2024 (8) TMI 1055 - HC - Money Laundering

Bank Ordered to Transfer Frozen Funds to Authorities, Await Trial in Money Laundering Case.

The HC disposed of the writ petition, directing the bank to comply with the authorities' instructions regarding the freezing and handling of the ... Directing the Petitioner Bank to keep the account frozen of a particular customer - direction to Petitioner Bank to make a demand draft of the frozen amount along with the interest accrued thereon in favour of the Joint Director, Enforcement Directorate - HELD THAT:- It is seen from a perusal of Section 8 (3) and 8 (4) of the Act of 2002 that after an order is passed by the Adjudicating Authority and the provisional order of attachment is confirmed, the Director or any other Officer authorized by him shall forthwith take possession of the property attached under Section 5 or frozen under Sub-Section 1 (A) of Section 17 of the Act of 2002 in such manner as may be prescribed. As the Respondent Nos. 1 and 2 had expressed their no objection in transferring the amount lying in the account in question and the statutory mandate contained in Section 8 (4) of the Act of 2002, this Court is of the opinion that the direction so given in the communication dated the 12.04.2024 which was received by the Petitioner on 19.04.2024 is required to be complied with. This Court therefore grants 7 (seven) days time to the Petitioner Bank to comply in terms with the directions so contained in the communication dated 12.04.2024 - Petition disposed off. Issues:1. Conflicting directions from authorities regarding freezing and handling of a customer's account.2. Compliance with directions under the Prevention of Money Laundering Act, 2002.3. Interpretation of statutory provisions regarding possession of frozen property.4. Granting time for compliance and ensuring subject to trial proceedings.Analysis:1. The petitioner, a bank, was faced with conflicting directives concerning the freezing and management of a customer's account named 'M/s Analytic Business Ventures Private Limited.' Various authorities instructed the bank to freeze the account while also demanding a demand draft of the frozen amount with interest for the Enforcement Directorate within a specific timeframe.2. The bank's branch in New Delhi received instructions to mark the account under 'debit freeze' due to investigations related to scheduled offenses under the Prevention of Money Laundering Act, 2002. The Enforcement Directorate and Adjudicating Authority issued orders confirming the freezing of the account and directing the bank to create a demand draft for the frozen amount in favor of the Enforcement Directorate.3. The court considered the provisions of the Prevention of Money Laundering Act, 2002, particularly Section 8, empowering the Adjudicating Authority to confirm provisional attachments. It was noted that upon confirmation, the Director or authorized officers must take possession of the frozen property as prescribed by law.4. In light of the authorities expressing no objection to transferring the frozen amount to the Enforcement Directorate, the court directed the bank to comply with the communication dated 12.04.2024 within seven days. The court emphasized that the remitted amount would be subject to trial proceedings as per Section 8(6) of the Act and clarified that its directions did not confirm or adjudicate the Adjudicating Authority's order, limited to the current case.In conclusion, the court disposed of the writ petition, instructing the bank to follow the directives within the specified timeframe, ensuring compliance with statutory provisions and trial proceedings.