CBI’s Freeze Order on Appellant’s Property was Redundant as Crime Committed by Accused was Unrelated to Investigation | SC

Case Details: Jermyn Capital LLC v. Central Bureau of Investigation - [2023] 154 taxmann.com 356 (SC)

Judiciary and Counsel Details

• Krishna Murari & Sanjay Kumar, JJ.
• Sunil Fernandes, AOR, Ms Nupur Kumar, Ms Priyansha Sharma, Divyansh Tiwari, Adv. & Ms Diksha Dadu, Advs. for the Petitioner.
• K.M. Nataraj, ASG, Mrs Aishwarya Bhati, ASGs, Sharath Nambiar, Vatsal Joshi, Vinayak Sharma, Indira Bhakar, Anuj S. Udupa, Nakul Chengappa, Chithransh Sharma, Anukalp Jain, Padmesh Mishra, Yuvraj Sharma, Akshay Nain, Advs. Arvind Kumar Sharma, AOR, Ms Swati Ghildiyal, AOR & Ms Devyani Bhatt, Adv. for the Respondent.

Facts of the Case

In the instant case, the respondent – CBI issued freeze orders under section 102 of the Code of Criminal Procedure against the appellant company on grounds of the necessity of investigation of an alleged crime committed by ‘D’.

The freeze order was issued by the CBI, which had incapacitated the appellant company to repatriate an amount of Rs 38.52 crores. This amount was realized in favour of the appellant company pursuant to an order passed by the Securities Appellate Tribunal (SAT).

Aggrieved by the said order, the appellant company approached the Supreme Court for relief. The Supreme Court vide order, had given liberty to the appellant company to approach the Trial Court for release of the said amount. Subsequently, the Trial Court held that the appellant company was entitled to repatriate the amount of Rs. 38.52 crores.

However, the release of such funds was subject to the condition of furnishing a bank guarantee equivalent to the amount to be withdrawn. Aggrieved by the said imposition of the bank guarantee condition, the appellant company approached the High Court, which reiterated the condition of the bank guarantee.

It was noted that the appellant company and accused ‘D’ were two separate entities, and the appellant company was in no way connected to the concerned investigation. It was further noted that the appellant company, till date had not been named in FIR or chargesheet in which ‘D’ was an accused and CBI had made a statement in open Court that no criminal proceedings were pending against the appellant company pertaining to the dispute.

Supreme Court Held

The Supreme Court held that since the freeze order made against the appellant company’s properties was redundant qua investigation, the freeze of the appellant company’s assets and bank guarantee imposed in furtherance of the freeze order also became redundant. Therefore, the condition imposed upon the appellant to furnish a bank guarantee was to be set aside.

List of Cases Reviewed

• Jermyn Capital LLC v. Central Bureau of Investigation [2023] 154 taxmann.com 355 (Guj.) (para 19) reversed [See Annex].