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Sudeep Kaur Sawhney Versus Union of India

2015 (5) TMI 1078 - PUNJAB AND HARYANA HIGH COURT

De-freeze of bank account allegedly been done under the provisions of The Prevention of Money Laundering Act, 2002 - whether this Court is to scrutinize the source of the funds and whether the action of the authorities is justified? - Held that:- We are well aware that the power of freezing is a draconian power and safe guards have to be kept in mind to check its abuse and limit its exercise. However, a balance has to be maintained between the right of the citizen and the right of the invest .....

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ation cannot as such be trampled upon by this Court and the purpose of freezing cannot be ignored regarding the interest of the revenue also so that the proceeds of crime are not frittered away. The parties have to be given a reasonable level playing field. This cannot be achieved by permitting oral applications thus depriving the respondents an opportunity of meeting the petitioner's case in a reasonable manner. - Admittedly, under 17(4) of the PMLA, an application has been filed on 11.02.2 .....

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estigation. A similar notice had also been issued to the husband of the petitioner to put in appearance apart from 43 other defendants. Normally and in the first instance, it is for the adjudicating authority to decide whether the order of freezing is to continue or not under Section 8(3) and in such circumstances, it would not be within the ambit of this Court to get into the disputed questions as to where the money lying in the fixed deposits bank accounts has come from. - Keeping in view .....

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other proceedings. - CWP No. 21705 of 2014 (O & M) - Dated:- 19-5-2015 - S.J. VAZIFDAR AND G.S. SANDHAWALIA JJ. Mr. Jagmohan Bansal, Advocate, for the Petitioner. Mr. D.D. Sharma, Advocate and Mr. Suresh Batra, Advocate, for the Respondents. ORDER G.S. SANDHAWALIA, J. 1. In the present writ petition, the petitioner seeks a writ in the nature of mandamus directing the respondents to de-freeze the bank account of the petitioner which has allegedly been done under the provisions of The Prevention .....

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n the writ petition, reliefs were sought of de-freezing only in respect of the petitioner's saving account No.1956915673. The respondents have de-frozen this account. This petitioner's grievance in this Writ Petition, therefore, does not survive. The Writ Petition can be disposed of on this ground alone. 3. Mr. Bansal, however, made an oral application for reliefs in addition to those sought in the writ petition. He sought the de-freezing of various other accounts and fixed deposit recei .....

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ubject matter of the petition on a mere technicality. The nature of the reliefs sought would require detailed investigation of facts many of which are disputed. To allow such an oral application would be undesirable especially in view of the nature of this case. It would also be unfair to the respondents. They must have an opportunity of dealing with the application and the documents on affidavit. 4. As Mr. Bansal pressed the application strongly, we will refer to the oral application and the fa .....

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ered in the negative. The only prayer in the petition reads as under: "i) issue Writ of Mandamus directing the Respondents to de-freeze the bank account of the Petitioner;" Firstly, the FDRs are not even mentioned in the prayer. The bank account is referred to in the singular, not in the plural. The paragraph-2 of the petition reads as under:- "2. That the Petitioner is having regular income from rent and tailoring. The Petitioner is maintaining a saving account bearing number 195 .....

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s it clear that the grievance is only in respect of the said saving account No.1956915673. The expression "said account", obviously, refers to that account and to no other account. It is clear, therefore, that the words "the bank account of the Petitioner" in prayer (i) of the petition refer to the said bank account referred to in paragraph-2 of the petition and to no other bank account. At the cost of repetition, the FDRs are not referred to anywhere in the petition. Even th .....

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id account having been de-frozen, the petitioner's grievance does not survive. The Writ Petition is liable, therefore, to be disposed of for this reason alone. As we mentioned earlier, Mr. Bansal, however, sought reliefs of de-freezing the other accounts and FDRs of the petitioner although the reliefs were not sought in respect thereof. He, however, insisted that we ought to consider the application even with respect to such assets. 8. We will refer to a few facts only to indicate the issues .....

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B IPC at P.S. Vigilance, Chandigarh against 4 accused regarding the transfer of shop-cum-flat no. 8, Sector 20-C, Chandigarh in favour of one O.P. Mittal, who was the tenant. In the investigation, a report dated 26.10.2009 had also been filed against her husband namely Sh. Gurvinder Singh Sawhney. It was alleged that on the basis of the said FIR and police report, the respondent-Directorate initiated an investigation bearing No. ECIR/CDS0/05/2013 under PMLA. Summons were issued under Section 50 .....

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efreeze the account but no action had been taken. Accordingly, the petition came to be filed before this Court in October, 2014. 10. In the written statement filed on 12.12.2014 by the Deputy Director of the Directorate, reference was made to FIR No. 4 and it was submitted that a property of one Tara Singh, NRI had been sought to be sold in favour of the tenant Sh. O.P. Mittal and information was received from the Chandigarh police which had filed a charge sheet on 20.10.2009 against Harnek Sing .....

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dated 28.02.2006 had been executed on behalf of Tara Singh whereby, sum of ₹ 50,000/- had been received without any authority and Harnek Singh, who is the clerk of the husband of the petitioner had deposited a sum of ₹ 1,350/- in the Estate Office on account of dues of the property but claimed ₹ 2,11,350/- from Tara Singh by forging the challan receipt dated 10.04.2007. A further compromise dated 17.01.2009 without any authority had been entered into by Harnek Singh in conspira .....

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perty had further been sold in favour of the tenant on the basis of the said power of attorney. In such circumstances, summons were issued to the husband of the petitioner under the provisions of Section 50 and record was called for to trace "the proceeds of the crime" under the provisions of the PMLA. The son of the tenant had also been summoned but the husband of the petitioner was not cooperating. The details were obtained from the concerned authorities including the charge sheet fr .....

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rnments which were also granted to him. 11. For the interest of the revenue, the bank accounts were ordered to be frozen which were operating in Central Bank of India, Sector 18-C, Chandigarh and investigation was going on. Keeping in view the non- cooperative attitude of Sh. G.S. Sawhney, the bank was requested that all accounts be frozen. The information was taken from the respondent-bank which revealed that following accounts were with the bank:- S. No. SB A/c or FDR A/c No. Name of the A/c h .....

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77; 2,074/- was lying in the concerned bank in account no. 1956915673 which is the subject matter of the present writ petition the same was defreezed by the Directorate vide letter dated 04.12.2014 (Annexure R-10). However, the other FDRs of the petitioner and the saving bank account of her husband had not been de- freezed for the sake of the revenue as the matter was subject of investigation and the documents in support of the investment made by the wife had not been furnished. 13. The petition .....

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hereafter, the latest status of the investigation report dated 12.02.2015 conducted was also placed on record through the Assistant Director. It was mentioned in the report that the husband of the petitioner was not cooperating and there were 4 other bank accounts in the name of the petitioner which were not disclosed by them earlier and details had been sought. The petitioner's husband was not giving the details of the receipt of the payment of ₹ 75 lacs and that he had submitted his .....

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Advocate, who had asked the husband of the petitioner to hand over two cheques of ₹ 35 lacs and ₹ 40 lacs to one Sh. Narinder, who was the aide of said Sh. Mukesh Mittal. The allegation that the amount of money received from O.P. Mittal had been returned in the presence of persons on 15.07.2009 was denied while placing reliance upon the statement of the son of the deceased-tenant. Accordingly, it is submitted that the investigation was continuing and that the petitioner was required .....

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d show cause notice had been issued to the petitioner and 42 other connected persons to appear on 23.04.2015 which had been duly served upon the petitioner on 08.03.2015. 16. Counsel for the petitioner has very vehemently submitted that the order freezing of the bank account under Section 17(1A) of the PMLA is by an unauthorized officer since it was not issued by the Deputy Director or the Director and there were no reasons to believe that the petitioner was in possession of any proceeds of crim .....

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xure P-8) by the authorized officer namely the Deputy Director would not cure the illegality committed and, therefore, the freezing order was liable to be set aside. Reference is also made to Section 20 of the PMLA to submit that beyond a period of 180 days, the amount could not be frozen. 17. Counsel for the respondent-Directorate, on the other hand, submitted that the statutory order of freezing of accounts was only passed on 14.01.2015 after information had been received from the bank and the .....

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challenged in appeal and, therefore, this Court would not exercise its discretion at this point of time. It was further argued that reasons had been duly recorded before the competent authority had passed the order dated 14.01.2015 and the original record was produced for perusal. 18. The second issue which arises for consideration on Mr. Bansal's oral application is whether the concerned accounts were frozen vide order dated 12.09.2014 (Annexure P-4) or 15.09.2014 (Annexure R-7) or 04.12.20 .....

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who would then decide on the factum whether the attachment is to continue or not. 19. It is important to note that since all relevant documents were not appended with the replies, photocopies of Annexures R-3 to R-12 have been taken on record vide order dated 23.04.2015. 20. The perusal of the Annexures taken on record would thus go on to show that the first notice was issued to the husband of the petitioner on 11.07.2013 (Annexure R-3) followed by notice dated 28.08.2014 (Annexure P-3 = Annexur .....

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garding the bank account of the husband of the petitioner pertaining to Account No. 1370 and other relevant information which was sought under Section 54 of the PMLA. The contents of the letter to the bank reads thus:- "Sub: Statement of S.B. A/c No. 1370 (Shri Gurwinder Singh Sawhney). -reg.- An investigation is being carried out under the provisions of the Prevention of Money Laundering Act, 2002 (15 of 2003). In this connection, you are requested to provide the statement of Bank Account .....

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s addressed to the bank wherein, apart from account no. 1370 equivalent to new A/c. No. 1956922067, information of the joint account of the couple was also asked for by the Assistant Director. A condition was also put that no withdrawals or debits be allowed from the account/FDRs, lockers, if any without clearance from the Directorate. The relevant portion of Annexure R-7 reads as under:- "Sub: Investigation under PMLA-2002 against Shri G.S. Sawhney, Harnek Singh and Others- In connection w .....

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0 02. Please furnish certified copies of Account opening forms together with the documents tendered while opening the account. Transcript/statement of each of the above mentioned accounts from 01.07.2005 to till date. All bank account's statement should be certified by the authorized person and a soft copy of the same may also be provided. Similarly information/documents in respect of any other account(s) of/connected with the subject persons, being maintained in your bank, be also provided. .....

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The same may be treated as most urgent and kindly provide the same by 19.09.2014." 22. Thereafter, the bank on 19.09.2014 (Annexure R-8), in reference to the earlier letter of the Directorate submitted details of eight accounts/FDRs which have been noticed above. The bank, however, also wrote that the accounts have been frozen as per the instructions. 23. It is also apparent that vide request dated 27.09.2014 (Annexure P-5 = Annexure R-9), the petitioner had represented to the Deputy Direct .....

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even no. 2497, dated 15.09.2014 on the subject case and your reply vide letter No. BR/18C CHD/2013-14, dated 19.09.2014. Following Bank A/cs and FDRs A/c have opened and operated by Shri G.S. Sawhney and his wife and Smt. S.K. Sawhney with your Branch and on the directions of this Directorate, the same have been freezed on 15.09.2014. xxx xxx table deleted xxx xxx 02. Investigation is under process. Shri G.S. Sawhney and his wife Smt. S.K. Sawhney have been asked to submit the source of investm .....

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ordingly be dealt with. 25. The challenge in the petition is only to the freezing of Account No. 1956915673 and it is relevant to mention that not a whisper was made in the writ petition that apart from this account, the petitioner had other accounts with the bank including one joint account mentioned in the table set out above in which a sum of ₹ 1,61,380/- was there along with her husband. Similarly, six FDRs in which various amounts varying from a sum of ₹ 2,00,000/- to more than .....

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aid issues on the basis of the oral submissions as the Directorate has been precluded from giving a reply to the same. It is also apparent that the writ petition regarding the Account No. 1956915673 has already become infructuous in view of the letter dated 04.12.2014 and the petitioner chose not to amend her writ petition regarding the other accounts and raise the issues which now she is seeking to do orally. 26. Secondly, there is no dispute regarding the fact that on 25.03.2013, the ECIR No. .....

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n pursuance of the said investigation, the record was called for from the bank. The perusal of the letter dated 12.09.2014 would only go on to show that it was a communication by the bank whereby, reference is to one letter of the Directorate bearing No. ECIR/CDS0/05/2013/2497 dated 15.09.2014 (Annexure R-7). Obviously there is a mistake regarding the date as it could not have been written on 12.09.2014 and it was only on the receipt of the letter dated 15.09.2014, the bank wrote to the petition .....

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s issued by the Assistant Director or the said Officer had been under a misconception that the accounts had been frozen. It was then rightly submitted that it is settled principle that an action by an officer not authorized to pass an order cannot be held to be an order passed with jurisdiction and, therefore, the earlier orders dated 15.09.2014 and 04.12.2014 or the communication of the bank dated 12.09.2014 (Annexure P-4) cannot be said to be statutory freezing orders. Accordingly once the sta .....

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acs" was made of this property which was paid in cash. Whether the same had been returned or not and how many people were involved in the said case and in similar cases of cheating has still to be gone into. In the reasons recorded, details of 12 companies have been mentioned which are allegedly controlled by Sh. Mukesh Mittal and his associates and on the basis of the said investigation, the Deputy Director concluded that there were reasons to believe that various persons were indulging in .....

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ot;. Thus, it is apparent that proper reasons have been recorded by the authorities while issuing the statutory order dated 14.01.2015 (Annexure P-8) wherein, the details of all the accounts have been mentioned and reference has been made to Section 17(1A) of the PMLA for the first time. 28. Admittedly, the said order has been served on the petitioner also and there is no dispute that the Deputy Director has the power to order freezing of the properties under Section 17(1)(i)(ii) where it is not .....

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n the basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person- (i) has committed any act which constitutes money-laundering, or (ii) is in possession of any proceeds of crime involved in money laundering, or (iii) is in possession of any records relating to money-laundering, 2 [or] 3 [(iv) is in possession of any property related to crime] then, subject to the rules made in this behalf, he may authorise any officer subo .....

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cause to be made extracts or copies therefrom; (e) make a note or an inventory of such record or property; (f) examine on oath any person, who is found to be in possession or control of any record or property, in respect of all matters relevant for the purposes of any investigation under this Act: 5 [Provided that no search shall be conducted unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 157 of the Code of Criminal Procedure, 1973 (2 of .....

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alent being head of the office or Ministry or Department or Unit, as the case may be, or any other officer who may be authorised by the Central Government, by notification, for this purpose.] 1 [(1A) Where it is not practicable to seize such record or property, the officer authorised under sub- section (1), may make an order to freeze such property whereupon the property shall not be transferred or otherwise dealt with, except with the prior permission of the officer making such order, and a cop .....

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ns so recorded along with material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such reasons and material for such period, as may be prescribed. (3) Where an authority, upon information obtained during survey under section 16, is satisfied that any evidence shall be or is likely to be concealed or tampered with, he may, for reasons to be recorded in writing, e .....

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ty seized under sub-section (1) or for continuation of the order of freezing served under sub- section (1A), before the Adjudicating Authority.]" 29. We are well aware that the power of freezing is a draconian power and safe guards have to be kept in mind to check its abuse and limit its exercise. However, a balance has to be maintained between the right of the citizen and the right of the investigating agency which cannot be restricted as it is the duty of the said agency to unearth and fi .....

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d regarding the interest of the revenue also so that the proceeds of crime are not frittered away. The parties have to be given a reasonable level playing field. This cannot be achieved by permitting oral applications thus depriving the respondents an opportunity of meeting the petitioner's case in a reasonable manner. 30. Lastly, question arises whether this Court is to scrutinize the source of the funds and whether the action of the authorities is justified. Admittedly, under 17(4) of the .....

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