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MADRAS HIGH COURT
M.S. Ramesh and Sunder Mohan, JJ.
Tamil Nadu Development Foundation Trust – Petitioner
versus
Assistant Commissioner of Police and Anr. – Respondents
W.P. No.11821 of 2023 & W.M.P. Nos.11722, 11723 and 11725 of 2023
Decided on 25.3.2024
Counsel for the Parties:
For the Petitioner: Mr. I. Abdul Basith
For the Respondent No.1: Mr. E. Raj Thilak, Additional Public Prosecutor assisted by Mr. Aravind. C.
For the Respondent No.2: No Appearance
For the Respondent No.3: Mr. AR.L. Sundaresan, Additional Solicitor General assisted by Mr. R. Rajesh Vivekananthan
IMPORTANT POINT
Freezing of Bank Account – Principles of natural justice are required to be followed.
Headnote:
Unlawful Activities (Prevention) Act, 1967 – Section 7 – Criminal Procedure Code, 1973 – Section 102 – Freezing of Bank Account – When Section 7(1) mandates an inquiry to be conducted before passing of a prohibitory order, which has not been conducted in present case, consequential order would be in violation of Articles 14 and 21 of Constitution of India, apart from violating principles of natural justice – On this sole ground, impugned order cannot be legally sustainable – Powers of Central Government exercised by it under Sections 7 or 8 of UAP Act may be delegated to State Government by virtue of Section 42 of UAP Act – Whenever any coercive action is initiated by respondents by invocation of Section 7 of UAP Act, there is a duty cast on them to inform affected party about action taken – Failure to serve a copy of prohibitory order on Trust, would also amount to violation of principles of natural justice – Present Writ Petition challenging impugned order which is in violation of principles of natural justice, would be maintainable – In view of quashing of impugned order, petitioner’s bank account shall stand de-frozen. (Paras 7, 8, 13 and 14)
Result: Writ Petition allowed.
ORDER
M.S. Ramesh, J.—Heard Mr.I.Abdul Basith, learned counsel appearing for the petitioner, Mr.E.Raj Thilak, learned Additional Public Prosecutor, for the 1st respondent and Mr.AR.L.Sundaresan, learned Additional Solicitor General, for the 3rd respondent. There is no appearance on behalf of the 2nd respondent.
2. The writ petitioner is a registered Trust and engaged in various public welfare and social activities. The Trust also runs institutions in the name of ‘Arivagam’ in Theni and Tirunelveli Districts. In connection with its activities, the Trust maintains a savings bank account (A/c.No.410973519) with Indian Bank, Dr.Alagappa Road Branch, Chennai. Claiming that the petitioner Trust is an Islamic Centre of the Popular Front of India (PFI), which has been declared as an unlawful association under Section 3(1) of the Unlawful Activities (Prevention) Act (hereinafter referred to as ‘the UAP Act’), the aforesaid savings bank account has been frozen by the 1st respondent herein, through the impugned order dated 04.11.2022, in exercise of their powers under Section 7 of the UAP Act. Challenging the said order, the present Writ Petition has been filed.
3. The learned counsel for the petitioner submitted that the petitioner Trust is an independent Trust and has no connection or nexus with the PFI and that no funds of the Trust have been ever used for any unlawful activities or against the object of the Trust. He further submitted that the impugned order itself is in violation of the principles of natural justice, since neither a prior opportunity was given to the petitioner Trust to put forth its objections on the present action nor was the impugned order communicated or served on the Trust till date. He also submitted that the 1st respondent has no authority to pass the prohibition order.
4. Per contra, the learned Additional Solicitor General submitted that, if a person is in custody of any money, which is used or intended to be used for any unlawful association, the respondents would be well within their powers to prohibit the usage of such founds, in view of Section 7 of the UAP Act. He further submitted that when the powers under Section 7 are invoked against any person or a Trust, which aids an unlawful association, no inquiry or prior opportunity requires to be extended to such person/Trust. This apart, he also submitted that the Writ Petition is liable to be dismissed, in view of the alternate remedy available to the petitioner under Section 7(4) of the UAP Act to challenge the impugned order before the jurisdictional District Court.
5. Section 3 of the UAP Act empowers the Central Government to declare any association as unlawful, through a notification in the Official Gazette. In accordance with this provision, the PFI has been declared as an unlawful association, through a Gazette notification dated 27.09.2022. In consequence to declaration of an association as unlawful, the Central Government is empowered to pass prohibitory orders against the use of funds of an unlawful association or against any person, who aids an unlawful association with any sort of funds. For the sake of convenience, Section 7 of the UAP Act is reproduced below:—
“7. Power to prohibit the use of funds of an unlawful association.—(1) Where an association has been declared unlawful by a notification issued under section 3 which has become effective under sub-section (3) of that section and the Central Government is satisfied, after such inquiry as it may think it, that any person has custody of any moneys, securities or credits which are being used or are intended to be used for the purpose of the unlawful association, the Central Government may, by order in writing, prohibit such person from paying, delivering, transferring or otherwise dealing in any manner whatsoever with such moneys, securities or credits or with any other moneys, securities or credits which may come into his custody after the making of the order, save in accordance with the
