TMI Blog2021 (3) TMI 1132X X X X Extracts X X X X X X X X Extracts X X X X ..... dings 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 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also registered. It is the case of the 3rd respondent that about ₹ 47.41 crores was transferred from various entities belonging to the Managing Director of the petitioners, to the bank accounts of firms created by the aforesaid Sri Vaddi Mahesh, which were further transferred to the other bank accounts of shell companies created by Sri Vaddi Mahesh. 4. In October, 2020 summons had been issued to the petitioners by the 3rd respondent herein requiring the attendance of the person in management, along with the documents enclosed with the summons. While the said enquiry was going on, the petitioners in all the cases, received a message from the 4th respondent on 19.11.2020 that the petitioners cannot operate their bank accounts in view of an order from the Revenue Authority. As the freeze would cause dislocation of the operations of the petitioners, a request was made to the 4th respondent to furnish the details of the order. On the very same day, the 4th respondent issued a letter dated 19.11.2020 informing the petitioner that the debit-freeze has been placed on the current accounts of the petitioners in terms of the letter No. ECIR/03/VKSZO/2017/732, dated 06.11.2020, recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2017, dated 15.05.2017 was registered by the A.P. Police, and as the offences set out in the said FIR are scheduled offences under the Act, a case was recorded vide ECIR/VKSZO/03/2017, dated 22.05.2017 and investigation was taken-up under the Provisions of the Act and Rules. The various bank accounts held in various banks of nine companies incorporated by Sri Vaddi Mahesh were obtained and on the basis of the statements further investigation was taken up. It is submitted that in the course of the investigation, it was found that three entities belonging to Sri Yadavendra Kumar Roy, viz., the petitioners herein, had transferred funds to a tune of ₹ 47.41 crores within a span of five months between February, 2015 and July, 2015 and on account of this information, coupled with the statement given by Sri Vaddi Mahesh, summons were issued to Sri Yadavendra Kumar Roy and a statement dated 24.11.2020 was recorded under the Provisions of the Act where he has stated that the amount of ₹ 47.42 crores were remitted from his firms/companies to procure carpets which he had exported out-side India, and that even though he did not know Mr.Vaddi Mahesh, the money was remitted towar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ble High Court of Calcutta would not hold the field any more, in view of the Judgment of the Hon ble Supreme Court. He would pray that the order dated 06.11.2020 be set aside. CONSIDERATION OF THE COURT: 14. The Prevention of Money Laundering Act, 2002 was brought in, to provide for confiscation of property derived from or invoked in Money Laundering activities. Money Laundering is defined, under Section 3 of the Act, as follows: Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering. 15. Section 5 of the Act reads as follows: Attachment of property involved in money- Laundering.- (1) Where the Director or any other officer not below the rank of Deputy Director authorised by the Director for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in his possession, that- (a) any person is in poss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation .- For the purposes of this sub-section person interested , in relation to any immovable property, includes all persons claiming or entitled to claim any interest in the property. (5) The Director or any other officer who provisionally attaches any property under sub-section (1) shall, within a period of thirty days from such attachment, file a complaint stating the facts of such attachment before the Adjudicating Authority. 16. Section 17 of the Act reads as follows: Search and seizure.-(1) Where the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section, on 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, or (iv) is in possession of any property related to crime then, subject to the rules made in this behalf, he may authorise any officer subordinate to him to- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under sub-section (1) shall, immediately after search and seizure or upon issuance of a freezing order forward a copy of the reasons 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, enter and search the building or place where such evidence is located and seize that evidence: Provided that no authorisation referred to in sub-section (1) shall be required for search under this sub-section. (4) The authority seizing any record or property under sub-section (1) or freezing any record or property under sub-section (1A) shall, within a period of thirty days from such seizure or freezing, as the case may be, file an application, requesting for retention of such record or property seized under sub-section (1) or for continuation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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. 21. Sri T. Niranjan Reddy submits that, even if the order of Debit freeze was issued, under either of these provisions, the proceedings would have to be forwarded to the adjudicating authority, ..... 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