Interpreting Section 102 of CrPC

 Section 102 of the CrPC empowers a police officer to seize ‘any property’ that is either stolen or suspected to have been stolen, or which may be found under circumstances which create suspicion of the commission of an offence. This section also requires the seizing police officer to forthrightly report any such seizure to a Magistrate having appropriate jurisdiction over the matter involved.

It is a well-settled position of the law that the bank accounts of the accused and his relatives fall under the purview of ‘any property’ as per section 102 CrPC. However, the Supreme Court has clarified that it would be too harsh and inappropriate to seize the immovable property of the accused based merely on suspicion.

In general, the police have been evoking this section to freeze bank accounts linked to cases of online fraud, financial scams and money laundering. It is understood that freezing suspicious accounts prevents scamsters from transferring money to safer locations beyond the reach of investigating agencies. In some instances, immediate freezing of the bank accounts has also helped the police in gathering and compiling evidence to buttress the case being made in the charge sheet.

In the following, we will make a brief survey of the nature, scope, and various interpretations of the provisions of this section.

Defining ‘Property’

There are essentially two elements of this section-

First- There must be a ‘property’ to be seized

Second- There must be a reasonable suspicion that the seized property is either stolen property or linked to an offence in some direct manner.

Confusion arises because the High Courts have interpreted section 102 CrPC in diverse ways, causing several parallel versions of its scope and import to co-exist. Ambiguities have arisen over questions of whether it is a directory or mandatory provision; and whether the police are obligated to invoke it in certain cases.

As per subsection 3 of section 102 CrPC, every police officer acting under its sub-section shall forthwith report the seizure to the Magistrate having jurisdiction and where the property seized is such that it cannot be conveniently transported to the Court, he may give custody thereof to any person on his executing a bond undertaking to produce the property before the Courts as and when required and to give effect to the further order by the Court as to the disposal of the same.

A recent two-judge Allahabad High Court bench held that not reporting the seizure of property in a forthwith manner to the appropriate Magistrate, as required by subsection 3 of section 3 CrPC, does not render such seizure illegal. In reaching such a conclusion the court relied on the precedent of Amit Singh v State of Uttar Pradesh (2022) wherein it was observed that a frozen bank account may be held to have been entrusted by the police officer to the custody of the bank for the duration of the trial, and consequently, as per subsection 3 of section 102 CrPC, the question of its disposal becomes subject to the further orders of a court of appropriate jurisdiction. The legal fiction of a frozen bank account as having been automatically entrusted by the police to the custody of the bank concerned seems appropriate as the main concern behind the requirement to inform the magistrate about such seizure is to ensure that there is no illegal seizure. Such fears are set aside in the cases of freezing of bank accounts as there is no likelihood of any money being stolen from it while it is frozen. It appears inappropriate to set aside the freezing of a suspicious account merely on the technical ground that a report about it was not sent to the magistrate in a forthright manner, particularly because the office of the same magistrate is also responsible for issuing a warrant to carry out such seizure in the first place.

However, in direct contrast to this position, in Manish Khandelwal and Others v State of Maharashtra, the Bombay High Court held that non-compliance with Section 102 (3) would translate into prompt de-freezing of the suspicious account.

Taking a similar view, in T Subbulakshmi, the Madras High Court took the view that subsection 3 to section 102, CrPC is mandatory in nature. The freezing of a bank account cannot be lawfully upheld if the police officer fails to fulfil any of the mandatory procedures laid down by it.

Whether subsection (3) of section 103 CrPC is mandatory or directory in nature?

A provision in a statute is mandatory in nature if its non-fulfilment would render the proceeding to which it relates illegal and void. In the present context, if the Court is to hold that section 102 (3) CrPC is mandatory in nature, then a police officer’s failure to report to the appropriate magistrate about the freezing of a bank account would render such freezing illegal and void. Whereas, if the said subsection is held to be merely directory in nature, then freezing of a bank account may not be set aside even if the police officer concerned fails to report the matter to the magistrate in a forthright manner, as required by the law.

In interpreting the true import and meaning of a statute, courts examine its overall structure, intent, and context, rather than making a literal reading of its text.

In Nasiruddin and Others v Sita Ram Agarwal, when the question of interpretation of this subsection came before the court it observed that wordings used in a statute alone cannot be relied upon to determine its objective meaning. Subsection 3 Section 102 CrPC cannot be held to be mandatory just on the ground that it uses the word ‘shall’. The question of a public functionary’s obligatory duties cannot be settled without considering its repercussions for the function he is performing for the state.

Chapter XXXIV of CrPC consists of the scheme for the disposal of property prescribed by the Code. Based on its reading it may be deduced that the purpose behind sending a report to the magistrate about a seized property is to facilitate its lawful disposal during or after the trial. Failing to send such a report in a timely manner does not in any manner vitiate the trial or put the accused at any disadvantage. Based on these grounds, the court held that Section 102 (3) CrPC cannot be held to be a mandatory provision.

In some cases, arguments have focused on the word ‘forthwith’ mentioned in section 102(3). Addressing this concern a constitution bench held in Keshav Nilkanth Joglekar v The Commissioner of Police, Greater Bombay and Others, that the presence of this word could only mean that the act should be performed promptly, that if there is any delay at all in performing it, there should be a reasonable explanation for it. If the intent behind the delay is found to be unreasonable or malafide then the freezing of the account may be set aside.

In general, courts have been reluctant to put a hold on the freezing of the bank accounts of the accused as it creates the danger of money being withdrawn and parked at secret locations. But, as is apparent from the stand taken by the Court in Joglekar, seizer of property in the form of freezing of accounts may be set aside if the court discovers that it was done with the intent of merely harassing the accused or preventing him from preparing a defense. The purpose behind this section is certainly not to prejudice the investigation against an accused.

It is also pertinent to clarify here that failure to follow 102 (3) could lead to the unfreezing of the bank accounts of the accused, but it would not affect the investigation and trial. In the State of Punjab v Balbir Singh, the Supreme Court ruled that breaking the rules of section 102 (3) CrPC would not in itself vitiate the prosecution of a case. However, the court would consider whether the accused was consequently prejudiced in any way and take this factor into account while evaluating evidence during the trial.

Freezing the bank accounts of the accused plays an important role in the investigation of cases of financial fraud and money laundering. However, courts also have the duty to ensure that the police do not use section 102 CrPC as a punitive tool to harass the accused.

Some confusion prevails regarding the scope of section 102 (3) CrPC due to divergent and sometimes mutually contradictory judgements delivered by various High Courts in recent times. Therefore, it is high time that the Supreme Court settles down this debate by laying down definitive guidelines.