Court upholds attachment of bank accounts under PMLA, rejects plea to operate account.

The Court dismissed the petition, upholding the validity of the Directorate of Enforcement's attachment of the petitioner's bank accounts under the Prevention of Money Laundering Act. The Court emphasized that the petitioner must seek redress through the statutory remedies available, rejecting the petitioner's plea to operate the attached bank account. The Court affirmed that a bank account with alleged proceeds of crime constitutes 'property' subject to attachment under the PMLA, and clarified that the Adjudicating Authority's jurisdiction does not preclude challenging the Provisional Attachment Order.

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Issues Involved:
1. Condonation of delay in filing the counter affidavit.
2. Legality of the 'debit freeze' direction issued by the Directorate of Enforcement (ED).
3. Allegations of money laundering and attachment of bank accounts under the Prevention of Money Laundering Act (PMLA).
4. Availability of an alternate statutory remedy.
5. Validity of attaching a bank account as 'property' under PMLA.
6. Right to operate the bank account subject to maintaining the balance of the attached amount.

Detailed Analysis:

1. Condonation of Delay:
The Court condoned an 8-day delay in filing the counter affidavit by the respondent No. 2 (Directorate of Enforcement), allowing the counter affidavit to be taken on record.

2. Legality of the 'Debit Freeze' Direction:
The petitioner challenged the ED's direction to 'debit freeze' its bank accounts, arguing that the action was taken without proper legal basis and was motivated by malice. The petitioner claimed that the ED's action was unsustainable as it did not follow the mandatory procedural safeguards under the PMLA.

3. Allegations of Money Laundering and Attachment:
The petitioner company, a sister concern of M/s Shakti Bhog Foods Limited (SBFL), was not named in the CBI FIR or the ECIR filed by the ED. However, the ED attached the petitioner's bank accounts, alleging that the petitioner received proceeds of crime from SBFL. The ED claimed that the petitioner was involved in sham transactions to launder money. The investigation revealed that the petitioner received Rs. 687.53 crore from SBFL, out of which only Rs. 42.17 crore was returned, leaving Rs. 645.36 crore with the petitioner. The ED argued that the attachment was necessary to safeguard the proceeds of crime.

4. Availability of Alternate Statutory Remedy:
The ED argued that the petitioner had an alternate statutory remedy under Section 8 of the PMLA to approach the Adjudicating Authority. The petitioner countered that the relief sought (operation of bank accounts) could not be granted by the Adjudicating Authority, which can only confirm or reject the attachment order. The Court agreed with the petitioner, noting that the Adjudicating Authority's proceedings under Section 8 of the PMLA do not preclude the challenge to the Provisional Attachment Order under Section 5 of the PMLA.

5. Validity of Attaching a Bank Account as 'Property':
The petitioner argued that only the funds in the bank account, not the account itself, could be attached. The ED relied on the Supreme Court's judgment in Tapas D. Neogy, which held that a bank account could be considered 'property' and thus subject to attachment. The Court upheld the ED's position, stating that a bank account with alleged proceeds of crime falls under the definition of 'property' under Section 2(1)(v) of the PMLA.

6. Right to Operate the Bank Account:
The petitioner sought to operate the attached bank account subject to maintaining the balance of Rs. 24,75,993. The Court rejected this plea, noting that the Provisional Attachment Order included the bank account and the amount lying therein. The Court found no merit in the petitioner's argument that the attachment order did not expressly state that the bank account itself was attached.

Conclusion:
The Court dismissed the petition, holding that the petitioner was not entitled to the prayers made. The attachment of the bank account by the ED was upheld as valid under the PMLA, and the petitioner was directed to seek redress through the available statutory remedies.

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