By Nihit Nagpal and Akif Abidi
The recent arrest of Ravi Uppal in Dubai, the owner of Mahadev Online Betting App has engendered the chances to truly understand the length and breadth of the scam. The Mahadev Online Betting App Case had engulfed various A-List Bollywood celebrities such as Ranbir Kapoor, Huma Qureshi, Kapil Sharma into the net of the Enforcement Directorate. With extensive seizure of jewellery, cash, and bank accounts worth 417 crores; the case of Mahadev Online Betting App has brought to focus the liability and laws regarding the money involved as ‘proceeds of crime’.
The Mahadev Betting App was a mobile application launched in 2017, which allowed users to indulge in betting in virtual games like Teen Patti, Rummy, Poker, Online Cricket etc. The Online betting App gained traction during the Covid-19 pandemic and at a certain point, its daily profits were estimated to be approximately Rs 200 Crore.
Beginning in humble origins, the mastermind behind the App threw a Rs. 200 crore grand wedding held in the United Arab Emirates (UAE) which raised eye brows of the law enforcement agencies and unravelled the length and breadth of the scam.
Checks and Balances in case of Seizure of Property
The power of police to seize certain property is provided under the Section 102 of Code of Criminal Procedure, 1973. This power is debated and discussed by the Hon’ble Courts in various cases due to the substantial amount of discretion involved in the wordings of the Section 102.
In the various cases decided by the Hon’ble Supreme Court regarding interpretation of what qualifies property and what stage can the said property be seized; it was held in landmark case of State of Maharashtra vs Tapas D. Neogy [(1999) 7 SCC 685] that bank accounts were property for the purpose of seizure under Section 102 CrPC and the Police has sufficient power to seize the account in case of suspicion of involvement in an offence. This was reconfirmed in the case of Teesta Atul Seetalvad vs State of Gujarat [(2018) 2 SCC 372].
Further, in the case of Vinodkumar Ramachandran Valluvar vs State of Maharashtra [2011 SCC Online Bom 402] it was decided that based on the interpretation of Section 102, there is no requirement of advance notice to be served on the account holder before the bank account is seized.
However, the position of seizure is different from the act of impounding the bank account for a prolonged period. The Hon‘ble Court in the case of Jayendra Saraswathy Swamigal (2) vs State of Tamil Nadu [(2005) 8 SCC 771] held that continuous paralysing of the bank account is not within the scope of Section 102 hence the Police shall not have sufficient power for continuous impounding of the same.
The Vagaries of Ambiguity
One important vagueness imposed under Section 102 is that the provision does not provide the time limit before which the seized account has to be submitted to the magistrate. It merely states that the “every police officer acting under sub- section (1) shall forthwith report the seizure to the Magistrate having jurisdiction.”
In a bizarre development earlier on, the Delhi High Court in the case of Swaran Sabharwal vs Commissioner of Police (1987 SCC Online Del 221) had quashed the seizure of property by the Police and further granted interest of 18 % p.a to the account holder for the illegal seizure of the bank account.
In the case of R Sivaraj vs State (2013) it was held that the Petitioner invoking jurisdiction under Section 482 approached the Hon’ble Karnataka High Court and contended that the mandatory requirement of immediately forwarding the property to Magistrate. The Hon’ble Court held that defect of not sharing the seized property to Magistrate is material defect which ultimately vitiates the proceeding of seizure. Hence, the account was defreezed.
Under the special legislation of Prevention of Money Laundering Act, 2002 (PMLA) the Section 17(1) (c) provides authorization to any officer authorized by Director or Deputy Director to seize any record or property found as a result of such search.
However, the provision under PMLA imposes the duty upon the officer to record the reasons of suspicion in writing and in case of retention of such property, the officer has to file an application and request the same from the Adjudicating authority. The powers under PMLA are circumscribed within the procedure laid down under the Act.
The mix up between Cyber Crime and unsuspecting accounts
Since the launch of the National Cyber Crime Reporting Portal (NCCRP) by Ministry of Home Affairs to counter the rising menace of the cyber-crimes, it has been observed largely that hundreds and thousands of innocent account holders are finding themselves in the fishnet of account seizures based on cyber complaints registered in different states, sometimes thousands of kilometres away from their bank branch.
This is followed by a long drawn and emotionally and financially draining process of contacting the bank officials who are themselves not in the know-how of the actual reason of seizure but they merely share the contact information of the police official sharing the details of the suspected account. In some cases, the seizure is lifted from the end of the Police official after preliminary investigation and account is de-freezed but in quite a few cases, the victims of account seizures end up greasing few palms before being able to operate their own hard earned money deposited in the account.
There are various social media groups of victims of this seizure available on Telegram and Whatsapp Messenger which indicates the unimaginable scope and extent of the issue of innocent account holders being mixed up because of the easy targets. There are instances of bank accounts of small and marginal farmers, widows and members of other economically backward sections which have found their bank accounts to be seized without any illegal transaction.
The primary cause of this mix up is the tendency of law enforcement to en masse seize tertiary and quaternary bank accounts which had transacted with the original account complained of in the cyber complaint. And considering the penetration and accessibility of UPI payments, many innocent victims are also entrapped in this difficult situation.
In many cases, the law enforcement officials have conducted seizure of the bank accounts outside the power of Section 102, by merely invoking Section 91 of the Criminal Procedure Code, which empowers investigating officer to summon documents or things. This erroneous application of Section 91 was discussed recently in an important case, in Sahil Raj vs State (W.P. No. 23344 of 2022) the Hon’ble Madras High Court held that mere issuance of summon to produce the documents under Section 91 of the Code of Criminal Procedure would not authorize the law enforcement officials to seize the bank accounts.
What to do if stuck in bank account freeze
It is important to note that the primary action which is required of the victim of bank account freeze is to contact the bank branch manager and seek necessary information relating to the seizure. This written acknowledgement allows the victim to create a paper trail and find contact details of the investigating officer.
Upon confirming the freeze enacted based out of a cyber-complaint, the victim can seek legal counsel and demand the notice requiring seizure of bank account under Section 102 CrPC.
In the event of police official not cooperating or demanding any bribe, the victim may file an application under Section 451 and 457 of CrPC to the Magistrate praying for discharge of property that has been seized by the Police. The Application must include information and documents that enforce the idea that the property seized is not in any manner related to any offence, hence there is no ground for continuous seizure.
Alternatively, the victims can also approach the Hon’ble High Court under Section 482 CrPC and/or under Article 226 of the Constitution invoking the writ jurisdiction of the Hon’ble Court seeking direction to the law enforcement to discharge the seized bank account. This has been reiterated in the case of Madhu vs Sub Inspector of Police [WP(C).No.9820 OF 2020(B)]
The Hon’ble High Courts have been proactive in granting reliefs regarding the illegal seizures of bank accounts. Considering the scope and extent of this problem, the Hon’ble High Court of Karnataka in the case of Narayan Yadav v. State of Karnataka (Writ Petition No. 226989 of 2020) while quoting from the case of Prakash Padukon vs State of Karnataka (W.P. 13516 of 2018) has observed that,
“This court is of the firm opinion that unless and until there is a strong suspicion against the petitioners, the police would not be justified in freezing the account belonging to the petitioners. For, such freezing of account adversely affects the right to life under Article 21 of Constitution of India. But, in order to balance the conflicting interest of the petitioners, with the interest of the Investigating Agency, and the interest of the complainant, in the interest of justice, respondent Nos.1 and 2 are directed to de- freeze the account belonging to the petitioners, provided, the petitioner No.1 submits a bond of 20,00,000/- (Rupees Twenty Lakh only) before the learned Sessions Judge, before whom the present case is pending.”
The Hon’ble Court has rightly recognized that account seizures without following the due process are directly violate the fundamental ‘Right to Life’ of the victim. As an alternate, in such cases, the Law enforcement personnel must be mandated to impose a seizure or lien over the property involved, instead of blanket freeze over the bank account.
It is important to note that more discretion may lead to more corruption and in order to suitably curb the menace of cyber-crime and money involved in such illegal transaction, we must not encourage indulging in the frenzy of account seizures of victims not associated directly with the said transaction.
 S. 102. : (1) Any police officer, may seize any property which may be alleged or suspected to have been stolen, or which may be found under circumstances which create suspicion of the commission of any offence.
(2) Such police officer, if subordinate to the officer in charge of a police station, shall forthwith report the seizure to that officer.
(3) 1 Every police officer acting under sub- section (1) 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 Court as and when required and to give effect to the further orders of the Court as to the disposal of the same.]