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IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
RAVI NATH TILHARI, J.
M/s. C. Gopal Reddy And Co. – Appellant
Versus
Directorate Of Enforcement – Respondent
Writ Petition No.36939 of 2022
Decided on : 07-03-2023
Constitution of India, 1950 - Article 226 - Indian Penal Code, 1860 - Sections 420, 467, 471, 468, 472 - Prevention of Money Laundering Act, 2002 - Section 8, 17 - Freeze of Bank account - Whether, in absence of any order to freeze property (Bank Accounts), under Section 17 (1-A) of PMLA, action of respondents in directing Bank Respondent Nos.3 and 4, vide impugned e-mails, not to entertain debit transactions from Bank accounts of petitioners mentioned in emails, is legally sustainable - Held, Considering aforesaid object of PMLA which is to achieve preventing money laundering and bring offenders to book as also at same time to safeguard rights of the persons who would be proceeded against under PMLA by ensuring fairness in procedure, in light of facts of present case, as brought on record from both sides, but without making any observation on merit of correctness thereof or otherwise, that amount in accounts of petitioners with respondent Banks is alleged to be "proceeds of crime", while setting aside impugned e-mails it would be in interest of justice to prevent the alleged money laundering, to keep it open to authorized officer of E.D under Section 17 of PMLA to take necessary action, by proceeding in accordance with law and further, for a period of 15 days from today to restrain petitioners with direction to respondent Nos.3 to 4 Bank, that there shall be no debit transaction from aforesaid accounts - Direction for 15 days as aforesaid, shall however abide by any order of Authorized officer of respondent No.1, if passed under Section 17 - Writ petition partly allowed.
JUDGMENT :
Heard Sri I.Koti Reddy, learned counsel, representing Sri N.Jeevan Kumar, learned counsel for the petitioners, Sri Josyula Bhaskara Rao, learned Standing Counsel for 1st respondent, Directorate of Enforcement (in short, ED), Ministry of Finance and 2nd respondent, Assistant Directorate of Enforcement, Hyderabad Zonal Office, Hyderabad, Sri D.V.S.Lokeshwara Rao, learned Standing counsel for 3rd respondent, Axis Bank Limited.
2. Sri G.Sudheer Kumar and Sri N.Satyanarayana, learned counsels accepted notice for the respondent No.4, Union Bank of India, Level-3, CO Annex Building, Saifabad, Hyderabad - 500 004, Telangana, but the appearance is not made.
3. This writ petition under Article 226 of the Constitution of India has been filed for the following relief:-
“It is therefore prayed that this Hon’ble Court may be pleased to pass an order orders, directions or writ more particular one in the nature of Writ of Mandamus:
(A) Declaring the action of Respondent No 2 in instructing/directing the Respondent Nos.3 and 4, vide emails dated 18.10.2022, to debit freeze the bank accounts of Petitioner No.1 bearing A/c No.91102004187524 maintained with Respondent No.3 and A/c No.055231100000858, A/c No.055211100004711, A/c No.055211100002962, A/c No.641301010050403 and A/c No. 641304010000001 maintained with Respondent No.4 as arbitrary, illegal, contrary to principles of natural justice and provisions of the Prevention of Money Laundering Act, 2002 and violative of the Fundamental rights guaranteed Article 19(1)(g) and Article 21 of the Constitution of India; and consequently set aside the instructions/directions in emails dt. 18.10.2022 issued by Respondent No.2.
(B) Declaring the action of Respondent No.2 in instructing/directing the Respondent Nos.3 and 4 vide emails dated 18.10.2022 to debit freeze the bank accounts of Petitioner No.2 bearing A/c No.913010024250012 maintained with Respondent No.3 and A/c No.055230100132315, A/c No.055211100002500 maintained with Respondent No.4 as arbitrary, illegal, contrary to principles of natural justice and provisions of the Prevention of Money Laundering Act, 2002 and violative of the Fundamental rights guaranteed Article 19(1)(g) and Article 21 of the Constitution of India and consequently set aside the instructions/directions in emails dt. 18.10.2022 issued by Respondent No.2.
(C) Declaring the action of Respondent No.2 in instructing/directing the Respondent Nos.3 and 4 vide emails dated 18.10.2022 to debit freeze the bank accounts of Petitioner No.3 bearing A/c No.919010092209062 maintained with Respondent No.3 and A/c No.055211100003013 maintained with Respondent No.4 as arbitrary, illegal, contrary to principles of natural justice and provisions of the Prevention of Money Laundering Act, 2002 and violative of the Fundamental rights guaranteed Article 19(1)(g) and Article 21 of the Constitution of India and consequently set aside the instructions/directions in emails dt. 18.10.2022 issued by Respondent No.2.
(D) Declaring the action of Respondent No.2 in instructing/directing the Respondent No.3 vide emails dated 18.10.2022 to debit freeze the bank accounts of Petitioner No.4 bearing A/c No.055211100003110 maintained with Respondent No.4 as arbitrary, illegal, contrary to principles of natural justice and provisions of the Prevention of Money Laundering Act, 2002 and violative of the Fundamental rights guaranteed Article 19(1)(g) and Article 21 of the Constitution of India and consequently set aside the instructions/directions in emails dt. 18.10.2022 issued by Respondent No.2.
(E) Pass such other order or orders as this Hon’ble Court may deem fit and proper in the interest of justice.”
4. The petitioners are challenging the e-mails dated 18.10.2022 by the respondent No.2, the Assistant Director, Directorate of Enforcement, Hyderabad Zonal Office, Hyderabad to the 3rd respondent, the Axis Bank Limited and to the 4th respondent, the Union Bank of India, requesting them to furnish the balance
SupremeToday
(1) Freezing of Bank Account – If a statute provides for a thing to be done in a particular manner, then it has to be done in that manner alone and in no other manner failing which it would fall foul....
It is a well-settled salutary principle that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner.
Point of law: powers of judicial review are limited and while exercising such power the Court has to see whether the process adopted or decision made by the authority is malafideor is intended to fav....
The court affirmed that the Enforcement Directorate's actions under the PMLA were valid, emphasizing the importance of statutory compliance in search and seizure operations.
Point of Law : Whenever letters of request are received from any contracting states, the ED ought to follow due process, as per the domestic law, in line with the spirit of the Merida and the Palermo....
The main legal point established in the judgment is that the procedure for freezing bank accounts under the Unlawful Activities (Prevention) Act, 1967, specifically Section 25, is directory in nature....
The court upheld the validity of the debit freeze on the appellant's accounts, affirming that the funds were reasonably suspected to be proceeds of crime under PMLA.
The main legal point established in the judgment is the legality of freezing bank accounts under Section 102 Cr.P.C. and the applicability of this provision in the context of the case.
The freezing of the bank account under section 102 Cr.P.C. must be in compliance with the statutory requirements, and the intimation to the court must be made forthwith as required by the law.
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