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JAY SENGUPTA
Kedia Fintrade Pvt Limited – Appellant
Versus
Union Of India – Respondent
Parties: M/s Kedia Fintrade Pvt Limited & Ors. (Petitioners) vs. Union of India & Ors. (Respondents) (!) (!) (!) .
Nature of Petition: Writ petition under Article 226 seeking quashing of seizures, freezing orders, and consequential actions by Enforcement Directorate (ED) (!) .
Petitioners' Background and Arguments: - Petitioner No. 1: Company incorporated in 2019 for share investment/trading; sub-broker of Motilal Oswal since 2022 with ~140 clients, including Vikas Chhaparia (linked to case) (!) . - Petitioner No. 3: Long-time share trader and taxpayer (!) . - Not named in FIRs for predicate offence or money laundering; cooperated with ED; freezing orders unrelated to investigation (!) . - Timeline: FIRs in 2022 (Mohan Nagar PS 112/2022, Supela PS 1030/2022); ED ECIR 06.02.2022; Searches 08-09.09.2023; Freezing 10.09.2023 u/s 17(1A); Continuation 09.10.2023; Show cause u/s 8 on 13.10.2023 (!) . - Jurisdiction: Cause of action (search, seizure, freezing communication, injury) within Calcutta High Court limits u/Art. 226(2); PMLA allows local High Court challenge for attachment/freezing (!) .
ED's Arguments: - Challenge limited to quashing freezing (10.09.2023), continuation (09.10.2023), and SCN (13.10.2023); no press for other reliefs (!) . - No jurisdiction for Calcutta HC: Pan-India investigation from Raipur Zonal Office based on Chhattisgarh FIRs/ECIR; searches part of 88 nationwide operations (!) (!) . - Proper procedure: Director authorized Deputy Director (Circular 27.09.2011); Deputy Director recorded 'reason to believe' 08.09.2023 u/s 17(1), issued Search Auth. 116/2023; Asst. Director executed search, issued Seizure Memo/Form II & freezing u/s 17(1A) 10.09.2023; Deputy Director continued u/s 20(1) 09.10.2023 (communicated by Asst. Director) (!) (!) (!) (!) (!) . - Form II compliant: Substitutes 'Director' with delegated Deputy Director; Act prevails over Rules (!) (!) (!) . - SCN valid: Reasons & RUDs provided; petitioners replied (46 pages, 07.11.2023); adjudication pending (!) (!) . - Investigation: Mahadev App betting scam; proceeds laundered via associates (!) (!) .
Union of India's Position: Adopted ED submissions (!) .
Court's Findings: - Jurisdiction upheld: Part cause of action (search/seizure/freezing/continuation/injury) in jurisdiction u/Art. 226(2); legal right infringed locally (!) (!) (!) . - ED Actions Valid: - Proper authorization chain: Director → Deputy Director ('reason to believe' u/s 17(1)) → Asst. Director (search/seizure/freezing u/s 17(1)/(1A)) (!) (!) (!) . - Continuation: Deputy Director 'reason to believe' u/s 20(1), 09.10.2023 (!) . - Seizure Memo/Form II: Act-compliant despite Rule format (!) (!) . - SCN: Reasons/RUDs provided (!) . - No procedural illegality; part of Raipur-led pan-India probe (!) (!) .
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
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 : 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....
Court cannot take cognizance and quash or stay criminal proceedings without having territorial jurisdiction.
(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....
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....
Writ petitions are not entertained when alternative statutory remedies are available under the relevant legislation, emphasizing adherence to legal protocols for addressing grievances.
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