2015 (6) TMI 501 - HC - Customs

Jurisdiction of Senior Intelligence Officer - Section 110 - Power to stop withdrawal from account of the petitioners because an investigation was being carried out by the office - Held that - Section 110 A of the Act provides that any goods documents or things seized under Section 110 may pending order of the Adjudicating Authority be released to the owner on taking a bond from him in the proper form with such security and conditions as the Adjudicating Authority may require. Thus the precondition stipulated under Section 110 A is that goods documents or things must have been seized under section 110 of the Act. We have already held that the power under section 110 of the Act could not have been exercised for passing an order that the petitioners should not be permitted to make any withdrawal from the account. In such circumstances the respondents cannot insist that the petitioners should furnish adequate security bond. - Decided in favour of appellant.

Summary

Issues:
Petition for quashing order of Directorate of Revenue Intelligence freezing bank account under Customs Act, 1962.

Analysis:
The petitioners, a private firm and its proprietor, filed a petition seeking to quash an order by the Directorate of Revenue Intelligence directing the ICICI Bank to freeze the firm's account and to provide necessary information/documents under the Customs Act, 1962. The petitioners argued that the Directorate's action was without jurisdiction as Section 110 of the Act does not authorize holding withdrawals from bank accounts. They also contended that even if such authority existed, it could not last more than six months as per Section 110(2) of the Act.

The dispute centered around the communication issued by the Senior Intelligence Officer to the bank under Section 110 of the Act, directing the freeze on withdrawals. The petitioners argued that bank accounts were not covered under Section 110, which pertains to seizure of goods, documents, or things. Citing precedents, the petitioners highlighted judgments from various High Courts that supported their position that Section 110 did not empower the officer to restrict bank account operations.

The High Court examined the relevant provisions of the Act and the arguments presented. It referenced a Division Bench judgment from the Gujarat High Court, which clarified that the authority under Section 110 cannot prevent bank account operations. Additionally, a judgment from the Karnataka High Court was cited, emphasizing that Section 110 does not allow for the attachment of bank accounts. The Court considered the circumstances cited by the respondents but concluded that the Senior Intelligence Officer did not have the power to issue such a direction under Section 110.

The respondents' contention that security should be provided if the account is allowed to operate was rejected by the Court, citing Section 110A of the Act, which requires seized goods, documents, or things for such security provisions. Since the freeze order was deemed unsustainable under Section 110, the Court set it aside, directing the respondent to permit the petitioners to operate the bank account. Consequently, the writ petition was allowed in favor of the petitioners.