PMLA investigation permits temporary bank account freezing as an incidental measure to preserve suspected proceeds of crime.

During investigation under the Prevention of Money Laundering Act, 2002, temporary freezing of bank accounts may be used as an incidental measure to preserve suspected proceeds of crime and prevent frustration of the statutory process. The Court noted that provisional attachment can be founded on reason to believe, and that the Code of Criminal Procedure applies to the extent it is not inconsistent with the Act. Because the restraint was imposed in aid of investigation and not shown to be illegal merely for want of a completed attachment order at that stage, the challenge to the debit restrictions failed and the writ application was rejected.

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Issues: Whether the writ applicants were entitled to a direction permitting operation of their bank accounts and quashing of the debit restrictions imposed by the Enforcement Directorate under the Prevention of Money Laundering Act, 2002.

Analysis: The account-freezing directions were issued in aid of investigation under the Prevention of Money Laundering Act, 2002 and were founded on material suggesting that the accounts were being used in relation to proceeds of crime. The statutory scheme permits provisional attachment under section 5 on the basis of reason to believe, and section 65 makes the Code of Criminal Procedure, 1973 applicable so far as it is not inconsistent with the Act. The Court held that, at the investigative stage, temporary freezing of accounts can be resorted to as an incidental and consequential measure to preserve suspected proceeds of crime and prevent frustration of proceedings. The absence of a completed attachment order at that stage did not, by itself, invalidate the impugned restraint.

Conclusion: The challenge to the freezing of the bank accounts failed, and the writ application was rejected.

Ratio Decidendi: During investigation under the Prevention of Money Laundering Act, 2002, the enforcement authority may temporarily freeze bank accounts as an incidental measure to preserve suspected proceeds of crime, provided the action is in aid of the statutory process and is not allowed to continue indefinitely without movement towards provisional attachment or other lawful continuation.

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