2019 (5) TMI 1109 - HC - Customs

Attachment of Bank Accounts - de-freezing of attached Bank Accounts - conditional or un-conditional de-freezing - requirement of furnishing security - HELD THAT - The impugned orders dated 16th and 31st March 2017 of the learned Single Judge to the extent that they require SLML to furnish security in the sum of ₹ 10 crores to the satisfaction of the DRI as a condition to operate its bank accounts are hereby set aside. It is directed that all of SLML s bank accounts shall be permitted to be operated by the Respondents without any pre-condition - Petition disposed off.

Issues:
1. Freezing of bank accounts by Directorate of Revenue Intelligence (DRI) during investigation.
2. Legal validity of conditions imposed on unfreezing bank accounts.
3. Compliance with court orders regarding furnishing security for unfreezing bank accounts.
4. Challenge to the orders passed by the Single Judge in the writ petition.
5. Authority of Revenue authorities to freeze bank accounts under the Customs Act, 1962.
6. Resolution of the appeal and writ petition regarding operating bank accounts without conditions.

Issue 1: Freezing of bank accounts by DRI
The case involved a search operation by the DRI at the premises of the petitioner, an exporter of rice, resulting in the freezing of bank accounts. Initially, two bank accounts were frozen, followed by an additional 43 accounts being frozen on the same grounds. This action prompted the petitioner to file multiple writ petitions challenging the freezing of accounts by the DRI.

Issue 2: Legal validity of conditions for unfreezing bank accounts
Upon filing a writ petition, the Single Judge ordered the unfreezing of two bank accounts upon the petitioner furnishing security of a specified amount. The conditions imposed required the petitioner to provide a security of ?10 crores, in addition to the gold and currency seized by the authorities. The legality and necessity of such conditions were contested by the petitioner, leading to further legal proceedings.

Issue 3: Compliance with court orders for furnishing security
The petitioner complied with the court's order by offering security in the form of agricultural land. However, the adequacy and valuation of the furnished security were questioned by the authorities, leading to a determination that the security provided was insufficient and unacceptable.

Issue 4: Challenge to orders passed by the Single Judge
Subsequent to the initial writ petition, the petitioner withdrew the petition and filed a fresh one due to the issuance of a show cause notice by the DRI alleging duty evasion. This led to the filing of another writ petition, which was subsequently withdrawn with liberty to pursue further legal action as per the law.

Issue 5: Authority of Revenue authorities under the Customs Act
The High Court, in a related judgment, clarified that the Customs Act, 1962 does not empower Revenue authorities, including the DRI, to freeze bank accounts or interfere with banking transactions of parties. This clarification was crucial in determining the legality of the actions taken by the DRI in freezing the petitioner's bank accounts.

Issue 6: Resolution of the appeal and writ petition
After a series of legal proceedings and compliance with court orders, the DRI ultimately agreed to allow the petitioner to operate its bank accounts without any conditions. Consequently, the court set aside the earlier orders requiring the petitioner to furnish security and directed that all bank accounts be operated without pre-conditions, effectively disposing of the appeal, writ petition, and related applications.

In conclusion, the judgment addressed the freezing of bank accounts by the DRI, the legal validity of conditions imposed for unfreezing accounts, compliance with court orders, challenges to the Single Judge's orders, the authority of Revenue authorities under the Customs Act, and the final resolution allowing the petitioner to operate its bank accounts without conditions.

← Previous Next →