M/S. JERMYN CAPITAL LLC DUBAIversusCENTRAL BUREAU OF INVESTIGATION & ORS.

                          [2023] 6 S.C.R. 565                            565


              M/S. JERMYN CAPITAL LLC DUBAI                              A
                                  v.
       CENTRAL BUREAU OF INVESTIGATION & ORS.
                 (Criminal Appeal No. 1434 of 2023)
                           MAY 09, 2023                                  B
      [KRISHNA MURARI AND SANJAY KUMAR, JJ.]
       Code of Criminal Procedure, 1973 – s.102 – Freeze orders
and bank guarantee in furtherance there of were imposed against
the appellant company on grounds of necessity of investigation of
an alleged crime initiated against one ‘D’ allegedly connected to        C
the appellant company – Held: Accused-‘D’ was never an employee/
share holder/director or a key managerial person in the appellant
company – Since ‘D’ was in no way connected to the appellant
company, the trial faced by him, was in his individual capacity, and
not vicariously on behalf of the appellant company – No criminal
proceedings whatsoever are pending against the appellant company         D
pertaining to the dispute at hand – Furthermore, ‘D’ has been
discharged of the alleged offences by the Trial Court – Even
assuming that his discharge is subsequently reversed, and he is
convicted, such a conviction would still have no bearing on the
properties of the appellant company, since it is not alleged to be a     E
part of the crime – The purpose of the freeze order and the bank
guarantee in extension of the freeze order, can only be in operation
to aid in the investigation against the alleged crime – Since the
appellant company is in no way connected to the alleged crime, the
freeze order against its properties is redundant qua the investigation
– As the investigation against the appellant company is redundant,       F
hence, the freeze of the appellant company’s assets and the bank
guarantee imposed in furtherance thereof also becomes redundant
– Therefore, the condition imposed upon the appellant to furnish a
bank guarantee by the Courts below is not sustainable and is set
aside – Orders impugned modified – Appellant permitted to withdraw       G
the amount along with 4% simple interest.
     CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
No.1434 of 2023.
      From the Judgment and Order dated 16.08.2018 of the High Court
of Gujarat at Ahmedabad in CRLMA No.602 of 2013.                         H
                                 565
566             SUPREME COURT REPORTS                            [2023] 6 S.C.R.


A           Mukul Rohatgi, Sr. Adv., Sunil Fernandes, Ms. Nupur Kumar,
      Divyansh Tiwari, M. Thangathurai, Ms. Priyansha Sharma, Ms. Diksha
      Dadu, Advs. for the Appellant.
            Shailesh Madiyal, Rajesh Ranjan, Mukul Singh, Pratyush
      Shrivastava, Arvind Kumar Sharma, Rajat Nair, Ms. Swati Ghildiyal,
B     Ms. Devyani Bhat, M/s K J John and Co., Advs. for the Respondents.
             The Judgment of the Court was delivered by
             KRISHNA MURARI, J.
             Leave Granted.
C           2. The present Appeal is directed against the judgment and final
      order dated 16.08.2018 passed by the High Court of Gujarat at
      Ahmedabad, (hereinafter referred to as “High Court”) in Criminal
      Application No. 602 of 2013.
             FACTS
D
              3. The brief facts relevant for the purpose of the present appeal
      are that the appellant company is a Foreign Institutional Investor and
      was permitted by Securities and Exchange Board of India (for short
      ‘SEBI’) to buy and sell shares and securities in the Indian Stock Market.
      However, due to certain litigations, the appellant company had quit trading
E     in the Indian markets in 2006. It is important to note that at this point, the
      appellant company had shares and money in its bank account with ICICI
      bank.
             4. Subsequently, the appellant company was subject to two freeze
      orders under Section 102 of the Code of Criminal Procedure, 1973. The
F     first freeze order was imposed against the appellant company on
      20.10.2006, and the second freeze order was imposed on 17.08.2010.
      These abovementioned freeze orders, as has been discussed in detail
      below, were levied against the appellant company on grounds of necessity
      of investigation of an alleged crime. At this point, It must be noted that
      the said investigation of the alleged crime was initiated against one
G     Dharmesh Doshi, who is in no way related to the appellant company,
      and he was never an employee/share holder/director or a key managerial
      person in the appellant company.
            5. In so far as the first freeze order is concerned, vide orders
      dated 05.12.2008,14.05.2009,16.11.2009 and 17.08.2010, this Court
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 M/S. JERMYN CAPITAL LLC DUBAI v. CENTRAL BUREAU                               567
    OF INVESTIGATION & ORS. [KRISHNA MURARI, J.]

allowed the appellant company to sell the shares in its account, convert       A
it into cash, and repatriate the funds so received with interest and without
a bank guarantee, while the first freeze order was still operational. In
terms of the abovementioned orders, the appellant company repatriated
an amount of Rs. 42.51 crores without any bank guarantee.
       6. The issue posed in front of us therefore is limited to the second    B
freeze order. The second freeze order, which was passed by the
respondent herein on 17.08.2010, had incapacitated the appellant
company herein to repatriate an amount of Rs. 38.52 crores, which was
realized in favour of the appellant company herein pursuant to an order
passed by the Securities Appellate Tribunal dated 08.05.2006.
                                                                               C
        7. Aggrieved, the appellant company had approached this Court
for relief, and vide order dated 12.10.2011, this Court gave liberty to the
appellant company to approach the Trial Court for release of the said
amount.
        8. Subsequently, the learned Trial Court, after duly taking notice     D
of the fact that this Court had allowed the appellant company to repatriate
an amount of Rs.42.51 crores, vide order dated 02.11.2012, 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 a bank
guarantee equivalent to the amount sought to be withdrawn.
                                                                               E
      9. Aggrieved by the said imposition of the bank guarantee, the
appellant company approached the High Court, however, vide impugned
order dated 16.08.2018, the High Court reiterated the imposition of the
Bank Guarantee. The appellant company has therefore, as against the
impugned order and judgment, filed the present Appeal.
                                                                               F
      ANALYSIS
      10. We have heard the learned counsel for the parties, however, it
must be noted that despite notice being served the respondent no.2, ICICI
Bank, they have chosen not to put in appearance.
       11. It is our opinion, that a bare reading of the decisions rendered    G
by the lower Courts, would show that the imposition of the bank guarantee
and the freeze orders passed by the respondent, were solely imposed on
the grounds of criminal proceedings being alive against one Dharmesh
Doshi, who is alleged to be connected to the appellant company.
                                                                               H
568             SUPREME COURT REPORTS                            [2023] 6 S.C.R.


A            12. While perusing through the documents on record, it has come
      to our notice that the said Dharmesh Doshi, on the basis of whom the
      condition of bank guarantee was imposed, has now been discharged of
      the alleged offences by the Trial Court. It is also important to note that
      the said Dharmesh Doshi , who has been discharged of the alleged crime,
      was never an employee/share holder/director or a key managerial person
B
      in the appellant company.
             13. Since the said Dharmesh Doshi was in no way connected to
      the appellant company herein, the trial faced by him, was in his individual
      capacity, and not vicariously on behalf of the appellant company.
C            14. In such a circumstance, wherein the appellant company and
      the accused Dharmesh Doshi are two separate entities, and the appellant
      company is in no way connected to the concerned Investigation, the
      operation of the freeze order against the appellant company, is not legally
      tenable.

D             15. Further, It must also be noted that the appellant company herein,
      till date, has not been named in the FIR or the chargesheet in which the
      abovementioned Dharmesh Doshi is an accused. It must also be noted
      that Mr. Shailesh Madiyal, learned counsel appearing for the respondent
      CBI, on the basis of Instructions, made a statement before us in open
      Court stating that no criminal proceedings whatsoever are pending against
E     the appellant company pertaining to the dispute at hand.
             16. In such a circumstance, even if we were to assume that the
      accused Dharmesh Doshi’s discharge is subsequently reversed, and he
      is convicted, such a conviction would still have no bearing on the properties
      of the appellant company herein, since the appellant company is not
F     alleged to be a part of the crime.
             17. Since the appellant company is not connected to the alleged
      crime, and has not found mention in the FIR or the chargesheet, the
      freeze order against the appellant company’s properties is redundant
      qua the investigation, since the appellant company itself is not necessary
G     for the conclusion of the investigation.
             18. It has also come to our notice that the operation of the freeze
      order has been active for a period of 17 years and has caused huge
      losses to the appellant company. The purpose of the freeze order, and
      the bank guarantee in extension of the freeze order, can only be in
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 M/S. JERMYN CAPITAL LLC DUBAI v. CENTRAL BUREAU                               569
    OF INVESTIGATION & ORS. [KRISHNA MURARI, J.]

operation to aid in the investigation against the alleged crime. Since the     A
investigation against the appellant company, as has been discussed above,
is redundant, hence, the freeze of the appellant company’s assets and
the bank guarantee imposed in furtherance of the freeze order also
becomes redundant.
      19. In the light of above mentioned facts and discussions, the           B
condition imposed upon the appellant to furnish a bank guarantee by the
Courts below, is not liable to be sustained and is therefore set aside.
      20. The orders impugned herein stand modified to that extent and
the appeal, accordingly, stands allowed.
       21. As a consequence, the appellant shall be permitted to withdraw      C
the aforesaid amount along with 4% simple interest, which shall be payable
from 08.05.2006 till the date of actual payment.

Divya Pandey                                                 Appeal allowed.
(Assisted by : Roopanshi Virang, LCRA)                                         D




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