- 1 - HC-KAR NC: 2026:KHC:16910 CRL.P No. 16235 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25TH DAY OF MARCH, 2026 BEFORE THE HON'BLE MR. JUSTICE M.NAGAPRASANNA CRIMINAL PETITION NO. 16235 OF 2025 BETWEEN: SRI. SARESH T.R. S/O. SRI. THYKKOOTTATHIL RAGHAVAN AGED ABOUT 46 YEARS, R/AT NO.8133, WING 1 PRESTIGE ROYAL GARDEN, DODDABALLAPURA MAIN ROAD, BENGALURU - 560 064. PERMANENT RESIDENT OF THYKKOOTTATHIL HOUSE, KADALUNDI SO, KOZHIKODE KERALA - 673 302. …PETITIONER (BY SRI. KUMARA, ADVOCATE) AND: THE STATE OF KARNATAKA BY NORTH EAST CEN POLICE STATION, BANGALORE. REPRESENTED BY Digitally signed by SANJEEVINI J KARISHETTY Location: High Court of Karnataka - 2 - HC-KAR NC: 2026:KHC:16910 CRL.P No. 16235 of 2025 THE STATE PUBLIC PROSECUTOR HIGH COURT BUILDING, BENGALURU - 560 001. …RESPONDENT (BY SMT. B. PUSHPALATHA, ADDL. SPP) THIS CRL.P IS FILED U/S 528 OF BNSS R/W SECTION 482 OF CR.P.C (U/S 528 BNSS) BY THE ADVOCATE FOR THE PETITIONER PRAYING THAT THIS HONOURABLE COURT MAY BE PLEASED TO SET ASIDE THE ORDER DATED 24.10.2025 PASSED BY THE XLV ACJM, AT BENGALURU IN CR.NO.397/2025 OF NORTH EAST CEN P.S., AND TO DEFREEZE THE BANK ACCOUNTS BEARING A/C NO.074801506875, IFSC CODE-ICICI0000748 IN ICICI BANK AND A/C NO.23901000004604, IFSC CODE-HDFC00002390 IN HDFC BANK AND REFUND THE ENTIRE AMOUNT RS.4,01,400/- WHICH WAS DEBITED FROM THE ACCOUNTS OF THE PETITIONER. THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: - 3 - HC-KAR NC: 2026:KHC:16910 CRL.P No. 16235 of 2025 CORAM: HON'BLE MR. JUSTICE M.NAGAPRASANNA ORAL ORDER The petitioner is before this Court seeking the following prayer: "WHEREFORE the petitioner prays that this Hon'ble Court may be pleased to set aside the order dated 24.10.2025, passed by the XLV Addl Chief Judicial Magistrate, at Bengaluru, in Crime No. 397/2025 of North East CEN Police Station and to to defreeze the bank accounts bearing A/c No. 074801506875; IFSC Code: ICICI0000748 in ICICI Bank and A/c No. 50100810738954, IFSC Code: HDFC0008674 in HDFC Bank and refund the entire amount of Rs.4,01,400/- (Rupees Four Lakhs One Thousand Four Hundred only) which was debited from the accounts of the petitioner, in the interest of justice, equity and law. 2. Heard Sri. Kumara, learned counsel appearing for the petitioner, Smt. B. Pushpalatha, learned Addl. SPP appearing for the respondent and have perused the material on record. 3. Learned counsel appearing for the petitioner would project that without hearing the petitioner the amount from the account of the petitioner is defrozen and transferred to the hands of the complainant. - 4 - HC-KAR NC: 2026:KHC:16910 CRL.P No. 16235 of 2025 4. This Court in way back in year 2022 had clearly directed that the concerned Court should not pass orders without hearing the person from whom the amount is to be transferred on answering an application under Sections 451 and 457 of the Cr.P.C. The courts are repeating the same mistake. Therefore, this Court in the case of RAHUL CHARI AND ANOTHER V. STATE OF KARNATAKA BY NORTH CEN POLICE AND OTHERS1 has held as follows: "12. The afore-narrated facts are not in dispute and therefore not reiterated. The 2nd petitioner is a Unified Payment Interface platform. All such UPI platforms are not owned by them. They are owned by the National Payments Corporation of India (‘NPCI’ for short) and legally the petitioners are considered as third party application provider by the NPCI or a system provider. In effect, regardless of different nomenclatures under different enactments, the UPI service providing entities like the 2nd petitioner/PhonePe have the status of intermediaries as obtaining under the Information Technology Act, 2000 (‘IT Act’ for short). Section 79 of the IT Act protects the intermediaries to the extent as obtaining under the provision. Section 79 of the IT Act reads as follows: “79. Exemption from liability of intermediary in certain cases.–(1) Notwithstanding anything contained in any law for the time being in force but subject to the provisions of sub-sections (2) and (3), an intermediary shall not be liable for any third party information, data, or communication link made available or hosted by him. 1 2022 SCC OnLine Kar 1967 - 5 - HC-KAR NC: 2026:KHC:16910 CRL.P No. 16235 of 2025 (2) The provisions of sub-section (1) shall apply if– (a) the function of the intermediary is limited to providing access to a communication system over which information made available by third parties is transmitted or temporarily stored or hosted; or (b) the intermediary does not– (i) initiate the transmission, (ii) select the receiver of the transmission, and (iii) select or modify the information contained in the transmission; (c) the intermediary observes due diligence while discharging his duties under this Act and also observes such other guidelines as the Central Government may prescribe in this behalf. (3) The provisions of sub-section (1) shall not apply if– (a) the intermediary has conspired or abetted or aided or induced, whether by threats or promise or otherwise in the commission of the unlawful act; (b) upon receiving actual knowledge, or on being notified by the appropriate Government or its agency that any information, data or communication link residing in or connected to a computer resource controlled by the intermediary is being used to commit the unlawful act, the intermediary fails to expeditiously remove or disable access to that material on that resource without vitiating the evidence in any manner. Explanation.–For the purposes of this section, the expression “third party information” means any information dealt with by an intermediary in his capacity as an intermediary”. Section 79 (supra) directs that notwithstanding anything contained in any law, an intermediary shall not be liable - 6 - HC-KAR NC: 2026:KHC:16910 CRL.P No. 16235 of 2025 for any third party information, data or communication link made available or hosted by him and application of the provision is in terms of what is observed in the provision itself. The intermediary would not become liable if the intermediary has not initiated the transmission, selected the receiver of the transmission or selected or modified any information contained in the transmission. The expression third party information under Section 79 of the IT Act is explained to be information dealt with by the intermediary in the capacity as an intermediary. 13. It is not in dispute that the 2nd petitioner is an intermediary and the 1st petitioner is the whole time Director of the 2nd petitioner. A transaction is made by the 2nd respondent, online, for an amount of Rs.69,143/- with one suspect Amith Mishra. The payment is routed through “PhonePe”. It appears that the said Amith Mishra turns out to be a fraud and the amount so transacted becomes a fraudulent transaction. An e-mail is sent by the 2nd respondent to the cyber cell reporting the incident of such UPI fraud. Pursuant to the e-mail so sent by the 2nd respondent, the nodal account of PhonePe was directed to be freezed. Later the complainant registers a complaint before the jurisdictional Police informing them about the transaction that took place on 02.04.2021, pursuant to which, a crime comes to be registered against unknown person in Crime No.256 of 2021. While registering the crime, the CCIR is also placed on record. In the CCIR the suspect details are also forthcoming. The name of the suspect is Amith Mishra and the number of the suspect is also indicated. 14. After registration of crime and freezing of nodal account, an application is filed by the 2nd respondent/complainant before the concerned Court under Sections 451 and 457 of the CrPC claiming that the amount she has lost should be refunded to her by defreezing the nodal account. The learned Magistrate directs defreezement of the account and transfer of money to the account of the complainant. It is only then that the 1st petitioner comes to know that his account was frozen, later the account was de-frozen, an amount of Rs.69,143/- is debited from his personal account and transferred to the account of 2nd respondent held at ICICI Bank. It is not that the 1st petitioner was intimated about - 7 - HC-KAR NC: 2026:KHC:16910 CRL.P No. 16235 of 2025 the debit from his account by any authority. When he noticed the debit transaction in his account he got to know link in the chain of events and comes to know that it is pursuant to the order passed by the learned Magistrate. 15. One glaring factor is that both the petitioners are not the accused; though for freezing of account one need not be an accused. It is only money trail that leads to suspicion as also freezing of account. Therefore nobody need be heard as Section 102 of the Cr.P.C. empowers Investigating Agency to direct freezing of account within its sweep. The case at hand is not of that kind. 16. It not a case even where the suspect is not known. The name of the suspect is intimated in CCIR and also phone number of the suspect is indicated. The investigation ought to have been made for unearthing the fraud qua the alleged fraudster. The complainant files an application before the concerned Court seeking recovery of money and from the personal account of 1st petitioner the amount is directed to be transferred by the order of the learned Magistrate. The order passed on the application reads as follows: “ORDER ON THE APPICATION FILED BY PETITIONER UNDER SECTIONS 451 AND 457 OF Cr.P.C.” The petitioner by name Madhuri R.K. has filed recent application to direct the I.O. to defreeze the bank account No.05231140029395, HDFC Bank and transfer the freezed amount to the account of the petitioner. According to the petitioner, during the course of investigation, the IO has freezed the above said account. The petitioner is the complainant and the freezed amount belonging to the petitioner and there is no claim by others. The seized amount is very much necessary and required by the petitioner for her necessities. The petitioner is ready and willing to abide by any conditions that may be imposed by this Court and sought to allow the present application. On the said application, the report from the I.O. is called for and the I.O. has submitted the report, - 8 - HC-KAR NC: 2026:KHC:16910 CRL.P No. 16235 of 2025 stating that he has no objection to release the freezed amount ini favour of the petitioner on conditions. Learned Senior APP has filed objections Heard arguments of both sides. After hearing the arguments and perusal of the records reveals that the amount seized by the I.O. by freezing the account belongs to the accused and there is no rival claim by others. Therefore, the petitioner has made out grounds to allow the present application. Therefore, in view of the above, it is just and proper to allow the application filed by the petitioner. Accordingly, I proceed to pass the following: ORDER The application filed by the petitioner by name Madhuri R.K. under Section 451 and 457 of Cr.P.C. is hereby allowed. Accordingly, the offence is hereby directed to issue intimation to the HDFC Bank to defreeze the amount of Rs.69,143/- from the account No.05231140029395 and to transfer the said amount to the account of the petitioner namely ICICI Bank Account No.004701626126. Accordingly, the petitioner is hereby directed to execute indemnity bond for Rs.69,143/- with a condition to indemnifying the said amount against third party claim and shall deposit the said amount as and when directed by this Court. Office to issue release order after execution of indemnity bond. Put up after final report.” (Emphasis added) The afore-quoted is the order passed by the learned Magistrate by which the amount that is held in the personal account of the 1st petitioner is debited and transferred. The reason rendered would indicate that after hearing arguments and perusal of the records, it would reveal that the amount seized by the Investigating Officer is by freezing the account which belonged to the accused. The petitioners are not the accused and there is no rival - 9 - HC-KAR NC: 2026:KHC:16910 CRL.P No. 16235 of 2025 claim by others. The petitioners are not even notified for any rival claim. It is only on these two grounds it is held that the petitioner therein has made out grounds to allow the application. Accordingly, the learned Magistrate directs the amount that is in the account and that has already been frozen should be defrozen and Rs.69,143/- should be immediately transferred to the account of the 2nd respondent on execution of indemnity bond. 17. In the entire process the 1st petitioner from whose account the amount is transferred is not even heard in the matter. Though the Court notices that the amount belongs to the victim/ complainant, which accused is even known and there are no rival claimants, if notice is not issued to the account holder from whom debit is sought, there cannot be a rival claim. This rudimentary fact is given a go-bye by the learned Magistrate. The application under Sections 451 and 457 of the Cr.P.C. is dealt with by the learned Magistrate in a casual and cavalier manner. The amount however small it is, is the property of an individual in whose account, it is held. Such amount which is a right to property of the account holder cannot be taken away without even bringing to his knowledge. There has been a debit from the account of the 1st petitioner for the purpose of satisfying the complainant. While the right of a complainant is to be looked into, since the complainant is a victim of a fraud, but the investigation cannot be cut short without unearthing the fraud and closing the issue, by transfer of amount from a third party, in the case at hand, from the personal account of the 1st petitioner. All the factors will have to be borne in mind by the Magistrates while dealing with an application under Sections 451 and 457 Cr.P.C. Therefore, the impugned order, on the face of it, is arbitrary and cannot stand the scrutiny of law. 18. This Court is coming across scores and scores of cases where the account is frozen, defrozen and the amount that the complainant is due from a suspect or an accused is transferred to the account of the complainant from the account of third parties which action is contrary to all cannons of law. It has therefore, become necessary for this Court to direct the learned Magistrates that while dealing with applications under Sections 451 and 457 of - 10 - HC-KAR NC: 2026:KHC:16910 CRL.P No. 16235 of 2025 the Cr.P.C., particularly in cases where it involves intermediaries like the petitioners, to hear those intermediaries and then direct transfer of the amount, and not allow the application filed under Sections 451 and 457 of the Cr.P.C in a casual manner. 19. The learned Magistrates are required to note that they are dealing with the properties of third parties. Decision on an application under Sections 451 and 457 Cr.P.C. cannot become a frolicsome act on the part of the learned Magistrates merely because it is subject to indemnity. It is not the question of security but it is the question of right to property of an individual, from whose account the money is transferred without any information to him. Therefore, the learned Magistrates while considering the applications of the kind shall notice the following: (a) Whether the accused has been identified by the Investigating Officer? (b) Whether the account of the accused is identified by the Investigating Officer? (c) If the rival claimant is not an accused, whether intimation is given to the account holder, from whose account the money is sought to be transferred to the account of the complainant and such order of transfer of amount from the particular account shall only be after hearing the person, from whose account the money is sought to be transferred to the account of the complainant, before its transfer. 20. Freezing of account in terms of Section 102 of the Cr.P.C. is a power that is available, but if the amount is sought to be transferred to any other account, the account holder whose account is frozen or de-frozen for the purpose of transfer of the amount shall be heard. The learned Magistrates considering the applications under Sections 451 and 457 of the Cr.P.C. shall bear in mind the aforesaid directions, while passing orders under the said provisions, only in the cases of the kind aforementioned. In the light of the preceding analysis, the purpose of - 11 - HC-KAR NC: 2026:KHC:16910 CRL.P No. 16235 of 2025 Section 79 of the IT Act is not gone into. The contentions remain open. 21. For the aforesaid reasons, I pass the following: O R D E R (i) The Writ Petition is allowed and the order dated 23.12.2021 passed by the I Additional Chief Metropolitan Magistrate, Bengaluru in Cr.No.256 of 2021 is quashed. (ii) The amount debited from the account of the 1st petitioner shall be refunded to his account forthwith. (iii) The 1st respondent is directed to pursue the investigation pursuant to the complaint of the 2nd respondent registered in Crime No.256 of 2021 dated 27-05-2021. (iv) Registry is directed to circulate the order to all the Magistrates." 5. In that light, the petition deserves to succeed by way of a remand to the hands of the concerned Court to hear the petitioner and then pass necessary orders. Any amount that is already transferred to the account of the second respondent, return of it or refund of it shall be subject to the result of the proceedings now remitted back to the hands of the concerned Court. - 12 - HC-KAR NC: 2026:KHC:16910 CRL.P No. 16235 of 2025 6. For the aforesaid reasons, the following: ORDER (i) The petition is allowed. (ii) The order dated 24.10.2025 passed by the XLV Additional Chief Judicial Magistrate, Bengaluru, is hereby set aside. (iii) The matter is remitted back to the hands of the concerned Court to hear the parties to the lis and pass necessary orders in accordance with law. (iv) The amount that is transferred from the account of the petitioner to the account of the complainant shall remain subject to the outcome of the matter now remanded. Ordered accordingly. Sd/- (M.NAGAPRASANNA) JUDGE SJK List No.: 1 Sl No.: 15