The Bombay High Court has clarified that investigating officers under the Maharashtra Protection of Interest of Depositors (MPID) Act cannot unilaterally direct sub-registrars to freeze immovable property. This ruling reinforces constitutional safeguards against arbitrary deprivation of property and underscores the necessity of statutory compliance and procedural fairness.
Background & Facts
The Dispute
The petitioners, Datta S/o Kisanrao Hathkadke, Shaikh Junaid Shaikh Jalil, and Shaikh Sajed Shaikh Jalil, are third-party purchasers of land bearing Gut No. 127 in Mantha, Jalna district. They acquired their shares through registered sale deeds from the original owners. When they attempted to sell their respective portions, they discovered that an impugned communication dated 16.06.2025, issued by the Deputy Superintendent of Police (Economic Wing), Latur (Respondent No. 3), had been sent to the Sub Registrar, Mantha (Respondent No. 4), directing a prohibition on further transfer of the entire property.
Key Facts
- The land in question, Gut No. 127, was originally owned by Sumanbai Indrajeet Hathkadke and Ramkuwar Indrajeet Hathkadke.
- Chandulal Mohanlal Biyani, the main accused in Crime No. 234/2024 registered at Gandhi Chowk Police Station, Latur, purchased a portion of Gut No. 127 (42.33 R) in 2022 during the period of alleged misappropriation of depositors’ funds.
- In 2024, Chandulal Biyani sold his undivided share of 14.11 R to Petitioners No. 1 and 2, along with Ramdas Uttam Borade.
- The impugned communication dated 16.06.2025 froze the entire Gut No. 127, including portions owned by non-accused third-party purchasers.
- The petitioners were not named as accused in Crime No. 234/2024.
- The Sub Registrar, Mantha, informed the petitioners of the restriction via letter dated 06.02.2026.
Procedural History
- 16.06.2025: Impugned communication issued by Dy. S.P. (Economic Wing), Latur, directing Sub Registrar to prohibit transfer of Gut No. 127.
- 06.02.2026: Petitioners received notice of the restriction from Sub Registrar, Mantha.
- 22.12.2025: Bombay High Court delivered judgment in Ausha w/o Sureschandra Nelge v. State of Maharashtra (Crl. W.P. No. 643/2025), holding that investigating officers lack power to freeze property under MPID Act.
- 28.03.2026: Criminal Writ Petition No. 298/2026 filed before Bombay High Court, Aurangabad Bench.
- 07.05.2026: Case reserved for judgment.
- 08.05.2026: Judgment pronounced.
The Parties' Positions
Petitioners: Argued they are innocent third-party purchasers with no connection to the alleged fraud. Contended that freezing the entire property violates Section 4 of the MPID Act, which vests attachment powers only in the Competent Authority or State Government, and contravenes Article 300A of the Constitution by depriving them of property without due process.
Respondents: Argued that since Chandulal Biyani, the main accused, had purchased part of the land using misappropriated funds, freezing the entire property was necessary to protect depositors’ interests. Relied on the nexus between the accused and the property.
Relief Sought
The petitioners sought quashing of the impugned communication dated 16.06.2025, and a direction to the Sub Registrar to remove the restriction on transfer of Gut No. 127.
The Legal Issue
Can an investigating officer under the Maharashtra Protection of Interest of Depositors (MPID) Act, 1999, issue a directive to the Sub Registrar to freeze immovable property without following the procedure under Section 4 of the Act or obtaining an order from the Competent Authority, and without affording notice or hearing to third-party property owners?
Arguments Presented
For the Petitioner
The petitioners relied on the precedent set in Ausha w/o Sureschandra Nelge v. State of Maharashtra (Crl. W.P. No. 643/2025), where this Court held that investigating officers have no statutory power under the MPID Act to freeze property by writing letters to land records authorities. They emphasized that Section 4 of the MPID Act exclusively vests the power of attachment in the State Government or a designated Court, not the police. They further argued that the impugned order violated Article 300A of the Constitution and the principles of natural justice, as no notice or opportunity of hearing was given to them, despite their clear title and lawful purchase.
For the Respondent
The State contended that the property was acquired by the main accused, Chandulal Biyani, using proceeds of crime during the period of misappropriation (2022 - 2024). It argued that freezing the entire property was a preventive measure to safeguard depositors’ interests and prevent dissipation of assets. It claimed that the investigating officer acted in good faith under the broader objectives of the MPID Act.
The Court's Analysis
The Court examined the statutory framework under Section 4 of the MPID Act, which provides that only the State Government or a designated Court may order attachment of property. The Court noted that the investigating officer’s role is limited to investigation and filing of charge sheets under the CrPC, not to exercise quasi-judicial powers of attachment.
"Thus, this Court has held that the Investigating Officer cannot assume the statutory powers of the Government or the designated Court by directly issuing orders or directions to the Sub Registrar asking them to attach or freeze the properties by making an endorsement in the land records."
The Court further held that the impugned communication was issued without any notice or opportunity of hearing to the petitioners, who were not accused in the case. This violated the fundamental principle of natural justice, as enshrined in Article 300A of the Constitution, which protects property rights against arbitrary state action.
The Court distinguished the facts of this case from those where the accused themselves are the owners of the property. Here, the petitioners were bona fide purchasers who acquired their shares after the crime was registered and through lawful transactions. Freezing the entire property, including portions owned by non-accused persons, was held to be excessive, disproportionate, and legally unsustainable.
The Court also reaffirmed its earlier decision in Vijaykumar alias Vijay S/o Sitaram Dandanaik v. State of Maharashtra (Crl. W.P. No. 231/2025), emphasizing that statutory powers cannot be assumed by executive officers without legislative mandate.
The Verdict
The petition succeeded. The Court quashed and set aside the impugned communication dated 16.06.2025 issued by the Deputy Superintendent of Police (Economic Wing), Latur. The rule was made absolute. However, the Court clarified that this order does not preclude the Competent Authority or State Government from taking action strictly in accordance with Section 4 of the MPID Act against the accused in Crime No. 234/2024, provided such action is preceded by a proper order from the designated Court.
What This Means For Similar Cases
Investigating Officers Cannot Act as Attachments Authorities
- Practitioners must challenge any police directive freezing property under the MPID Act as ultra vires if issued without a court or government order.
- Any communication from police to Sub Registrars or Land Revenue Departments must be scrutinized for statutory authority under Section 4.
- Third-party purchasers with registered sale deeds are entitled to protection from blanket property freezes.
Due Process Is Non-Negotiable in Property Matters
- No person can be deprived of property without notice or hearing, even if the property is suspected to be proceeds of crime.
- The doctrine of natural justice under Article 300A overrides administrative convenience.
- Courts will not permit collateral damage to innocent buyers under the guise of protecting depositors.
Statutory Powers Are Exhaustive and Exclusive
- The MPID Act does not grant implied powers to investigating officers.
- Any attempt to expand police powers beyond statutory text will be struck down.
- Future applications for attachment must strictly follow Section 4 - application to the designated Court, notice to all interested parties, and reasoned order.
