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2024 Supreme(Mad) 709
IN THE HIGH COURT OF JUDICATURE AT MADRAS
M.S. RAMESH, SUNDER MOHAN, JJ.
M/s. Tamil Nadu Development Foundation Trust – Petitioner
Versus
The Assistant Commissioner of Police, Vepery and Others – Respondents
W.P. No. 11821 of 2023, W.M.P. Nos. 11722, 11723, 11725 of 2023
Decided On : 25-03-2024
Advocate Appeared:
For the Petitioner: I. Abdul Basith.
For the Respondents: E. Raj Thilak, C. Aravind, A.R.L. Sundaresan, R. Rajesh Vivekananthan.
IMPORTANT POINT
The main legal point established in the judgment is the requirement of conducting an inquiry before passing a prohibitory order under the Unlawful Activities (Prevention) Act, and the violation of principles of natural justice in the absence of such inquiry.
Headnote:
Unlawful Association - Freezing of Bank Account - Unlawful Activities (Prevention) Act - Section 3, Section 7 - The court discussed the provisions of Section 3 and Section 7 of the Unlawful Activities (Prevention) Act, which empower the Central Government to declare an association as unlawful and to pass prohibitory orders against the use of funds of an unlawful association or against any person aiding an unlawful association with funds. The court emphasized the requirement of conducting an inquiry before passing a prohibitory order and highlighted the violation of principles of natural justice in the absence of such inquiry. The court also clarified the delegation of powers under Section 42 of the UAP Act to the State Government and the authority of the Central Government to pass prohibitory orders.
Fact of the Case:
The petitioner Trust's bank account was frozen by the 1st respondent under the Unlawful Activities (Prevention) Act, alleging a connection with an unlawful association. The Trust challenged the order, claiming independence and no nexus with the alleged association.
Finding of the Court:
The court found that the impugned order was in violation of the principles of natural justice and quashed the order, directing the bank account to be de-frozen. The court emphasized the requirement of conducting an inquiry before passing a prohibitory order and highlighted the violation of principles of natural justice in the absence of such inquiry. The court also clarified the delegation of powers under Section 42 of the UAP Act to the State Government and the authority of the Central Government to pass prohibitory orders.
Issues: The issues involved the freezing of the Trust's bank account under the UAP Act, the requirement of conducting an inquiry before passing a prohibitory order, and the authority of the Central Government to pass such orders.
Ratio Decidendi: The court held that the impugned order was in violation of the principles of natural justice due to the absence of an inquiry before passing the order. The court also clarified the delegation of powers under Section 42 of the UAP Act to the State Government and the authority of the Central Government to pass prohibitory orders.
Final Decision: The Writ Petition was allowed, the impugned order was quashed, and the Trust's bank account was directed to be de-frozen, with no costs imposed. The court emphasized that the order shall not stand as an impediment for the appropriate authority to pass orders in accordance with the law.
JUDGMENT :
M.S. RAMESH, J.
Prayer: Writ Petition filed under Article 226 of the Constitution of India, praying to issue a Writ of Certiorarified Mandamus, calling for the records relating to the impugned order dated 04.11.2022 of the 1st respondent and quash the same as illegal and consequently direct the 2nd respondent to defreeze the savings bank account bearing No. 410973519 of the petitioner Trust.
1. 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. A.R.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
