2020 (9) TMI 392 - HC - FEMA

Seizure and attachment of the bank account of the petitioner's father - grievance of the petitioner before this Court is that the bank account mentioned in the writ petition is not allowed to be operated by the petitioner under the guise of investigating the matter under FEMA and no order of attachment was passed by the first respondent at any point of time in respect of the said bank account and therefore, the petitioner cannot be prevented from operating the bank account - HELD THAT - Investigation under FEMA is pending and the investigation conducted so far reveals that the amount inter alia lying in the subject matter bank account appears to have been involved in violation of provisions of FEMA. Though such counter affidavit is filed, when a specific question is put to the leaned counsel for the first respondent by this Court as to whether any order of freezing the account has been issued by the first respondent, he submitted that no such order is issued so far. When it is stated that the first respondent has not issued any order freezing the subject matter bank account so far, no justification on the part of the first respondent in not allowing the petitioner to operate the bank account. Either the first respondent should pass an order in accordance with law to freeze the bank account or allow the petitioner to operate the bank account, in the absence of any such attachment order. Without doing either of these things, the respondents make the petitioner to stand in a position namely neither here nor there. Therefore, this Court is of the view that it is for the first respondent to take a decision and if they choose to attach the bank account, it should be done only by the manner in which law so provides to do so. Order - Since it is an admitted fact that the subject matter bank account is not so far issued with any order of attachment or freezing the account, it is open to the first respondent to pass any such order within a period of 30 days from the date of receipt of a copy of this order. If the first respondent has not chosen to pass any attachment order as stated supra, the petitioner shall not be prevented from operating the bank account.

Summary

Issues:
- Declaration sought for illegal seizure and attachment of bank account
- Allegation of preventing operation of bank account under FEMA investigation
- Previous writ petition regarding the same bank account
- Pending investigation under FEMA
- Lack of order freezing the bank account
- Court's direction regarding attachment order

Analysis:
The writ petition before the Madras High Court sought a declaration regarding the alleged illegal seizure and attachment of a bank account belonging to the petitioner's father, maintained with a specific bank. The petitioner contended that the account was not allowed to be operated under the pretext of investigating the matter under the Foreign Exchange Management Act (FEMA). It was emphasized that no formal order of attachment had been issued by the first respondent concerning the bank account in question. The court noted a previous writ petition filed by the petitioner's father with similar relief, which was disposed of after the respondent's counsel clarified that the account was not frozen, but certain restrictions were placed on debit transactions. The present petition was filed by the son of the earlier petitioner following his father's demise, seeking permission to operate the bank account.

In response to the current petition, the first respondent filed a counter affidavit stating that the investigation under FEMA was ongoing and indicated possible violations involving the funds in the bank account. However, during the court proceedings, it was revealed that no formal order freezing the account had been issued by the first respondent. Consequently, the court found it unjustifiable for the respondent to prevent the petitioner from operating the bank account without a proper attachment order in place. The court emphasized that the first respondent must either issue an order to freeze the account in accordance with the law or allow the petitioner to operate it, rather than leaving the petitioner in a state of uncertainty.

As a result, the court disposed of the writ petition by directing the first respondent to either issue an attachment order within 30 days or allow the petitioner to operate the bank account if no such order was issued. The court refrained from expressing any opinion on the merits of the investigation itself and did not impose any costs. The judgment aimed to address the lack of a formal attachment order while ensuring clarity and proper legal procedures regarding the bank account in question.