TMI Blog2023 (3) TMI 589X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned in the e-mails, is legally sustainable? HELD THAT:- In OPTO Circuit India Limited [ 2021 (2) TMI 117 - SUPREME COURT ], the Hon'ble Apex Court held that the pre-requisite, is that the Director or such authorised Officer in order to exercise the power under Section 17 of the PMLA should on the basis of information in his possession, have reason to believe that such person has committed acts related to money-laundering and there is need to cease any record or property found in the search and such belief of the Officer should be recorded in writing. Sub-section (1A) of Section 17 of the PMLA, provides that the Officer authorised under sub-section (1) may make an order to freeze such record or property where it is not practicable to seize such record or property, but it was clarified and emphasized that the freezing of the account will also require the same procedure since a bank account having proceeds of crime shall fall, both under the ambit of property and records - the Hon'ble Apex Court observed that in that case, except issuing the impugned communication dated 15.05.2020 to Anti-Money Laundering Officer to seek freezing, no other procedure contemplated in la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 17 (1-A) being below the rank of the Deputy Director, though prima facie, the Court is not in agreement, for, the use of the expression the officer authorized under sub-section (1) in Section 17 (1-A) in the phrase the officer authorized under sub-section (1) may make an order to freeze such property . Considering the object of the PMLA which is to achieve preventing money laundering and bring the offenders to book as also at the same time to safeguard the rights of the persons who would be proceeded against under the PMLA by ensuring fairness in procedure, in the light of the facts of the present case, as brought on record from both the sides, but without making any observation on the merit of the correctness thereof or otherwise, that the amount in accounts of the petitioners with the respondent Banks is alleged to be proceeds of crime , while setting aside the impugned e-mails it would be in the interest of justice to prevent the alleged money laundering, to keep it open to the authorized officer of E.D under Section 17 of the PMLA to take necessary action, by proceeding in accordance with law and further, for a period of 15 days from today to restrain the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2500 maintained with Respondent No.4 as arbitrary, illegal, contrary to principles of natural justice and provisions of the Prevention of Money Laundering Act, 2002 and violative of the Fundamental rights guaranteed Article 19(1)(g) and Article 21 of the Constitution of India and consequently set aside the instructions/directions in emails dt. 18.10.2022 issued by Respondent No.2. (C) Declaring the action of Respondent No.2 in instructing/directing the Respondent Nos.3 and 4 vide emails dated 18.10.2022 to debit freeze the bank accounts of Petitioner No.3 bearing A/c No.919010092209062 maintained with Respondent No.3 and A/c No.055211100003013 maintained with Respondent No.4 as arbitrary, illegal, contrary to principles of natural justice and provisions of the Prevention of Money Laundering Act, 2002 and violative of the Fundamental rights guaranteed Article 19(1)(g) and Article 21 of the Constitution of India and consequently set aside the instructions/directions in emails dt. 18.10.2022 issued by Respondent No.2. (D) Declaring the action of Respondent No.2 in instructing/directing the Respondent No.3 vide emails dated 18.10.2022 to debit freeze the bank accounts of Peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce dated 02.08.2022, under Section 8 of the PMLA, along with record of reasons, calling upon the petitioner Nos.1 to 3 to show cause as to why the properties seized on 17.06.2022 be not retained by the 1st respondent. The petitioner Nos.1 and 2 submitted their reply dated 17.09.2022 and the matter is pending before the Adjudicating Authority. 7. Learned counsel for the petitioners submitted that the petitioners are not raising any grievance with respect to the proceedings in O.A.No.605 of 2022 in this writ petition which is confined to action vide impugned E-mails/letters. 8. Challenging the Emails of the 2nd respondent, Sri I.Koti Reddy, learned counsel submitted that any order under Section 17 (1-A), PMLA to freeze the Bank accounts, has not been passed, which order is a pre-condition to issue directions to the Bank. 9. Sri I. Koti Reddy further submitted that Section 17 of the PMLA provides for the power to search and seizure of the property where the Director or any other officer not below the rank of Deputy Director authorized by the Director for the said purposes, on the basis of information in his possession, has reason to believe that any person has committed the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r two goods vehicles having registration Nos. AP-02-TC-9666 and TS-09-UB-7034. Since, prima-facie, there existed a scheduled offence under Sections 420, 467, 471 472 of IPC, 1860, as per the schedule-I of the PMLA-2002, investigation was initiated under PMLA, in file No.ECIR/HYZO/33/2020, in which during investigation, it was revealed that several other FIRs were registered, including against the petitioners herein, for fraudulently registering various vehicles on the basis of fake, forged and fabricated documents. Those FIRs were also taken on record in the ongoing investigation under PMLA-2002. 13. Sri J.Bhaskar Rao, further submitted that the Hon'ble Supreme Court of India vide judgment dated 29.03.2017 in WP (Civil) No.13029/1985, ordered that the vehicles which are not compliant to BS-IV emission norms shall not be sold in India by any manufacturer or dealer from 1st April 2017 onwards and the registering authorities were prohibited from registering such vehicles from 1st April 2017. The manufacturing companies, including M/s. Ashok Leyland Ltd, were having stock of BS-III vehicles as on 01.04.2017, which was prohibited for sale and registration in India, but M/s. Ash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions were issued to the Banks vide e-mails not to entertain debit transactions from the accounts of the petitioners, as a measure to safeguard the balances in the accounts, with a view to issue provisional attachment order under Section 5 (1) of the PMLA, 2002, in respect of those amounts. He submitted that the petitioners acquired proceeds of crime, out of scheduled offences and the E.D. in discharge of its statutory duties is bound to investigate and secure the proceeds of crime or the value thereof. The action taken by the E.D. is bonafide and in good faith. 15. Sri J. Bhaskar Rao, however admitted that no order was passed under Section 17 (1-A) of the PMLA. He referred to Para 36 of the counter affidavit to submit further that since no order under Section 17 (1-A) was passed, the question of following the provisions of Section 17 (2) (4) to forward a copy of the reasons recorded or/and filing of the application before the adjudicating authority did not arise at all. 16. Sri D.V.S.Lokeshwar Rao, learned counsel for the Axis Bank Respondent No.3, submitted that in compliance of the e-mails communication of Respondent No.2, the Bank issued information to the petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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: (1A) Where it is not practicable to seize 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 copy of such order shall be served on the person concerned: Provided that if, at any time before its confiscation under sub-section (5) or sub-section (7) of section 8 or section 58B or sub-section (2A) of Section 60, it becomes practical to seize a frozen property, the officer authroised under sub-section (1) may seize such property. (2) The authority, who has been authorised 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quirements, even if the freezing of the account was found justified. In the said case, the Directorate of Enforcement in their counter affidavit took stand while explaining their need to freeze the account as stated that the stop operation was requested to stop the further layering/diversion of proceeds of crime and to safeguard the proceeds of crime. But in the counter affidavit, the stand taken was that the same was not done under Section 17 (1) of the PMLA. The Hon'ble Apex Court held that such a stand was contradictory. It was observed and held that the power to stop operation , in need to freeze the account, to stop the further layering/diversion of proceeds of crime as also to safeguard the proceeds of crime, is a power available under the PMLA, but the exercise of power by the competent authority should also be shown to be in the manner provided in law i.e. under the PMLA. 23. In OPTO Circuit India Limited (supra), the Hon'ble Apex Court held that the pre-requisite, is that the Director or such authorised Officer in order to exercise the power under Section 17 of the PMLA should on the basis of information in his possession, have reason to believe that such per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to, or interest in, such property or assets, wherever located; 2. (1) (w) records include the records maintained in the form of books or stored in a computer or such other form as may be prescribed; 25. In OPTO Circuit India Limited (supra), the Hon'ble Apex Court observed that in that case, except issuing the impugned communication dated 15.05.2020 to Anti-Money Laundering Officer to seek freezing, no other procedure contemplated in law was followed. Such impugned communication also did not even refer to the belief of the authorised Officer. It was held that though it was not the requirement that the communication addressed to the Bank should contain all the details but what was necessary was an order in the file recording the belief as provided under Section 17 (1) of the PMLA before the communication is issued and thereafter the requirements of Section 17 (2) of the PMLA, after the freezing was made, was required to be complied with. 26. In the present case, the basic facts to attract the applicabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioners in the absence of an order as contemplated by Section 17 (1-A) of the PMLA. 30. In view of the aforesaid, this Court is of the considered view that though there is power to direct freezing of the account or to issue the communications as has been issued in the present case to the Banks, under Section 5 or/and Section 17, but such power/direction which has the effect of freezing the property/bank account under Section 17 (1-A) is to be exercised as per the law by following the procedure prescribed. 31. It is settled in law by various pronouncements, and reiterated in OPTO Circuit India Limited (supra), by the Hon'ble Apex Court, that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner alone and in no other manner. It is apt to reproduce Para No.14 of OPTO Circuit India Limited (supra) as under:- 14. This Court has time and again emphasised that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner alone and in no other manner. Among others, in a matter relating to the presentation of an Election Petition, as per the procedure prescribed under the Patna Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (1), by the Director, authorizes any officer subordinate to him for the purposes of sub-clauses (a) to (f) of Clause (iv), such subordinate officer would also be an officer authorized under sub-section (1) for making an order under sub-section (1A) of Section 17 (1-A). So in case of further authorization as permitted by Section 17 (1) (iv), in favour of any subordinate officer to carry out the acts under sub-clauses (a) to (f) such authorized officer, if in the course of search and seizure, finds that it is not practicable to seize record or property, he may make an order to freeze such property with due compliance of Section 17(1-A). However, as consideration of this submission is not necessary for the decision of the writ petition, the Court is not expressing any final view. 34. In OPTO Circuit India Limited (supra), the Hon'ble Apex Court held that the scheme of the PMLA is well intended, while it seeks to achieve the object of prevention of money-laundering and bring to book the offenders, it also safeguards the rights of the persons who would be proceeded against under the Act by ensuring fairness in procedure. Hence a procedure, including timeline is provided, s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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