Freezing of bank accounts under PMLA: email communication cannot substitute formal order, resulting in lifting of freezes.

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 order on the person concerned. Executive communication (an email to a bank) cannot substitute for the formal order-making step, so a freeze effected solely by such communication is invalid. Consequently, freezing of the bank accounts based only on the email must be lifted. The High Court's refusal to grant relief on that basis is set aside to the extent necessary to remove the account freezes.

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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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