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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
J.B. Pardiwala, J.
Bhanuben and Ors. - Appellants
Vs.
State of Gujarat and Ors. - Respondents
Special Criminal Application (Direction) No. 1555 of 2017
Decided On : 29-03-2017
Constitution of India, 1950 – Article 226 – Petitioner prays to direct respondent No. 2 to permit petitioners to operate their Bank Accounts which are mentioned in communication and be further pleased to quash and set aside partial ban whereby it is directed that no debits be allotted from accounts of present petitioners and to direct respondent No. 2 to permit petitioners to operate their Bank Accounts which are mentioned in communication –Held, Manner in which attachment proceedings are legislatively structured, indicate, that when, designated/authorised officer orders provisional attachment, based on material available with him, it is a tentative view, taken, keeping in mind that, if provisional attachment is not ordered, it could lead to frustration of proceedings under the PMLA – If properties, which reflect proceeds of crime change hands, it could lead to creation of bonafide third party interest which may, make it difficult, if not impossible, for the concerned authorities, to retrieve the proceeds of crime – Application Rejected (Paras 27, 28, 29)
Certainly. Based on the provided legal document, here are the key points:
The primary issue concerns the legality of freezing or attaching bank accounts of individuals under investigation for suspected proceeds of crime, specifically under the Prevention of Money Laundering Act, 2002 (PMLA) and the Criminal Procedure Code (Cr.P.C.) (!) (!) .
The legislation provides that provisional attachment of property, including bank accounts, can be ordered by an authorized officer when there are reasons to believe that such property is involved in money laundering or criminal activity, and that non-attachment could frustrate proceedings (!) (!) .
The order for provisional attachment is a tentative measure, valid for a maximum of 150 days, intended to prevent the transfer or concealment of proceeds of crime during ongoing investigations (!) (!) .
The powers under the PMLA are intended to be exercised in a manner that is consistent with the objectives of the Act, including the prevention of money laundering, and are supported by the provisions of the Cr.P.C., which apply wherever not inconsistent (!) (!) (!) .
The process involves multiple stages: provisional attachment (Section 5), filing of a complaint with the Adjudicating Authority (Section 5(5)), adjudication and confirmation (Section 8), and eventual confiscation if guilt is established in a trial (!) (!) .
The authority's power to freeze or attach accounts is not dependent on prior charges or prosecution; it is based on reasonable belief and material in possession, which must be recorded in writing (!) (!) (!) .
The legislation and judicial interpretation support that bank accounts, whether in the name of the accused or related persons, can be considered property within the scope of the law, and their freezing or prohibition from operation is permissible during investigation (!) (!) (!) .
The authority's actions, including freezing accounts, are meant to be temporary and should not continue indefinitely. If provisional attachment is not followed by a formal order within the prescribed period, the freeze should be lifted (!) (!) .
The provisions of the PMLA are designed to facilitate effective investigation and enforcement, including incidental powers such as prohibiting withdrawal from bank accounts, which are necessary for preserving evidence and preventing the dissipation of proceeds of crime (!) (!) (!) .
The procedural safeguards, including notice and opportunity to be heard, are integral to the process, and any action taken must be within the scope of the statutory powers, ensuring that rights are not arbitrarily infringed (!) (!) .
The law emphasizes that actions during investigation, such as freezing accounts, are part of the statutory investigative process and do not amount to final adjudication or conviction, thus maintaining the presumption of innocence until proven guilty (!) (!) .
The legal framework aims to strike a balance between individual property rights and the necessity of effective enforcement against money laundering and related crimes, with the understanding that provisional measures are temporary and subject to judicial review or subsequent proceedings (!) (!) .
Please let me know if you need further elaboration or specific legal advice based on these points.
J.B. Pardiwala, J.
1. By this writ application under Article 226 of the Constitution of India, the writ applicants have prayed for the following reliefs:
"(A) Your Lordships may be pleased to admit and allow this petition;
(B) Your Lordships may be pleased to direct the respondent No. 2 to permit the petitioners to operate their Bank Accounts which are mentioned in the communication at Annexure-A and be further pleased to quash and set aside the partial ban whereby it is directed that no debits be allotted from the accounts of the present petitioners;
(C) Pending admission, hearing and final disposal of this application, Your Lordships may be pleased to direct the respondent No. 2 to permit the petitioners to operate their Bank Accounts which are mentioned in the communication at Annexure-A;
(D) Your Lordships may be pleased to grant such other and further relief/s that may be deemed fit and proper in the interest of justice."
2. The case of the writ applicants may be summarized as under:
2.1 The writ applicants are the residents of Daman falling within the union territory. They are into the business of sale of liquor. They are carrying on business in the name of Damaniya Enterprise, Sai Wines, Sai Bar & Restaurant and Sai Enterprise. It is the case of the applicants that they hold a valid license for the purpose of the business of sale of wine including distributorship. They have, in all, the following Bank Accounts;
"(1) HDFC Bank Account No. 01303630000115
(2) Goa State Co-operative Bank Account No. 00251010000748
(3) Bank of Baroda Account No. 25580500004060
(4) Sai Bar and Restaurant with the Goa Co-operative Bank bearing account No. 00251010000802 as well as the Bank of Baroda Account No. 25580500001384.
(5) The Damaniya Enterprise holds a Bank Account with the Bank of Baroda bearing Account No. 25580500004020, State Bank of India Account No. 35807890407 as well as the Goa State Co-operative Bank Account No. 00251010000779."
2.2 On 15th February, 2017, the Enforcement Directorate, Department of Revenue, Ministry of Finance, Government of India, issued a letter to the Branch Manager of the Goa State Co-operative Bank Ltd. Bhimpore, Daman, stating as under:
"To,
The Branch Manager,
The Goa Co-operative Bank Ltd.
Dori Kadiya,
Bhimpore,
Daman 396210.
Sir,
Subject: Bank Account details of A/c. Nos. 00251010000779, 00251010000802, 00251010000748 & 00251010000817-Reg.
With regard to the subject matter kindly arrange to furnish the details of the following account numbers:
(i) 00251010000779
(ii) 00251010000802
(iii) 00251010000748
(iv) 00251010000817
The details required are as under
1. Copy of Account Opening Form (AOF) and KYC documents
2. Statement of accounts from 01.01.2011 to till date in hard copy & a Soft Copy, in Excel Format be mailed to bippan.sharma@gov.in within one hour from the receipt of this mail.
3. Present status of above accounts.
4. Please also inform whether the bank is aware of any proceedings in respect of the account numbers mentioned herein above by any other government agency.
In case, the account holder is maintaining any other account in their name or joint names, the details as called Sr. No. 1 to 4 above in respect of such accounts, is also required to be furnished.
The above information is highly confidential and is being called under the provisions of Prevention of Money Laundering Act, 2002.
Further, it is hereby directed that no debits be allowed from the aforesaid accounts/ accounts in their name or joint names till further instructions from this office."
2.3 Similar such letter was also issued to the Bank of Baroda, SSI Daman Branch.
2.4 Being dissatisfied with such action on the part of the Enforcement Directorate, the writ applicants have come up with this writ application.
3. Mr. Marshal, the learned senior counsel appearing
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