2019 (6) TMI 1335 - HC - Customs

Attachment of Bank Accounts - It is the case of the Petitioner that in the course of purported investigation communication dated 11th July 2018 came to be addressed to the aforesaid two banks restraining the said two banks from allowing the Petitioner to undertake Debit operations in their respective accounts - HELD THAT - The impugned communications came to be issued by the Respondents purporting to allow Debit operation subject to maintenance of minimum balance as aforesaid in the two accounts. It is the case of the Petitioners that in fact this amounts to freezing of bank account at least to the extent of maintenance of minimum balance amount. The Petitioner addressed yet another letter dated 22nd January 2019 demanding the withdrawal of the impugned communications. However despite this demand for justice the Respondents failed to withdraw the impugned communication the Petitioner have instituted the present Petition. In the present case we were considering imposition of costs against the Respondents because despite the decision of this Court in virtually identical circumstances the Respondents persist in ordering Debit freezing without issuing of any show cause notice or completing investigations within the reasonable period. However on this occasion we refrain from imposition of any costs by expressing the hope that at least in future the Respondents will abide by the decision of this Court in such matters.

Summary

Issues involved:
Challenge to letters freezing bank accounts without issuance of show cause notice or completion of investigations.

Analysis:
The petition challenged letters from the Directorate of Revenue Intelligence freezing the petitioner's bank accounts without issuing show cause notices or completing assessments. The petitioner, engaged in import/export trading of diamonds, argued that the freezing of accounts virtually halted their business operations. The court noted that similar cases in the past had seen such actions being set aside. The respondents defended their actions by stating that the freezing was to secure amounts owed by the petitioner in connection with confiscated goods. However, the court found that no show cause notice had been issued, and assessments were pending. The court referred to previous judgments where similar actions were deemed unjustified without proper legal procedures being followed.

The court highlighted that freezing bank accounts without completing investigations or issuing show cause notices could severely impact businesses. Citing previous cases, the court emphasized the importance of following due process before taking such drastic actions. The respondents were directed to withdraw the freezing orders and intimate the banks accordingly. Despite considering imposing costs on the respondents for persisting with such actions against court rulings, the court refrained from doing so, expressing hope for compliance with court decisions in the future.

In conclusion, the court quashed the freezing orders on the petitioner's bank accounts, following the principles and reasoning from previous judgments. The court emphasized the need for proper legal procedures, including issuing show cause notices and completing assessments before taking actions that could significantly affect businesses. The respondents were directed to inform the banks about the setting aside of the freezing orders.