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2021 (3) TMI 1132 - HC - Money LaunderingValidity of imposition of “debit-freeze” of the bank accounts - Attachment of property in money laundering - conspiracy to create false and forged documents - cheating the Government of India by transferring of ₹ 569 crores in foreign exchange outside India to Singapore, Hongkong and China - search and seizure - HELD THAT:- The scheme of the Act provides for an initial attachment of the proceeds of the crime in the possession of any person for an initial period of 180 days by the Director or any other Officer not below the rank of Deputy Director Authorised by the Director, for the purposes of Section 5 of the Act. This attachment can be made only when the said officer records, in writing, his reason to believe that such a person is in possession of any proceeds of crime and that such proceeds of crime are likely to be concealed or transferred or debited in any manner which may result in frustration of any proceedings relating to confiscation of such proceedings of the crime. After such provisional attachment is made, the said order of attachment, along with the material in possession of the said officer, shall be forwarded to the adjudicating authority in a sealed envelope for further proceedings. The sine qua non for exercise of the powers under either section 5 or section 17 of the Act is the formation of an opinion, by a competent officer, that the conditions set out in these sections are found to exist. In the absence of such a finding, the exercise of power under these Sections would be without basis and cannot survive in the absence of these requirements. There are no such reasons recorded in the order dated 6.11.2020. The Hon’ble Supreme Court in OPTO Circuit India Limited vs. Axis Bank and others, [2021 (2) TMI 117 - SUPREME COURT], had considered a similar situation. In this case, the concerned authority, without any findings either under Section 5 of the Act or under Section 17 of the Act, had directed a debit-freeze/stop operation of the accounts of the petitioner therein. The Hon’ble Supreme Court after considering the provisions of the Act had held that while the provisions of the Act empower the appropriate authority to attach or seize the proceeds of the crime, the due process set out in the Act would have to be followed and the minimum requirement for such due process is the formation of an opinion, that he has “reason to believe”, set down in writing. The Hon’ble Supreme court had also held that this formation of opinion, at the very least should be available in the file of the authority. In the present case also no finding, recorded in writing, either under Section 5 or Section 17 of the Act, has been placed before this Court, nor has any material been placed to show that such a finding is available in the files of the Enforcement Directorate. The action of the 3rd respondent in the present case in issuing similar orders of debit-freeze/ stop operations, cannot be sustained - the said order of the 3rd respondent directing the 4th respondent to freeze the accounts of the petitioners is not valid and has to be set aside - Petition allowed.
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