State of Maharashtra v. Tapas D. Neogy

In this critical criminal procedure decision authored by Justice G.B. Pattanaik, the Supreme Court settled an important divergence of opinion among High Courts regarding the scope of police seizure powers under Section 102 CrPC (now Section 106 BNSS, 2023). The Court authoritatively ruled that the phrase 'any property' in Section 102 is wide enough to encompass bank accounts, credit balances, and financial deposits. An investigating police officer has the power to seize/freeze bank accounts if there is a reasonable nexus between the funds and the alleged commission of a cognizable offence. The Court held that police must report the freezing forthwith to the jurisdictional Magistrate under Section 102(3).

• 'Any Property' Includes Bank Accounts: Section 102 CrPC applies not only to tangible physical movables but equally to bank deposits and credit balances.
• Reasonable Nexus Required: Police must establish a direct link or reasonable suspicion connecting the funds in the bank account to the commission of the offence.
• Mandatory Reporting to Magistrate: Freezing of an account must be reported forthwith to the jurisdictional Magistrate under Section 102(3) CrPC / Section 106(3) BNSS.
• Prevention of Asset Dissipation: Account freezing is a vital investigative tool to prevent fraudsters and corrupt public servants from siphoning off crime proceeds.
• Remedy of the Account Holder: Account holders can approach the Magistrate under Section 451/457 CrPC for conditional defreezing upon furnishing bank guarantees.

An FIR was registered by the Anti-Corruption Bureau, Maharashtra against Tapas D. Neogy, an officer of the Maharashtra State Financial Corporation, and others for offences under Sections 120-B, 409, 420, 467, 468, 471 IPC and the Prevention of Corruption Act, 1988, alleging massive financial embezzlement.

During investigation, the Investigating Officer discovered several bank accounts held in the names of the accused and their family members containing large unexplained cash deposits traced to the embezzled funds.

The police officer issued orders to the respective banks under Section 102 CrPC directing them to freeze the accounts and disallow withdrawals.

The accused challenged the freezing before the Bombay High Court, which held that bank accounts do not constitute 'property' capable of seizure under Section 102 CrPC, quashing the freeze orders.

The State of Maharashtra appealed to the Supreme Court.

The expression 'any property' in Section 102 of the Code of Criminal Procedure is wide enough to include bank accounts of an accused or any other person in respect of which there is a reasonable suspicion of the commission of any offence. In the modern era of commercial and white-collar crime, stolen proceeds and defalcated funds are rarely kept in physical bundles of cash; they are converted into bank deposits, wire transfers, and negotiable securities. To place a restricted interpretation on the word 'property' so as to exclude bank accounts from the purview of Section 102 would completely frustrate police investigations in serious cases of corruption, cheating, and breach of trust. An investigating officer cannot be rendered a helpless spectator while ill-gotten wealth is swiftly transferred out of accounts to defeat justice. Therefore, an investigating police officer has the power under Section 102 to seize/freeze a bank account if he finds that the monies deposited in the account have direct links with the commission of the offence or create reasonable suspicion. However, the officer must forthwith report the seizure to the Magistrate having jurisdiction as mandated by sub-section (3) of Section 102.

• Teesta Atul Setalvad v. State of Gujarat (2018) 2 SCC 372: Reaffirmed Tapas D. Neogy, holding that bank accounts of NGOs and trustees can be frozen under Section 102 CrPC.
• Shento Varghese v. Jincy Das (2024) 4 SCC 702: Reasserted the mandatory nature of reporting the seizure forthwith to the Magistrate under Section 102(3).
• Nevada Properties Pvt. Ltd. v. State of Maharashtra (2019) 20 SCC 119: Distinguished Tapas Neogy by holding that 'property' under Section 102 CrPC does not include immovable property.