Bank's Account Freeze Under Customs Act Deemed Unlawful; Immediate Release Ordered.

The HC determined that the respondent bank's action of freezing the petitioner's current account under Customs Act provisions was unlawful. The court found that the cited sections did not apply, as they pertain to goods before export, not post-export currency transactions. The court ordered the immediate release and operation of the account, denying any stay of the order and making the rule absolute without costs.

---

---

Issues:
Challenge to bank's action of not permitting operation of current account under Customs Act provisions.

Analysis:
The petitioner challenged respondent No. 4 bank's action of not allowing operation of the current account under Customs Act provisions. The bank cited Directorate of Revenue Intelligence's direction under Customs Act Sections 110(3) and 121 as the reason for freezing the account. The petitioner argued citing a previous case that the account cannot be frozen during an investigation. The respondent authorities defended their action under Sections 110(1), 110(3), 121, 2(39), and 113(i) of the Act, claiming power to confiscate goods and sale proceeds due to alleged over-valuation in exports linked to a group under investigation.

The judgment analyzed the provisions of Sections 113(i) and 110(3) of the Act. It was noted that these provisions apply before actual export of goods and require goods to be entered for exportation, which was not the case here as goods were already exported. The respondent authorities' reliance on Section 113(i) and 110(3) was deemed unsupported by the law due to the timing and requirements specified in the provisions.

Regarding Section 110(3) empowering seizure of relevant documents or things, the argument that 'currency' could fall under 'things' was dismissed. The court emphasized the Act's focus on import and export of goods, not currency transactions, and clarified that the provision does not apply to currency dealings unless related to legal or illegal import/export transactions. As the petitioner was not involved in currency transactions, this provision did not justify the bank's action.

The judgment concluded that respondent No. 4's action in preventing the petitioner from operating the current account was unlawful. The court directed the bank to release the account and allow its operation immediately. It was clarified that the decision was based on current evidence and would not hinder lawful actions based on future investigation findings. The request to stay the order was denied, and the rule was made absolute with no costs, permitting direct service.

---