2019 (11) TMI 1423 - HC - Money Laundering

Money Laundering - Continuation of freezing of Bank Accounts - Section 102 of the Code of Criminal Procedure, 1973 (CrPC) - HELD THAT - As noted by the Adjudicating Authority in the Impugned Order dated 04.10.2018, the letters dated 19.04.2018 freezing the bank accounts were issued under Section 102 of the CrPC and were not passed in exercise of power under Section 17(1A) of the PMLA Act. The Impugned Order dated 04.10.2018 and the letters dated 19.04.2018, insofar as it continues to freeze the bank accounts in exercise of power under Section 102, cannot be sustained and are accordingly quashed - petition allowed.

Summary

Issues:
Challenge to freezing of bank accounts under Section 102 of CrPC
Challenge to order allowing continuation of freeze under PMLA
Compliance with Section 17 of PMLA
Validity of provisional attachment order under PMLA

Analysis:
The petitioner challenged the freezing of 74 bank accounts of a company under Section 102 of the Code of Criminal Procedure (CrPC) and the order allowing the freeze to continue under the Prevention of Money Laundering Act (PMLA). The petitioner argued that the freeze was not made under Section 17(1A) of the PMLA and relied on a previous judgment emphasizing strict compliance with Section 17 of the PMLA. The Adjudicating Authority confirmed that the freeze was under CrPC Section 102, not PMLA Section 17(1A), allowing the Enforcement Directorate to continue investigating and freezing the accounts under CrPC Section 102 until a decision under PMLA Section 17(1A) is made.

The court noted that the freezing of accounts under Section 102 of CrPC cannot continue without compliance with Section 17 of PMLA. As the Enforcement Directorate had not passed any order under PMLA Section 17(1A), the freezing under CrPC Section 102 was not sustainable. The court quashed the order allowing the continuation of the freeze under CrPC Section 102, citing a Division Bench judgment. However, the court clarified that a provisional attachment order under PMLA Section 5 passed during the petition's pendency would not be influenced by this decision, ensuring the ongoing proceedings are unaffected.

In conclusion, the court ruled in favor of the petitioner, quashing the freezing order under CrPC Section 102 as it did not comply with PMLA requirements. The judgment highlighted the importance of following the specific provisions of the PMLA when freezing accounts and emphasized the need for proper legal procedures to be followed.