Freeze orders lack justification when imposed on an unconnected company not named in the FIR or chargesheet.

A freeze order over a company's assets cannot be sustained where the company was not named in the FIR or chargesheet, was not shown to be an employee, shareholder, director or key managerial person of the accused, and had no demonstrated link to the criminal investigation. The restraint had been imposed only because proceedings were pending against a third party. Once the accused was discharged, and in any event where the company had no necessary connection with the investigation, continued asset restraint lost its lawful investigative purpose. The associated bank guarantee condition, being an extension of the freeze, was likewise unjustified and was set aside.

---

---

Issues: Whether the freeze order and the condition of furnishing a bank guarantee could be sustained against a company that was not named in the FIR or chargesheet and had no demonstrated connection with the criminal proceedings against the accused person.

Analysis: The freeze orders had been imposed only because of the pending proceedings against a third party. The company was not an accused, was not shown to be an employee, shareholder, director, or key managerial person of the accused, and had not been named in the FIR or chargesheet. Once the accused person had been discharged, and in any event where the company itself had no necessary connection with the investigation, continued restraint on its assets ceased to have a lawful investigative purpose. The accompanying bank guarantee condition, being an extension of the freeze, also lacked justification.

Conclusion: The freeze order and the condition requiring a bank guarantee were unsustainable and were set aside, in favour of the appellant.

---