Summary
The Court removed the bank-guarantee condition imposed on release of a foreign investor’s funds. The company was unconnected with the alleged offence, was not named in the FIR or chargesheet, and faced no related criminal proceedings. The individual whose prosecution had justified the freeze had also been discharged. The company was permitted to withdraw Rs 38.52 crore with 4% simple interest from 8 May 2006 until actual payment.
Issues
- Whether continued freezing and a bank-guarantee condition were justified when the company and its assets had no connection with the alleged crime.
- What consequential release and interest relief should follow.
Provisions considered
- Section 102, Code of Criminal Procedure, 1973The freeze and its associated guarantee condition had to serve the investigation. On the established absence of any connection between the company and the alleged crime, their continuation was redundant and legally untenable; the guarantee condition was set aside. (¶¶ 4, 6, 11, 12, 13, 14, 15, 16, 17, 18, 19)
Held
- The appeal concerned the second freeze order and the guarantee required to release Rs 38.52 crore. Earlier Supreme Court orders had already permitted repatriation of a separate Rs 42.51 crore without a guarantee; that earlier sum was not the subject of the present release direction. (¶¶ 5, 6, 7, 8, 9)
- The individual accused was never an employee, shareholder, director or key managerial person of the company, and his proceedings were personal rather than on its behalf. He had been discharged; the company had never been named in the FIR or chargesheet, and CBI confirmed that no related criminal proceeding was pending against it. Those facts defeated the basis for continuing the restriction. (¶¶ 11, 12, 13, 14, 15)
- Even reversal of the individual’s discharge and a later conviction would not, on these facts, affect the company’s properties because the company was not alleged to be part of the crime. Freezing and a guarantee imposed in its extension must aid investigation; absent the established investigative connection, they were redundant. The Court also noted the prolonged restriction and resulting losses. (¶¶ 16, 17, 18)
- The bank-guarantee condition was set aside and the impugned orders modified to that extent. The company was permitted to withdraw the disputed amount with 4% simple interest payable from 8 May 2006 until actual payment. (¶¶ 19, 20, 21)
Result
Appeal allowed; bank-guarantee condition removed. Appellant permitted to withdraw Rs 38.52 crore with 4% simple interest from 8 May 2006 to actual payment.