2022 (7) TMI 1394 - HC - Money Laundering

Court allows petitioner to operate frozen bank accounts, cites legal precedents, sets compliance requirements

The Court directed the Enforcement Directorate to proceed with analyzing the data submitted by the petitioner regarding payment details. The petitioner's ... Profiteering - De-freezing Bank accounts of petitioner - petitioner contends that the debit freeze orders impugned here would not sustain since the details of the bank accounts which were maintained by the petitioner were known to the respondents - HELD THAT:- The Court notes that the bank guarantee which is proffered together with the amount which stands to the credit of the freezed accounts would safeguard the interest of the respondent during the pendency of the writ petition. Consequently, let the petitioner furnish a bank guarantee to the extent of Rs. 950 crores to the satisfaction of the respondents within seven working days from today. Subject to the submission of that bank guarantee, the petitioner may be permitted to operate the bank accounts which form subject matter of the orders under Section 17(1A) to the extent that a sum of Rs. 251 crores which was standing in credit in those accounts on the date of the passing of the impugned orders shall be maintained at all times. Additionally the petitioner shall also furnish to the Enforcement Directorate all details of remittances that may be made from the concerned bank accounts every 48 hours. Let this petition be listed on 28.07.2022 for final disposal. Issues Involved:1. Compliance with communication from Enforcement Directorate for providing payment details.2. Legality of debit freeze orders under Section 17(1A) of the Prevention of Money-Laundering Act, 2002.3. Distinction between powers under Section 132 of the Income-tax Act, 1961 and powers under PMLA.4. Submission of bank guarantee by the petitioner.5. Permission to operate bank accounts subject to conditions.6. Listing of the petition for final disposal.Comprehensive Analysis:1. Compliance with Communication from Enforcement Directorate: The petitioner was called upon by the Enforcement Directorate to provide details supporting payments totaling to Rs. 2826 crores. The petitioner responded by submitting required data on a pen drive, which was acknowledged by the Directorate. The respondents requested time to analyze the voluminous data, and the Court directed the Directorate to proceed accordingly.2. Legality of Debit Freeze Orders: The senior counsel for the petitioner argued that the debit freeze orders were unsustainable as the bank account details were known to the respondents. Reference was made to Section 17 of the PMLA, contending that accounts with available details should not have been subjected to a freeze. Legal precedents from the Allahabad High Court and the Delhi High Court were cited to support this argument.3. Distinction Between Powers under Different Acts: The Enforcement Directorate argued that the powers under Section 132 of the Income-tax Act are distinct from those under the PMLA. They emphasized that the freeze orders were based on material found during a search, indicating the presence of proceeds of crime in the bank accounts. The Court noted that this argument required further consideration.4. Submission of Bank Guarantee: The petitioner offered to furnish a bank guarantee of Rs. 950 crores, considering the quantified proceeds of crime at Rs. 1200 crores. This offer was accepted by the Court, and it was deemed that the bank guarantee, along with the frozen account funds, would protect the interests of the respondents during the case.5. Permission to Operate Bank Accounts: Subject to the submission of the bank guarantee, the petitioner was allowed to operate the bank accounts under freeze, with the condition that Rs. 251 crores in credit on the date of the order should be maintained at all times. Additionally, the petitioner was directed to provide details of remittances every 48 hours to the Enforcement Directorate.6. Listing for Final Disposal: The petition was scheduled for final disposal on a specified date as jointly requested by the parties, with further directions for compliance and procedural formalities.This detailed analysis encapsulates the key legal issues addressed in the judgment, highlighting the arguments presented by both parties and the Court's directives in response to each issue.