IMPORTANT POINT
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.

JUDGMENT :

(Jay Sengupta, J.) :

1. This is an application under Article 226 of the Constitution of India praying for quashing of seizures, freezing, orders and of the consequential actions of the Enforcement Directorate (ED, for short) in respect of the petitioners.

2. Learned senior counsel appearing on behalf of the petitioners submitted as follows. The petitioner no. 3 was a full time share trader for the past 30 years. The petitioner no. 3 and his family members had been gold and platinum tax payers. The petitioner no. 1 was company incorporated on 17.10.2019, initially engaged in the business of investment and trading of shares out of their own capital. The petitioner no. 1 company was appointed as a sub broker of Motilal Oswal Financial Services Limited only on 19.10.2022. In ordinary course of business, one Vikash Chhaparia was tagged with the petitioner no. 1 as a client by Motilal Oswal Financial Services Limited. Apart from such person, the petitioner no. 1 company had approximately 140 other clients. It was not required of a sub-broker or the broker of any Stock Exchange to know the source of investments of their clients. Any sub broker was required to operate within the contours of contractual relationship which was in accordance with the SEBI regulations. These included buying/selling of shares on express instructions of the client. The petitioners were admittedly not named in the FIR’s lodged in connection with the predicate offence. Nor had allegation been levelled against the petitioners so far as the offence of money laundering was concerned. The officers of the Enforcement Directorate conducted a search operation at the premises of the petitioners as one Vikas Chapparia, an accused in the case of money laundering, was a client of the petitioner no. 1 company in its capacity of a sub-broker of Motilal Oswal Financial Services Limited. The petitioners thoroughly cooperated with the investigation. But surprisingly, the Enforcement Directorate issued carte blanche freezing orders on the securities held by the petitioners. The same had no bearing with the ongoing investigation of the Directorate. Some of the relevant dates, pertaining to the facts of the case could be noted. In 2022, two FIRs under (i) Mohan Nagar PS, FIR No. 112/2022 had been lodged. (ii) Supela PS case No. 1030/2022 were filed against one Mahadev App and its owner & Operator. On 06.02.2022, Enforcement Directorate (ED) started investigation under ECIR/RPZO/10/2022. On 08.09.2023 and 09.09.2023, search and seizure was conducted at the office of the petitioner. Seizure Memo was prepared. On 10.09.2023, the Assistant Director of ED issued a freezing order u/s 17(1A) of the Prevention of Money Laundering Act, 2002 and summons were issued and the Petitioner all along attended the interrogations. On 11.09.2023, 12.09.2023, 25.09.2023, 27.09.2023, and 28.09.2023, the Petitioner No.3 was interrogated by the ED, pertaining to affairs of one “Mahadev App” pursuant to the summon issued from time to time. On 09.10.2023, by Email, the Respondent No. 4 informed the Petitioners that the Respondent No. 2 had decided to continue the freezing order. On 13.10.2023, the Respondent Authority issued show cause u/s 8 of the Act being OA No. 1012/2023 & OA No. 1014/2023. On 19.10.2023, the Petitioner No. 3 submitted written explanation against the queries of the ED Authority. Learned Counsel of the Enforcement Directorate had taken a preliminary point of territorial jurisdiction of this Hon’ble Court, as because, FIRs in relation to the predicate offence were lodged in Chhattisgarh and ECIRs were lodged at Raipur and hence, it was submitted that only Chhattisgarh High Court should have the exclusive jurisdiction to entertain the present writ application. Article 226 (2) of the Constitution of India, conferred power to the High Courts to entertain a Writ Petition, wherein full or a part of cause of action arose, within its jurisdiction. Further Explanation of the Section