Police cannot freeze a third party’s account for contractual rent or security-deposit payments.

The petitioner, a real-estate developer, challenged police notices freezing ₹9,60,000 in its bank account and requiring it to provide a demand draft for the same amount to the 4th ACMM, Bengaluru.

The notices arose from Crime No. 86/2020, registered on allegations under Sections 120-B, 406, 420, 465 and 409 IPC.

The petitioner stated that Joseph Mathew had agreed to lease its premises, paid part of a ₹29,10,000 security deposit, and failed to pay the balance deposit or rent.

It said the amount was adjusted against unpaid rent after the tenancy was terminated.

The police contended that the payment had come from fraudulently obtained funds.

The petitioner sought to quash the notices under Section 482 Cr.P.C.

1. Whether the police notices directing the bank to freeze ₹9,60,000 in the petitioner’s account were sustainable where the petitioner claimed the payment arose from a lease transaction and adjustment of unpaid rent.

2. Whether the police could require the petitioner, under Section 91 Cr.P.C., to provide a demand draft for ₹9,60,000 to the court for investigation.

The petition invoked the High Court’s inherent jurisdiction under Section 482 Cr.P.C. to seek quashing of the police notices.

The demand for a draft was made under Section 91 Cr.P.C., which was the statutory provision identified in the notice.

The judgment did not cite any precedent or set out a broader legal test governing the freezing of third-party bank accounts; it determined the validity of these notices on the facts and documents before it.

The Court accepted that the petitioner was a third party to the criminal proceedings and found that the term sheet recorded an agreed security deposit of ₹29,10,000, of which only part had been paid, and monthly rent of ₹4,85,000.

The petitioner’s account that the security deposit was adjusted against rent after termination was consistent with the stated purpose of the deposit and the unpaid rent.

On those facts, the Court held that the police could not issue the challenged notices at the complainant’s instance, including the demand for a draft under Section 91 Cr.P.C.