Teesta Atul Setalvad v. State of Gujarat
In the Supreme Court of India
Crl. Appeal 1099/2017
Before Chief Justice Dipak Misra and Justice AM Khanwilkar
Decided on December 15, 2017

Relevancy of the case: SLP for defreezing bank accounts involved in misappropriation of funds by an NGO and a Trust

Statutes and Provisions Involved

• The Information Technology Act, 2000 (Section 72A)
• The Indian Penal Code, 1860 (Section 406, 420, 120B, 467, 471)
• The Code of Criminal Procedure, 1973 (Section 102, 103(3))
• The Constitution of India, 1950 (Article 136)

Relevant Facts of the Case

• The Gulberg Society members filed a petition against the CJP NGO and Sabrang Trust, as they had committed a breach of trust and misrepresentation.
• They were promised economic and legal help which was not given to them. The respondents were also told that their society would be transferred into a museum and the amount would be paid for their houses.
• Instead, the pictures, interviews, etc., of the victims of the 2002 Godhra riots, were published on the NGO’s website, against the will of the petitioners, to collect funds. These funds were being utilized for the personal uses of the appellants.
• Later, after filing an RTI application, it was inferred that there were Rs.63,00,000 and Rs. 88,00,000 in the bank accounts of the NGO and Trust respectively. The donation money (including foreign donations) was received between 2009-11.
• Later, the police froze their bank accounts, deduced some discrepancies and lack of audit. They found out that the funds were fraudulently utilised for personal use.
• The Investigation Authority did not seize the remaining accounts yet. Later, two High Courts rejected their application against seizing the bank accounts.
• Hence, this Special Leave Petition was filed in the Supreme Court.

Prominent Arguments by the Advocates

• The petitioner’s counsel argued that under Section 102 of CrPC, the Investigation authority should provide reasonable grounds to the petitioner for freezing their accounts. There is no clear connection between the prolonged seizing of accounts and accusations of cheating, forgery, and breach of trust. The cases of T Entrica Lexie vs. Doramma, Jayendra Saraswathy Swamigal vs. State of T.N were cited to support the argument.
• The petitioner’s counsel also submitted that there was no prior notice to the petitioners before freezing their accounts. It was also contended that no discrepancies were found in the audit conducted on the bank accounts.
• The respondent’s counsel stated that there is enough evidence to prove the misappropriation of money. A huge amount in lakhs was transferred to personal accounts. There was a clear breach of trust on the pretext of donation and help to the victims. Moreover, there was no cooperation of petitioners in the ongoing investigation.
• They also go on to state that the appellants have not been cooperating in the investigation process and according to records, the seizure of bank accounts was done properly.

Opinion of the Bench

• The court believed that the bank accounts cannot be considered as “property” and hence police officers and Investigation Authority can order to freeze the accounts.
• The bench was also of the belief that Section 102 CrPC does not require prior intimidation to the account holder for the seizure of accounts.
• The step to seize them is also reasonable and valid. The argument that prior notice should have been given before seizing, is also rejected. The case of Jayendra Saraswathy Swamigal vs. State of T.N did not provide any proposition where multiple bank accounts were under suspicion. In T Entrica Lexie vs. Doramma, the offence in question is not related to this case. Hence, these cases could not be considered in the current case.
• Lastly, the appellants have no valid answers for the substantial discrepancies in their bank accounts and transactions.
• The court stated that after the investigation is complete and the police report is filed, the appellants can apply for defreezing their accounts.

Final Decision

• The appeal stood dismissed.

This case summary has been prepared by Shubhangi Gehlot, an undergraduate student at Law Faculty, Maharaja Sayajirao University of Baroda, during her internship with The Cyber Blog India in May/June 2021.