2017 (12) TMI 1693 - HC - Customs

Freezing of Bank Accounts - conditional/unconditional de-freezing - HELD THAT - Counsel for the petitioner submits that there has been a change in circumstance as show cause notice under Section 124 of the Customs Act has been issued and it is not alleged that the money in the bank accounts is liable to be confiscated. Notice under Section 121 of the Customs Act has not been issued in respect of the money. In these circumstances, the petitioner contends that the order of seizure of operation of the bank accounts deserves interference. Counsel also relies upon Section 110(2) of the Customs Act. We would like the petitioner herein to first comply with the order dated 16th March, 2017 requiring the petitioner to furnish security for ₹ 10 crores. The said order has not been challenged by the petitioner. Once the said security is furnished, we would consider de-freezing the 43 bank accounts which were subject matter of Writ Petition. Relist on 3rd January, 2018.

Summary

Issues:
1. Compliance with the order requiring the petitioner to furnish security for ?10 crores.
2. Acceptance of the security provided by the petitioner in the form of agricultural land.
3. Allegations of duty evasion amounting to ?17.53 crores.
4. Freezing of 43 bank accounts by the respondents.
5. Withdrawal of the writ petition related to the 43 bank accounts.
6. Change in circumstances due to the issuance of a show cause notice under the Customs Act.
7. Legal basis for interference with the order of seizure of bank accounts.
8. Requirement to comply with the order before considering de-freezing of bank accounts.
9. Request for relisting and obtaining further instructions.

Analysis:
1. The High Court noted the petitioner's compliance with the order to furnish security of ?10 crores, which was not challenged. The security provided, in the form of agricultural land, was found over-valued and insufficient, leading to the freezing of 43 bank accounts by the respondents. The petitioner was directed to address this issue before further action could be taken on the bank accounts.

2. A show cause notice alleging duty evasion of ?17.53 crores was issued to the petitioner. Despite the withdrawal of a writ petition related to the 43 bank accounts, the petitioner highlighted a change in circumstances due to the show cause notice under the Customs Act. The petitioner argued that the money in the bank accounts was not subject to confiscation, emphasizing the legal basis for challenging the seizure of bank accounts.

3. The Court acknowledged the petitioner's contentions but emphasized the need for compliance with the previous order to furnish security. Once the security was provided as per the order, the Court indicated a willingness to consider de-freezing the 43 bank accounts. The petitioner's counsel requested time for instructions and further submissions, leading to the case being relisted for a future date.

4. The judgment highlighted the importance of procedural compliance and the legal framework governing the seizure and de-freezing of bank accounts under the Customs Act. The Court's decision was contingent upon the petitioner's fulfillment of the security requirement, underscoring the significance of adhering to judicial orders before seeking further relief.