Unjustified freezing of bank accounts under PMLA invalidated by Tribunal

Poonam Malik Versus The Deputy Director Directorate of Enforcement Chennai

Poonam Malik Versus The Deputy Director Directorate of Enforcement Chennai - TMI Issues Involved:
1. Legality of freezing the appellant's bank accounts.
2. Compliance with procedural requirements under the Prevention of Money Laundering Act (PMLA), 2002.
3. Application of Section 8(3)(a) of PMLA post-amendment.
4. Validity of actions taken by the Enforcement Directorate (ED) without naming the appellant or her husband in FIRs or ECIRs.

Detailed Analysis:

1. Legality of Freezing the Appellant's Bank Accounts:
The appellant's bank accounts were frozen based on an order dated 05.09.2018 by the respondent, confirmed by the Adjudicating Authority on 08.02.2019. The freezing was challenged on the grounds that neither the appellant nor her husband were named in any FIR or ECIR. The Tribunal noted that the respondent did not dispute the absence of any FIR or criminal complaint against the appellant, nor was any complaint filed under Section 8(3)(a) within 90 days from the date of the impugned order. Consequently, the freezing of the appellant's accounts was found to be unjustified.

2. Compliance with Procedural Requirements under PMLA:
The Tribunal emphasized the necessity of adhering to the procedural safeguards outlined in Sections 17, 18, 20, and 21 of PMLA. These sections mandate specific conditions for search, seizure, and retention of property, including the requirement to record reasons in writing and forward them to the Adjudicating Authority. The Tribunal found that the ED's actions did not comply with these procedural requirements, particularly the failure to file a complaint within the stipulated 90-day period.

3. Application of Section 8(3)(a) of PMLA Post-Amendment:
The Tribunal highlighted the amendment to Section 8(3)(a) effective from 19.04.2018, which limits the continuation of attachment during investigation to a period not exceeding 90 days. The Tribunal noted that the investigation must be completed within this period, failing which the attachment lapses. The Tribunal acknowledged the further amendment extending this period to 365 days, although it had not yet been notified. Therefore, the Tribunal applied the existing 90-day limit and found the freezing order invalid due to non-compliance with this timeline.

4. Validity of Actions Taken by the ED Without Naming the Appellant or Her Husband in FIRs or ECIRs:
The Tribunal observed that the appellant and her husband were not named in any FIR or ECIR, and no evidence was presented to justify the freezing of their accounts. The Tribunal referenced the Delhi High Court's judgment in 'Omar Ali Obaid vs. ED,' which discussed the scheme of seizure under Section 102 of Cr.P.C. and its inconsistency with PMLA's provisions. The Tribunal concluded that the ED's actions were based on mere suspicion without substantive evidence, rendering the freezing orders invalid.

Conclusion:
The Tribunal allowed the appeal, setting aside the impugned order related to the appellant's two bank accounts and directing their de-freezing. However, the freezing orders on the bank accounts of the appellant's husband/joint accounts were to continue until the appeals were decided on merit. No costs were awarded.