1 APHC010456412025 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) [3396] WEDNESDAY, THE EIGHTH DAY OF OCTOBER TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE DR.JUSTICE VENKATA JYOTHIRMAI PRATAPA WRIT PETITION Nos. 23188 & 23189 OF 2025 Between: 1. VER SE INNOVATION PRIVATE LIMITED, A PRIVATE LIMITED COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956, HAVING ITS REGISTERED OFFICE AT MANTRI COMMERCIO, SPATIUM OFFICES, UNIT 001, TOWER A, 5TH FLOOR, OUTER RING ROAD, NEAR SAKRA WORLD HOSPITAL, KARIYAMMANA AGRAHARA, BELLANDUR BENGALURU - 560103. REP BY ITS HEAD LEGAL / AUTHORISED PERSON, MR. DEVESH BHARDWAJ. ...PETITIONER AND 1. THE STATE OF AP, REP BY PRINCIPAL SECRETARY, HOME DEPARTMENT, SECRETARIAT BUILDINGS, VELAGAPUDI, AMARAVATI. 2. THE STATION HOUSE OFFICER, MUNAGAPAKA POLICE STATION, ANAKAPALLI DISTRICT, ANDHRA PRADESH - 531 033. EMAIL SHO MGPK VSPR@,AP.GOV.IN 3. KOTAK MAHINDRA BANK, HAVING REGISTERED OFFICE AT 27 BKC, C 27, G BLOCK, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI - 400051, MAHARASHTRA. AND THE SUBJECT BRANCH OFFICE AT 10/7, UMIYA LAND MARK, LAVELL ROAD, NEXT TO CHANCERY HOTEL, BANGALORE - 560001, KARNATAKA. ...RESPONDENT(S): Counsel for the Petitioner: 1. C SUMON Counsel for the Respondent(S): 1. GP FOR HOME The Court made the following: 2 COMMON ORDER: Writ Petition No.23188 of 2025 is filed under Article 226 of Constitution of India with the following prayer for: “.... Writ of Mandamus declaring the action of the Respondent No.2 in issuing communication dated 28th May 2025 issued to Respondent No.3 ordering initiation of debit freeze on Petitioners Kotak Mahindra Bank Account bearing no. 04222100000551 (IFSC Code KKBK0000422) as arbitrary illegal, violative of the principles of natural justice, violative of the fundamental rights guaranteed under the Constitution of India, and consequently to set aside the impugned communication dated 28th May 2025 of the Respondent No.2 whereby the said Bank Account of the Petitioner has been froze by the RespondentNo.3 and thereby de-freeze Petitioners Kotak Mahindra bank account bearing no.04222100000551 (IFSC Code KKBK0000422) by issuing appropriate directions to the Respondent No.3.” Writ Petition No.23189 of 2025 is filed under Article 226 of Constitution of India with the following prayer for: “.... Writ of Mandamus declaring the action of the Respondent No.2 in issuing communication dated 25th May 2025 issued to Respondent No.3 ordering initiation of debit freeze on Petitioners Kotak Mahindra Bank Account bearing no. 3311346478 (IFSC Code KKBK0000422) as arbitrary illegal, violative of the principles of natural justice, violative of the fundamental rights guaranteed under the Constitution of India, and consequently set-aside the impugned communication dated 25th May 2025 of the Respondent No.2 whereby the Bank Account of the Petitioner has been frozen by the Respondent No.2 and thereby de-freeze Petitioners Kotak Mahindra bank account bearing no. 3311346478 (IFSC Code KKBK0000422) by issuing appropriate directions to the Respondent No.3.” 2. Heard Sri C.V.Mohan Reddy, learned Senior Counsel assisted by Sri C.Sumon, learned counsel for the Petitioners and Sri Dammalapati Srinivas, learned Advocate General on behalf of Respondent / State. 3 3. Learned Senior Counsel for Petitioner would submit that the Petitioner is engaged in the business of digital marketing services and operates online content platforms. Learned counsel would further submit that the subject bank accounts of the Petitioner have been freezed in connection with a case in Crime No.87 of 2025 on the file of Munagapaka Police Station, Anakapalli District, though the Petitioner is not an Accused in the said crime. It is further submitted that the Petitioner has not committed any unauthorized, fraudulent or illegal activities through the said Bank Accounts. Learned Senior Counsel would further submit that, freezing of the Bank accounts of the Petitioner is causing severe operations and financial disruptions and adversely impacting the business of the Petitioner and also its legitimate financial activities and obligations. (ii) The Petitioner has business dealings with multiple customers, vendors, service providers etc., for which the subject bank accounts have been used to make and receive payments on a day-to-day basis. It is further submitted that, inspite of several requests made by the Petitioner to defreeze the bank accounts, the same were not considered by the Respondent - Police. (iii) There is an aggregate balance exceeding Rs.90.00 crores in the Account bearing no. 04222100000551 and Rs.50.00 lakhs in the Account bearing no. 3311346478 pertaining to the Petitioner-Company and the same cannot be subjected to an indefinite freeze merely on the basis of questionable transactions of Rs.13,72,000/-. It is submitted that the said amount has been received by the Petitioner from its clients through the 4 subject bank accounts as a valid consideration for providing digital market services. Learned Senior Counsel would further submit that the Petitioner has no knowledge or has no role to play in the online illegal betting transactions alleged to have taken place between the Complainant and the owners of such illegal betting websites. It is further submitted that there is no material to show that the Petitioner has nexus with the alleged criminal activity. (iv) The allegation made by the Complainant in the subject FIR is only about the alleged loss of Rs.1.42 crores. Respondent No.2 – Police alleged that the Petitioner is purportedly a culprit to the online betting crime, wherein, losses of Rs.174 crores are involved, however, identified four entries of about Rs.13.72 lakhs. It is further submitted that Respondent-Police has also highlighted certain transfers made within the Petitioner’s own bank accounts and alleged that the Petitioner has purportedly indulged in siphoning of funds. But, such inter-company transfers within the Petitioner’s two different bank accounts are routine commercial transactions in the ordinary course of business. Learned counsel would finally pray to direct the concerned to defreeze the subject bank accounts. In support of his contentions, learned Senior Counsel has placed reliance on the judgments of the Hon’ble Apex Court in Shridhar vs. Nagar Palika1, Asit Kumar Kar vs. State of West Bengal and others2, A.R.Antuley vs. R.S.Nayak & another3, State of 1 AIR 1990 SC 307 2 AIR 2009 SC (Supp.) 282 3 1988 (2) SCC 602 5 Maharashtra vs. Tapas D.Neogy4, and this Court in Avise Business Solutions Pvt. Ltd., vs. State of A.P and others5 and Ikshavaku Software Ventures India Pvt. Ltd., vs. State of A.P and others6. 4. 4. Per contra, learned Advocate General would submit that the Petitioner is not a stranger to the alleged crime as the victim’s defrauded funds were credited directly into the bank accounts of the Petitioner-Company. Learned Advocate General would further submit that there are transactions in the subject accounts of the Petitioner which shows prima facie involvement of the Petitioner in the offence. It is further submitted that, at the time of filing of the complaint, the Complainant was not aware of the identity of the persons behind the illegal betting websites and hence, the Petitioner was not shown as an Accused in the said crime. Direct link of the Petitioner’s bank accounts with the offence has been established. (ii) Despite multiple notices from the Respondents, the Petitioner neither offered any explanation regarding the suspicious transactions nor submitted any documents other than the statements of the subject bank accounts. Such an incomplete compliance, despite repeated opportunities, clearly indicates deliberate withholding of material evidence and non- cooperation with the investigation. On this aspect, learned Advocate General has placed reliance on the judgment of the Hon’ble Supreme Court in Teesta 4 (1999) 7 SCC 685 5 2024 SCC OnLine AP 4526 6 2024 SCC OnLine AP 4484 6 Atul Setalvad vs. State of Gujarat7, wherein, it was held that there is no requirement to provide notice to the account holder prior to or at the time of issuance of the debit freeze. It was further held by the Hon’ble Supreme Court that, at the stage of investigation, it is not incumbent upon the investigating agency to justify the material as if in a trial and it would be suffice to justify the material for the purpose of investigation. (iii) The investigation is at the threshold. The Petitioner-Company is a large-scale private entity with an annual turnover of thousands of crores however, the bank accounts under freeze are only two of the many accounts being operated under the Petitioner’s name. The Petitioner is still in control of sufficient assets and liquid funds to carry out its daily functions without much inconvenience. There are no tenable grounds to defreeze the subject accounts of the Petitioner. Hence, prayed for dismissal of the petition. 5. One M.Goutham lodged a complaint with Respondent No.2 alleging that he was defrauded by unknown individuals through illegal online betting websites, was enticed with fake bonuses and false promises of high returns, made him to deposit larger sums and thereby caused a loss of Rs.1,42,78,000/- to him. Based on the said complaint, a case in Crime No.87 of 2025 has been registered by Respondent No.2 for the offences under Sections 318(4) of Bharatiya Nyaya Sanhita, 2023 (for short ‘BNS’) and Sections 3 and 4 of A.P.Gaming Act, 1974 against unknown Accused. Admittedly, the Petitioner herein, is neither a party nor an Accused in the said 7 (2018) 2 SCC 372 7 crime. In connection with the said crime, Respondent No.2 had issued a notice under Section 91 Cr.P.C to Respondent No.3 to provide certain information pertaining to the Bank Account Nos.04222100000551 and 3311346478 of Kotak Mahindra Bank, which belong to the Petitioner – Company, and also with a request to freeze the said accounts. 6. There is no dispute about the fact that the Petitioner is a Company that has several business verticals inter alia creating technology for short-content video platforms; digital marketing services like running campaigns by using Google Ad Words, buying of digital media advertisement spots from platforms like Google and Meta and selling it to the end users or their agents / intermediaries along with certain add-on services such as optimizing internet search. It is contended by the Petitioner that, the four credit transactions into the bank account of the Petitioner, as alleged by the Respondent No.2, were made for providing digital market services. It is also the contention of the Petitioner that it is a practice that the payment towards the consideration is either received directly from the client or from the agents of the clients / third parties. Likewise, in the instant case, the consideration was towards providing digital marketing services, on behalf of Petitioner’s client, from one Goutham, who happened to be the Complainant in the present Crime and one Annepu Venkata Srinu. 7. As seen from the material placed on record, the Petitioner-Company had produced its bank account statements pertaining to the subject accounts vide Letter dated 23.06.2025. As rightly contended by the learned counsel for 8 the Petitioner, though it is alleged that the amount involved in the criminal activity is about Rs.174 crores, no iota of evidence is placed before this Court to show that the Petitioner – Company has any nexus or role to play in the alleged criminal activity. It is also not in dispute that, the allegation of the Complainant in the subject crime is only about his loss of Rs.1.42 crores. Though it is alleged that the loss of Rs.174 crores is involved, only four entries amount to Rs.13.72 lakhs which are allegedly suspicious in connection with the subject bank accounts of the Petitioner, were identified. 8. While dealing with the similar matter, the Hon’ble Supreme Court in Tapas D.Neogy’s case referred to supra, categorically held that a Police Officer, during investigation, can seize or prohibit the operation of the account if such assets have direct links with the commission of the offences for which the police officer is investigating into. In the case at hand, no crime has been registered against the Petitioner and so far, direct link of the subject bank accounts of the Petitioner with the alleged crime has also not been established. 9. As seen from the statements of accounts of the Petitioner, being a private limited company, it has amounts over Rs.90.00 crores and Rs.50.00 lakhs respectively in the said accounts. As rightly contended by the learned Senior Counsel for the Petitioner, as the subject bank accounts are used for the operation of the Petitioner’s business, freezing of the entire bank accounts, without any connection with the alleged offence which is under 9 investigation, would affect the ability of the Petitioner to carry on its day-to-day business operations. 10. Perusal of the material on record does not disclose any case registered against the Petitioner with regard to the present crime. In the present case, the alleged loss sustained by the Complainant in the subject crime is only about his loss of Rs.1.42 crores. Due to the blanket order to freeze the entire account of the Petitioner, which is a private limited company, Respondent No.3 -Bank has freezed the accounts in their entirety. As such, the Petitioner is unable to operate its accounts and deal with the money lying therein. Under the guise of investigation, order of freezing the entire accounts without quantifying the amount and period cannot be passed and such an order will be construed as violation of fundamental rights of trade and business. 11. In view of the facts and circumstances of the case, Writ Petition No.23188 of 2025 is disposed of directing Respondent No.3 - Bank to de- freeze the Kotak Mahindra Bank Account No.04222100000551 of the Petitioner and to keep a lien over a sum of Rs.1.42 crores, until further orders. The Petitioner is directed to submit the monthly statements of the said account to the Investigating Officer till filing of charge sheet in Crime No.87 of 2025 on the file of Munagapaka Police Station, Anakapalli District. The Petitioner shall furnish the name and contact number of its authorized person to the Investigating Officer to submit required information as and when necessary in connection with the said crime. 10 Writ Petition No.23189 of 2025 is allowed directing Respondent No.3 – Bank to defreeze the Kotak Mahindra Bank Account No.3311346478 of the Petitioner. There shall be no order as to costs. As a sequel thereto, miscellaneous petitions, if any, pending shall stand closed. __________________________________ Dr.VENKATA JYOTHIRMAI PRATAPA, J Date:08.10.2025 Dinesh 11 HON’BLE DR. JUSTICE VENKATA JYOTHIRMAI PRATAPA W.P.Nos.23188 & 23189 of 2025 Dt.08.10.2025 Dinesh