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Introducing the “In Favour Of” filter in Case Laws.
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of <h1>Freezing of bank accounts under PMLA: email communication cannot substitute formal order, resulting in lifting of freezes.</h1> Section 17(1A) of the PMLA treats freezing as two distinct steps: an order by the officer authorised under Section 17(1), and separate service of that ... Freezing of bank accounts as an action under the PMLA - Validity of executive communication vis-à-vis statutory order - Officer authorised u/s 17(1) - High Court's exercise of judicial review - Directorate of Enforcement powers and possession of alleged tainted money - Section 17(1A) of the Prevention of Money Laundering Act, 2002 - HELD THAT:- Section 17(1A) of the PMLA specifically speaks of two separate actions - first, the officer authorized under Section 17(1) of the PMLA has to make an order freezing the property, whereupon such property cannot be transferred or otherwise dealt with, except with the permission of that officer; and the secondly, a copy of such order should be served on the person concerned. Admittedly, no separate order was passed by the officer authorized under Section 17(1) of the PMLA and only an email addressed by him to the bank is stated to constitute the order. As the PMLA contemplates two separate actions, that is, the passing of an order and the communication thereof, it is not open to the DoE to club both the actions into one and claim that the communication itself amounts to the passing of the order. The freezing of the bank accounts, therefore, cannot be sustained and the order passed by the High Court, to the extent that it did not grant such relief, is liable to be set aside. The freezing of the bank accounts shall stand lifted forthwith in its entirety. The impugned judgment/order is partly set aside and the appeal is allowed to the extent indicated above. Issues: Whether the freezing of the appellants' bank accounts was valid under Section 17(1A) of the Prevention of Money Laundering Act, 2002, when no separate formal order by the authorised officer under Section 17(1) was passed and only an email communication to the bank was made.Analysis: Section 17(1A) contemplates two distinct actions: the authorised officer must pass an order freezing the property and a copy of that order must be served on the person concerned. The prescribed procedure requires a formal order by the officer identified under Section 17(1) and separate communication of that order to the affected person. The authority cannot treat a mere communication to the bank as both the order and its service when the statute contemplates separate acts. The High Court noted the procedural defect but permitted retention of the funds; where the statutory procedure for freezing is violated, the initial freezing itself lacks lawful foundation.Conclusion: The freezing of the bank accounts is unlawful for non-compliance with Section 17(1A) of the PMLA; the freezing is set aside and the accounts shall be unfrozen forthwith, and the impugned judgment/order is partly set aside in favour of the appellants.
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