OPTO Circuit India Ltd. vs Axis Bank

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2021 Supreme(SC) 48

S. A. BOBDE, A. S. BOPANNA, V. RAMASUBRAMANIAN
OPTO Circuit India Ltd. – Appellant
Versus
Axis Bank – Respondent

Advocates Appeared:
For the Petitioner(s): Mr. Shashikiran Shetty Sr. Adv. Mr. Mahesh Thakur, AOR Ms. Anuparma Bordoloi, Adv. Mr. Samarth Sreedhar, Adv. Mr. Kiran Patel, Adv.
For the Respondent(s): Mr. P. S. Sudheer, AOR Ms. Shruti Jose, Adv. Mr. Anil Kumar Sangal, AOR Mr. Siddharth Sangal, Adv. Mr. Nilanjani Tandon, Adv. Mr. S.V. Raju, ASG Mr. Zoheb Hossain, Adv. Mr. Kanu Agarwal, Adv. Ms. Aakansha Kaul, Adv. Mr. Tejas Patel, Adv. Mr. B.V. Balaram Das, AOR Mr. B. Krishna Prasad, AOR

Judgement Key Points

What is the required due-process procedure for freezing bank accounts under Section 17 of the PMLA? What is the consequence of not following the statutory freezing procedure under PMLA as held by the Supreme Court in this case? What is the court’s direction regarding defreezing the accounts and handling statutory payments?

Key Points: - The judgment emphasizes that freezing under Section 17 of PMLA must follow the specified procedure, including recording the belief in writing and forwarding reasons to the Adjudicating Authority (!) (!) . - The Court held that the impugned freezing, without due compliance of Section 17 of PMLA, is unsustainable and must be quashed/defreezed, with directions to defreeze and honor statutory dues (!) (!) (!) . - The Court clarifies that freezing/defreezing must be evaluated based on the contents of the impugned order/communication itself and not on post-hoc affidavits or statements (!) .

What is the required due-process procedure for freezing bank accounts under Section 17 of the PMLA?

What is the consequence of not following the statutory freezing procedure under PMLA as held by the Supreme Court in this case?

What is the court’s direction regarding defreezing the accounts and handling statutory payments?

JUDGMENT :

A.S. Bopanna, J.

Leave granted.

2. The appellant is before this Court assailing the order dated 13.08.2020 passed by the High Court of Karnataka in WP No.8031 of 2020. Through the said common order the High Court has disposed of two writ petitions but the consideration herein relates to the issue raised in Writ Petition No.8031 of 2020 which was filed before the High Court, by the appellant herein raising the issue relating to the freezing of their bank account.

3. When the Special Leave Petition was listed for admission, the learned senior counsel for the appellant while assailing the order passed by the High Court, inter alia contended that the freezing of the bank accounts maintained by the appellant company has prejudiced the appellant, inasmuch as, the amount in the account which belongs to the appellant is made unavailable to them due to which statutory payments to be made to the Competent Authorities under various enactments is withheld and the payment of salary which is due to the employees is also prevented. In that background, this Court though had not found any reason to interfere with the initiation of the proceedings under the Prevention of Money-Laundering Act,

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2021 Supreme(SC) 48

S. A. BOBDE, A. S. BOPANNA, V. RAMASUBRAMANIANOPTO Circuit India Ltd. – AppellantVersusAxis Bank – Respondent

What is the required due-process procedure for freezing bank accounts under Section 17 of the PMLA?

What is the consequence of not following the statutory freezing procedure under PMLA as held by the Supreme Court in this case?

What is the court’s direction regarding defreezing the accounts and handling statutory payments?

Cases Referred (2)

S. A. BOBDE, A. S. BOPANNA, V. RAMASUBRAMANIAN
OPTO Circuit India Ltd. – Appellant
Versus
Axis Bank – Respondent