2019 (9) TMI 179 - HC - Money Laundering

Offence under PMLA - in the process of investigation, the Enforcement Directorate requested the banks to stop the withdrawal/transfer in the accounts - the petitioners are at liberty to make deposits in the concerned bank accounts without having the liberty to withdraw or transfer any amount from such bank accounts - HELD THAT - Having heard the rival contentions of the parties, it would be appropriate to permit the parties to file affidavit. Let affidavit-in-opposition be filed with four weeks from date. Affidavit-in-reply, if any thereto, be filed within two weeks thereafter.The writ petition will be treated as ready for hearing immediately on expiry of the time period stipulated for filing affidavits. The parties are at liberty to mention for early hearing. So far as interim orders are concerned, I find that, there are serious charges of commission of economic offences against the petitioners. It is alleged that, the petitioners are guilty of dealing with the banks and financial institutions fraudulently. It would, therefore, be inappropriate to permit the petitioners to operate the bank accounts in the manner as prayed for, at this stage.

Summary

Issues: Challenge to actions of Enforcement Directorate preventing operation of bank accounts.

The judgment by the Calcutta High Court involves a challenge to the actions taken by the Enforcement Directorate in preventing the operation of bank accounts of the petitioners. The petitioners argue that the Prevention of Money Laundering Act, 2002 does not authorize the Enforcement Directorate to halt their business operations without issuing a notice under Section 5 of the Act. They claim that an Assistant Director of the Enforcement Directorate exceeded jurisdiction by ordering the prohibition of withdrawal/transfer of accounts. On the other hand, the banks assert that the petitioners' accounts were declared as non-performing assets, with one bank revealing discrepancies in the movables pledged by the petitioners. The Enforcement Directorate justifies its actions by stating that the complaint from the Central Bureau of Investigation is under investigation, and their request to banks to stop withdrawals/transfers is a valid measure. They rely on a previous judgment recognizing their authority to issue such prohibitory orders.

The court, after considering the arguments from all parties, decides to allow the filing of affidavits within specified timelines. However, regarding interim orders, the court notes the serious allegations of economic offenses against the petitioners, suggesting fraudulent dealings with banks and financial institutions. Consequently, the court deems it inappropriate to grant the petitioners permission to operate their bank accounts as requested at this stage. The judgment concludes by directing the provision of an urgent certified copy of the order to the parties upon completion of necessary formalities.