2021 (8) TMI 1242 - HC - Money Laundering

Court directs ED to provide documents, ensures transparency in freezing bank accounts, schedules compliance monitoring.

M/s Hamilton Housewares Pvt. Ltd., Paras Impo Expo Pvt Ltd., Alok Industries Limited, S.N. Kapoor Exports, SNB Enterprises Pvt. Ltd., Orbit Exports Ltd., Shantivijay Jewels Ltd., JK Tyre And Industries Ltd., Maxis Industries, Shri Vishwanath Overseas, KP Sanghvi And Sons LLP, M/s. Blossom Fabrics Limited, Prompt International, M/s Maya Trades, Eastman Industries Limited And M/s Suprint Textiles Jaipur Pvt Ltd. Versus Directorate Of Enforcement, Assistant Director, Enforcement Directorate, Union Of India & Anr.

The court addressed the Petitioners' concerns over the freezing of their bank accounts by the Enforcement Directorate (ED) and procedural irregularities ... Freezing of petitioner's Bank account - allegations of corruption and laundering - ED proceeded in accordance with the statutory provisions including Section 60 while conducting the Search & seizure operations - while issuing the show cause, the “reasons to believe” was not provided - HELD THAT:- It is considered appropriate to direct the ld. counsels appearing for the ED to seek instructions as to whether they can provide the requisite documents to the Petitioners - If any of the documents are available with the ED, the same shall be placed on record in a sealed cover with the Court on 20th August, 2021. If any of the documents are not available with the ED, the Court shall be informed accordingly. List this matter for further hearing on 23rd August, 2021. Issues:Petitioners seeking reliefs regarding frozen bank accounts by ED and grievances against Adjudicating Authority's proceedings under PMLA.Analysis:The petitions were filed by the Petitioners challenging the freezing of their bank accounts by the Directorate of Enforcement (ED) and raising concerns about the Adjudicating Authority's proceedings under the Prevention of Money Laundering Act, 2002 (PMLA). The background of the matter involved a request from Brazilian authorities regarding transactions linked to the Petitioners due to an investigation against a former Governor for corruption and money laundering. Following this, the ED conducted search and seizure operations and froze multiple bank accounts of the Petitioners. The Adjudicating Authority issued a show-cause notice to the Petitioners under the PMLA, but the Petitioners claimed they were not provided with the Relied upon documents (RUDs) and other essential details despite repeated requests. The Petitioners submitted replies based on the limited information available to them, leading to grievances against the Adjudicating Authority's conduct during hearings.The main grievances raised by the Petitioners included allegations that the ED did not follow statutory provisions during search and seizure operations and while issuing freezing orders under Section 17 of the PMLA. They also contended that the 'reasons to believe' were not provided by the ED or the Adjudicating Authority, and essential documents like RUDs, details of suspect transactions, and Brazilian investigation agency's application were not shared. The freezing orders were initially issued in July 2020 and later amended in November 2020 to restrict freezing to the amounts involved in suspected transactions. The court directed the ED counsels to provide specific documents, including reasons to believe, Brazilian investigation details, suspect transaction specifics, and any other relevant documents to the Petitioners by a specified date, with further hearings scheduled accordingly.In conclusion, the court addressed the concerns raised by the Petitioners regarding the freezing of their bank accounts by the ED and the procedural irregularities during the Adjudicating Authority's proceedings under the PMLA. The court's directive to the ED to provide essential documents sought by the Petitioners indicated a step towards ensuring transparency and fairness in the ongoing legal process. The matter was scheduled for further hearings to assess the ED's compliance with the court's directions and to address any additional issues raised by the parties involved.