent No.3 to acco'unt

No.2g00l0l0oLoTTz3andsentthescreenShotofpaymentproof on the BINANCE chart itself. The Petitioner herein had received the above mentioned amount from the buyer in his bank account as per the legal statutory procedure decided by RBI' India^and there is no statutory violation' To the shock of the Petitioner^on 06.07.2023 when the Petitioner tried to make an online transactionfromhisBankaccountwithRespondentNo.3,the transaction did not take place as such and when the Petitioner called the customer care of Respondent No 3 bank' the customer care officer informed that Petitioner's account was marked^as Deblt Freeze and the Petitioner needed to visit Respondent No'3

bank/branch for further details' Upon Petitioner's repeated requests to provide information related to Petitioner's^bank

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account, the Operation Manager of the 3'd Respondent Bank informed the Petitioner that they received a statutory order notice U/s.94 Criminal Procedure Code from Respondent No.4 to freeze Petitioner's bank account and several other bank accounts, in view of an FIR being registered against Mr. Arjun Karam Singh by Respondent No.4 and on 20.07.2023 Petitioner received the copy of the letter dated 20.07.2023 from Respondent No.3 branch stating the freezing of the bank account of the petitioner bearing No.290010100L07723. It is further the case of the Petitioner that when the Petitioner enquired with the 4th Respondent the 4th Respondent informed the petitioner that an FIR was registered on t7.02.2023 at Cyber police Station/Outer North Delhi. The specific case of the petitioner is that the Petitioner as on date had not been served with a notice U/S. L-A nor is an accused in the FIR or any averment against the Petitioner has been made. The Respondent No.4 had been calling the Petitioner and harassing the petitioner to appear before the 4th Respondent at New Delhi. Challenging the action of the Respondent No.3 in freezing the petitioner,s Savings Bank Account No.290010100L07723 upon the instructions of the Respondent No.4 Police authorities to freeze the petitioner.s account and challenging the alleged notice issued U/s.91 Cr.pC.,

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in FIR No.1712023, the Respondent No'4 the Petitioner filed the present writ Petition.

4 ^PEUSEDTHE

RECORD

A.^The impugned notice dated 2O'O7'2o23 reads^as under:

*To

Kambham Sathvik ReddY

g -5- l2ol3, Sapthagiri Colony, Karimnagar, Telangana - 505 001.

Sub: Notice u/s⁹¹Cr.P.C. in the FIR No'17/23 Cyber Police Station, outer North District, Delhi' With reference to the above notice from cyber police station, outer north district delhi and provided the below details from you are account (290010100107723)

1) You are account has been marked debit freeze' This is for Your kind information'"

B. Counter affidavit^has been filed by the Respondent No.3, in particular, paras 4, 6, 8, 10 and 11' reads^as u nde r:

"4) In reply to Para 4,5,6,7,^B, 13 & 14 of the^writ affidavit, I submit that Respondent No'3 has privity of cognizance about the Binance Application used by the writ

petitioner for his crypto currency transactions' Il

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6) In reply to Para No.l1 of the writ affidavit, I deny that the Petitioner visited Respondent No.3 several times while he has been staying at Hyderabad since more than year. Respondent No.3 promptly informed orally to the petitioner that the account has been freezed with a balance of .Rs.4,67,542.04 Ps by the Statutory Notice Department, Axis Bank Limited, Mumbai in response to Notice dated 06.07.2023 received uls 9L of Cr.p.C. from Respondent No.4 Cyber Police Station, Outer North District, Delhi in FIR No.l7/2023 registered against Mr.Arjun Karam Singh.

B) In reply to Para No. 15 of the writ affidavit, I sUbmit that the subject account has not been frozen by Respondent No.3. Such freezing of the subject account by Statutory Notice Department, Axis Bank Limited, Mumbai is neither arbitrary nor iltegal and it is in terms of following term and condition agreed by the petitioner at the time of opening the account.

Account Freeze: I authorize the bank to freeze my account in the following circumstances, with intimation to me except where specif ied otherwise:

a) When a minor, who is the holder of the account, attains majority .

b) If it is suspected by the bank that transaction in my account are not initiated by me (the Bank will not assume any liability for the transactions atready executed ).

c) If it is suspected that my account is being misused as a money mule or as a channel for unauthorised money

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pooling or a conduit for any illegal activity. (I wiil not receive a notice in this case).

d) Submission of either PAN or Form 60 is mandatory for all individual domestic Savings account opening as per regulatory guidelines.

Further, the Petitioner is bound to send back the alleged illegal amount received by him irrespective of the fact that he knew or did not know the source of remitter. The competent authority of Respondent No.3 is bound to freeze the subject account upon notice from Statutory Authority. Such freezing is neither unwarranted nor beyond its authority of Respondent No.3. 9) In reply to para No. 16. 17, LB, 19 & 21 of the writ affidavit, I submit that these paragraphs are not concerned to the Respondent No.3.

10) In reply to Para No.20 of the writ affidavit, I submir that the action of freezing by the Respondent No.3 is neither illegal nor arbitrary and is not violation of RBI Rules & Regulations. It is not violation of principles of natural justrce because such freezer is within the terms and conditions agreed by the petitioner at the time of opening the subject account. It is immaterial whether the petitioner made several requests for defreezing the account. Respondent No.3 has no power to defreeze the account unless it is cleared by the Respondent No.4.

11) In reply to Para No.22 of the writ affidavit, I submrt that the action oF the Respondent No.3 would not cause senous and irreparable injury to the Petitioner which was done unavoidably at the behest of Respondent No.4.

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Respondent No.3 has no role in infringing the constitutional rights of the writ petitioner. Pursuant to the order dated O4.Lt.2023 received frorn Chief Metropolitan Magistrate (North District), Rohini Courts, Delhi, Respondent No.3 remitted Rs. 1,45,000/- out of the disputed amount of Rs.2,87,312.32 Ps to the account of Mr.Krishna Mohan Choudhary on 2t.Lt.2023."

5. The learned Counsel appearing on behatf of the Petitioner mainly put-forth the foltowing submissions :

i. The bank account of the petitioner had been frozen by Respondent No.3 and 4 illegally and arbitrarily without issuing notice or giving an opportunity to the petitioner.

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Petitaoner is a bonafide receiver of the money for the sale of the crypto currency which is completely legal in India.

iii. The freezing of the bank account of the petitioner merely on the alleged suspicion, petitioner being neather aware that the bank account from which the buyer is transferring the amount online is of theft or fraud nor has any reason to believe that amount is stolen or of theft or fraud.

iv. With the illegal freezing of the bank account of the Petitioner the petitioner is unable to do business and is facing serious difficulties.

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There is^no allegataon on the part of the Petitioner of cheatang or obtainang property by fraud in the FIR and therefore there is no justification on the part of the 4th Respondent to pass orders to freeze the bank account of the Petitioner and the Petitioner did not involve in any criminal activity.

vi. The amount of Rs'1,5O,OOO/- and Rs.1r37,3L2/- was received through a valid sale of crypto currency and therefore the proceedings initiated against the Petitioner by 3d and 4th Respondents are totally unwaffanted.

vii. The Petitioner is not in a position to operate^his account and the 4th Respondent had not issued any notice regarding the case to the Petitioner^or produced any evidence relating to transfer^of funds to Petitioner's account and also have not found any relation of the Petitioner with the accused or in the offence.

viii. The learned counsel for the Petitioner brought^on record an unde kino affidavi t dated^18.1L.2023 and the two relevant paras of the^said undertaking affidavit read as under^:

(a) I submit that on the last date of hearing i.e., on 17.1L.2O23, this Hon'ble Court^was pleased to direct me to submat^an

undertaking stating no objection^for

depositing an amount of Rs.2,87,3L2.32

t2 received from the sale of crypto currency in a separate fixed deposit account maintained by Respondent No.3.

(b) f,submit that in view of the above, I have no objection to the said disputed amount of Rs.2,87,3L2.32 received from the sale of crypto currency in a separate fixed deposit account maintained by Respondent No.3 and pray this Hon'ble Court to permit me to operate my bank account bearing

No.29OO1O1OO[O7723 maintained by

Respondent No.3 with IFSC : UTIBOOOO29O in the interest of justice.

ix. The learned, counse! for the Petitioner placed reliance on the judgment of the Apex Court in Internet & Mobile Association of fndia vs. Reserve Bank of fndia, Writ Petition (Civil) No.528/2O18 and Writ Petition (Civil) No.373l 2O18, where under it was observed by the Apex Court that the sale or purchase of crypto currency is not illegal in India and directed for defreezing of all bank accounts that were frozen.

The learned counsel for the petitioner ptaced reliance on the judgment dated L4.O9.ZOZa reported in (2022) SCC Online Madras 5124 in Sahil Raj Vs. State of Tamilnadu, and contended x

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that the Petitioner is entitled for the relief prayed for in the Present writ Petition.

On the basis of the above referred submissions the Learned Counsel for the Petitioner submitted that the writ petition shoutd be altowed as prayed for'

6. The learned counsel appearing on behalf of^{the 3'd} Respondent places reliance on the counter affidavit filed by Respondent No.3 mainly put-forth the following submissions.

i. The subject account has not been frozen^by ResPondent No.3.

!t. The freezing of the subject account by Statutory Notice Department Axis Bank, Mumbai is not illega! and it is in terms and conditions as agreed by the Petitioner at the time of opening of the account. The said freezing as warranted and within the authoritY of 3'd Respondent.

iii. In response to^the undertaking affidavit dated 18.11.2023 filed by the Petitioner the learned counsel filed a Memo dated 23'LL'2O23^and specifically put-forth the following contentions'

(a) The subject account No.29OO1O1O OLO7723 of the Petationer maintaaned with the Respondent No.3 having outstanding balance i

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of Rs.4,67,542.04 ps has been under attachment since 06.07.2023 as was done by the Statutory Notice Department, Axis Bank . Limited, Mumbai and not Respondent No.3 in response to Notace dated 06.07.2021 U/s.91 Cr.P.C., received from Cyber police Station, Outer North

No.l7/2A23.

District, Delhi in FIR

(b) The Statutory Notice Department, Axis Bank Limited, Mumbai is not made a party.

(c) Pursuant to the order dated O4.t1.2O23 received from Chief Metropotitan Magistrate (North District), Rohini Courts, Dethi, R_3 remitted Rs.1,45,OOO /_ out of the disputed amount of Rs.2,97,312.32 pS to the account of Mr. Krishna Mohan Choudhary on

21.1,.2023.

(d) During attachment of the account disputed - amount of Rs.2,g7,gl2.L2 ps cannot be transferred to FDR as the amount is subject to the disposat of Delhi Court.

(e) We can transfer the remaaning disputed amount to suspense account to dispose the same as per the order of Delhi Court.

(f) The writ petition is not maintainable on the ground of Jurisdiction.

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7. In pursuance to the orders of thas Court dated 2L.O9.2023 the learned Counsel for the Petationer took out personat notice to the Respondent Nos.2, 3 and 4 in the present writ petition and filed Memo of Proof of Service dated 3O.O9.2O23 atong with the original postal receipt and the copy of the personal notice and a perusal of the postat track consignment and the contents of the^Memo dated3o.O9.2O23 indicate that the Notice has been delivered to Respondents No.2, 3 and^4.

8. In so far as the maintainability of the writ petition is concerned in Kusum Ingots and AIloys Limited vs. Union of India & Another reported in (2OO4) 6 SCC 254 the Supreme Court held by placing reliance on Clause 2 of Articte 226 ol the Constitution of India and also Sec.2o(c) of the CPC that even if a small fraction of cause of actaon accrues within the jurisdiction of the High Court it would have jurisdiction an the matter.

9. Though counter affidavit has been filed by 3'd Respondent, the 4th Respondent however, did not choose to appear. A bare perusal of the notice issued U/s.91 Cr.P.C., dated 2O.O7.2(J23 addressed to the Petitioner

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herein indicates that the account of the petitioner had been marked Debit Freeze,

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Section 91 of the Criminat procedure Code reads as under:

"91. Summons to produce document or other thing._

(1) Whenever any Court or any officer in charge of a police station considers that the production of any document or other thing is necessary or desirable for the purposes of any investigation, inquiry trial or other proceeding under this Code by or before such Court or officer; such Court may issue a summons, or such officer a written order; to the person in whose possession or power such document or thing is believed to be, requiring him to attend and produce it, or to produce it, at the time and place stated in the summons or order.

(2) Any person required under this section merety to produce a document or other thing shall be deemed to have complied with the requisition if he causes such document or thing to be produced instead ot attending personally to produce the same.

(3) Nothing in this section shall be deemed_

(a) to affect sections 123 and 124 of the Indian Evidence Act, IB72 (L of lg72), or the Bankers. Books Evidence Act, 1891 (13 of 1891), or

(b) to apply to a lettei postcard, telegram or other document 91 any parcel or thing

postal or telegraph authority.,,

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in the custody of the

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11. A bare perusal of the above referred provision U/s.9L Criminat Procedure Code indicates that the 3'd and^4th Respondents herein cannot direct for the freezing of Petitioner's account on the summons issued U/s.9A^of Criminal Procedure Code and the 3'd and 4th Respondents do not have any jurisdiction to direct for freezing^of Petitioner's account since in the summons issued U/s.9L of Criminal Procedure Code the anvestigation officer summons the person to produce the document or other things.

12. In a Writ Petition filed before Madras High Court with prayer to defreeze the bank account of the Pet'tioner there under which has been freezed in pursuant to^the registration of an FIR in Crime No.33 ot ZOZL^P'S' Viltupuram, the Madras High Court in the iudgment reported in (20.22) SCC Online Madras 5124 vide its judgment dated 14.O9.2022 under identical circumstances in the case of Sahil Raj Vs. State of Tamilnadu observed at paragraph No.9 as under^:

"Para 9:Thu s. it is clear that the first resoon

d ent sdictio In the sum ons lssued underhas no ru of Cr.P.C.. thSec ion 9^e tnvestioation officer

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mm he

the docum thin he

st su

er 91 of r.P.C.. accou

t cannot be f zed- That apart, the first respondent failed to comply with the procedure as contemplated under Section 102(3) of Cr.p.C. Admittedly the first respondent failed to lnform the freezing of the petitioner's account to the concerned jurisdictional Magistrate even till now, However, the petitioner himself admitted that he placed order of purchase of USDT (virtuat digital asset in the form of crypto currency) from a user named Raj Ghosh on 2L.L0.202I. He also had made a payment of Rs.89,000/- to his HDFC Bank current account.

13. A bare perusal of the counter affidavit in particular para 6 filed by the Respondent No.3 herein ctearly indicates that the account of the petitioner has been freezed with a balance oi Rs.4r67,S4Z.O4 ps by the Statutory Notice Department, Axis Bank Limited, Mumbai in response to Notice dated O6.O7.2O23 received under Section 91 of Criminat procedure Code.from Respondent No.4, Cyber Police Station, Outer North District, Dethi in FIR No. 17,/ 2023 registered against one Mr. Ariun Karam Singh.

14. This Court opines that upon the basis of Notice dated 06-()7.2(J23 under Section 91 of Criminal procedure Code

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received from 4th Respondent the Statutory Notice Department, Axis Bank Limited, Mumbai, had attached the outstanding balance of F(s.4r67,552-O4 Ps in Petitioner's subject account No.29OO1O1OOLO7723 of the Petitioner maintained with Respondent No.3. This Court op'nes that on the summons issued under Section 91 of the Criminal Procedure Code account of the Petitioner cannot^be freezed.

15. Taking into consideration of the above referred facts and circumstances of the case and duly considering^the averments made in Para 5 of the counter affidavit filed by the 3'd Respondent (referred to and extracted above)^and duly considering the fact that the petitioner as on date^had not been served with a notice under Section 41-A Cr'P'C nor is an accused in the FIR and duly taking^into consideration the view taken by the High Court of Madras in Judgment dated L4.O9.2O22 in "Sahit Raj Vs' State of Tamilnadu" under identica! circumstances this Court opines that the Notice issued under Section 91 Criminal Procedure Code against the Petitioner by the^4th Respondent herein to the Statutory Not'ce Department'

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Axis Eank Limited, Mumbai, without any intimation/ prior notice to the petitioner is illegal and in ctear violation of principles of natural justice and without jurisdiction and the same is accordingly set aside. This Court cannot issue any directions against the Statutory Notice Department, Axis Bank Limited, Mumbai, which had. ordered for freezing of the petitioner,s subject account since the same is not made a party an the present writ petition. The Petitioner is however at liberty to pursue the remedies as are available to the petationer seeking defreezing of the Petitioner's subject Account No.29OO1O1 OOhO7723 of the Petitioner maintained with the Respondent No.3. 16' Accordingry, the writ petition is aflowed. However, there shall be no order as to costs.

Misceflaneous petitions, if any pending, in this writ petition shall stand closed

SD/- T. JAYASREE

ASSTSTANT REGT1TRAR

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sEcfloN or/rlcen To,

One Fair Copy to the Hon'bte Mrs Justice SUREPALLI NANDA (For her Ladyships Kind Perusal)

11 LR Copies. The Under Secretary, Union of lndia tvlinistry of Law, Justice and Company Affairs. New Delhr

The. Secrelary, .Telangana Advocates Association Library, High Court Burldings. Hyderabad.

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4. The Secretary, Union of lndia, (Finance) Department, New Delhi _ 110OOl

5. The Regional Director, Rgserve Bank of lndia Office, at6- 1_ 56, AG Office RO Saifabad, Khairtabad. Hyderabad- S00OO4.

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f6;;3i"* Limited, Business Towers, Mukam.rmpura, Karimnagar, Tetangana. \

7. The cyber Police Station/outer North, cyber crime police station, outer North District, Bawana, New Delhi- i 10039.-

8. One CC to SRI NALAMALPU PAVAN KRISHNA REDDY. Advocare ropucl 9 one CC ro SRt GAD| PRAVEEN KUMAR, (Dy. SOLtCiTOn Cerusnn[ -dr INDIA), High Court for the State of Telangana. ai Hvderabad. IOPUCI

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HIGH COURT

DATED:21 l12l2ilz3

ORDER

WP.No.26276 of 2023

ALLOWING THE WRIT PETITION

WTHOUT COSTS

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FIJC^DE

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