Court orders release of frozen bank accounts, emphasizing fair exercise of powers and timely investigations.

The court allowed the petition, directing the release of the petitioner's bank accounts within 48 hours. The court emphasized that the freezing of the accounts was unjustified without conclusive proof of fraud and criticized the respondents for delaying investigations while promptly freezing the accounts. The court highlighted the need for public bodies to exercise their powers reasonably and fairly, allowing the investigation to continue in accordance with the law. The judgment did not limit the respondents' powers but underscored that freezing the petitioner's accounts indefinitely without conclusive evidence of fraud was impermissible.

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Issues Involved:
1. Legality, propriety, and validity of communications addressed to banks by respondents.
2. Legality, propriety, and validity of the action of freezing the petitioner’s bank accounts.

Issue-wise Detailed Analysis:

1. Legality, Propriety, and Validity of Communications Addressed to Banks:

The petitioner, a proprietor of M/s. Infinity Trading Company, challenged the communications addressed to banks by the respondents under Article 226 of the Constitution of India. The petitioner argued that the communications lacked legality, propriety, and validity. The respondents initiated investigations based on intelligence suggesting fraudulent duty drawback claims by exporters, including the petitioner. Summons were issued, and the petitioner cooperated by appearing before the Investigating Officer and addressing letters to the banks to transfer the balance to the Department. Despite this cooperation, the respondents directed the banks to freeze the petitioner’s accounts. The petitioner contended that the allegations of fraud were not conclusively established, and the respondents' unilateral actions were unjustified.

2. Legality, Propriety, and Validity of Freezing the Petitioner’s Bank Accounts:

The petitioner claimed that the freezing of bank accounts adversely affected his business and livelihood. He argued that the respondents' actions were based on alleged, not proven, fraud. The petitioner had deposited Rs. 16,62,792.18 to show bona fides and requested the release of his accounts. The respondents, however, maintained that the petitioner was involved in fraudulent exports and had failed to appear before the Directorate of Revenue Intelligence officers. They justified the freezing of accounts by citing the need to investigate the fraudulent duty drawback claims.

The court scrutinized the respondents' actions and found that the unilateral freezing of accounts was unjustified without conclusive proof of fraud. The court emphasized that public bodies must exercise their powers reasonably and fairly. The court noted that despite the allegations, the respondents had not concluded their investigations or issued a show-cause notice. The court criticized the respondents for delaying the investigation while promptly justifying the freezing of accounts.

Judgment:

The court allowed the petition, directing the release of the petitioner’s bank accounts within 48 hours. The court clarified that the investigation could continue, and further steps could be taken in accordance with the law. The court's order did not limit the respondents' powers or influence the adjudicating authority's decision. The court underscored that the respondents could not deprive the petitioner of his livelihood by indefinitely freezing his accounts without conclusive evidence of fraud.

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