2022 (8) TMI 1361 - HC - Money Laundering

Money Laundering - validity of debit freeze orders made by the respondents in purported exercise of powers conferred by Section 17(1A) of the Prevention of Money Laundering Act 2002 - HELD THAT - The petitioners may file their requisite undertakings before the competent authority of the respondents to effect compliance. Upon the filing of those undertakings the respondents may permit operation of the concerned accounts subject to the petitioners complying with the condition imposed. The Court further observes that it shall be open to the Directorate to duly verify that all the petitioners maintain balances as were standing to the credit of the respective accounts on the date of seizure and that those balances are retained and preserved at all times during the pendency of proceedings before the Adjudicating Authority - Petition disposed off.

Summary

Issues:
Assailing the validity of debit freeze orders under Section 17(1A) of the Prevention of Money Laundering Act, 2002 (PMLA) after the expiry of the statutory period.

Analysis:

1. The batch of writ petitions challenged the debit freeze orders issued by the respondents under Section 17(1A) of the PMLA. The petitioners, who are agents of a company, had earlier obtained interim orders to operate their bank accounts in a related case. The respondents pointed out that the petitioners filed their challenges after the statutory period of thirty days as per Section 17(4) had expired.

2. The Directorate highlighted that the transactions between the petitioners and the company resulted in proceeds of crime amounting to Rs. 38,641 crores, as opposed to the earlier quantified amount of Rs. 1200 crores. The Court acknowledged this and noted that the Adjudicating Authority had been approached by the respondents for continuation of the freezing orders.

3. Considering the circumstances and the pending proceedings before the Adjudicating Authority, the Court deemed it appropriate to dispose of the writ petitions, allowing the petitioners to raise their contentions before the Authority. The respondents suggested that the petitioners could operate their accounts if they maintained the balance as on the date of freezing, which the Court accepted.

4. The Court ordered the petitioners to file undertakings to comply with maintaining the account balances, following which the respondents could permit the operation of the accounts. The Directorate was authorized to verify the account balances and required the petitioners to provide details of remittances every 48 hours to the Enforcement Directorate.

5. Ultimately, the writ petitions and pending applications were disposed of, with the directive for the petitioners to adhere to the conditions set by the Court and the Enforcement Directorate during the pendency of proceedings before the Adjudicating Authority.

6. The judgment concluded with the issuance of orders for further administrative actions under the signatures of the Court Master.