2021 (2) TMI 620 - HC - Money Laundering

Validity of provisional attachment order - proceeds of crime - unauthorised payments for obtaining the coal blocks allocation - allegations against her in the PAOs date back to the time when she was a PR professional i.e., sometime between 2007-08 to 2015 when the FIR was lodged - HELD THAT - The manner in which all the liquid savings of the Petitioner have been completely frozen appears completely unjustified, especially when the allegations against the Petitioner are merely in the realm of speculation, at this stage. The letter dated 22nd January 2021 issued to M/s. Centrum attached the Petitioner s entire deposits to the tune of ₹ 6 crores. Coupled with the assets attached in the PAO, the total assets attached are cumulatively worth 9,23,51,787/- crores, when admittedly, even as per the ED s own case, the total amount received by M/s. Centrum from M/s. AES Chhattisgarh Energy Private Ltd is only ₹ 5.60 crores. Some opportunity ought to have been granted to the Petitioner before passing orders attaching all her accounts and deposits. Attaching all her assets was totally unwarranted. It is directed that in place of the attachment of the assets of the Petitioner, as per the PAOs dated 22nd January, 2021 and 8th February, 2021, the Petitioner shall voluntarily keep a fixed deposit of ₹ 3 crores and not dispose of the immovable property, being Commercial Shed bearing No. Gat No.-126, Sawardari, Tal-Khed, Chakan, Pune-410501, Maharashtra, India, valued at ₹ 2,24,43,670/-. Details of the Fixed deposit of ₹ 3 crores, shall be provided to the ED within one week. Subject to the above terms being complied with within a week by filing of an affidavit of undertaking before this Court, the Petitioner would be free to deal with all other assets - Petitioner is now free to approach the Adjudicating Authority in accordance with law, at the appropriate stage. The de-freezing of the bank accounts shall be effected by the banks concerned upon service of a digitally signed copy of this order, downloaded from the High Court s website - Petition disposed off.

Summary

Issues:
Challenge to Provisional Attachment Order (PAO) by Enforcement Directorate (ED) on suspicion of proceeds of crime being used for unauthorized payments for coal block allocation.

Analysis:
The petitioner, a 72-year-old widow and former public relations professional, challenged the PAO dated 22nd January, 2021, where her assets were provisionally attached by the ED. The PAO alleged that she was involved in making unauthorized payments for coal block allocation. The petitioner's counsel argued that there was no basis for the PAO as she was not named in the FIR and was not an accused. On the other hand, the ED contended that there was enough material to suspect her involvement in the unauthorized payments.

The court considered the Supreme Court judgment in Opto Circuit India Limited v. Axis Bank & Ors., highlighting the need for proper and cogent reasons for issuing PAOs under the Prevention of Money Laundering Act, 2002 (PMLA). The petitioner's plea was based on humanitarian grounds, stating that her life savings were frozen, making it difficult for her to pay medical bills and daily expenses. The allegations against her dated back to her time as a PR professional between 2007-08 and 2015.

After initial hearings and the issuance of a subsequent PAO on 8th February 2021, the court found the freezing of all the petitioner's liquid savings unjustified, considering the speculative nature of the allegations at that stage. The court directed the petitioner to voluntarily keep a fixed deposit of ?3 crores and retain her immovable property, modifying the PAOs dated 22nd January, 2021, and 8th February, 2021 accordingly. The petitioner was allowed to deal with her other assets, subject to compliance within a week.

The court ordered the de-freezing of bank accounts upon service of the order, with no further communication from the ED required by the banks. The petitioner was given the liberty to approach the Adjudicating Authority as per the law at the appropriate stage. With these observations, the petition and pending applications were disposed of by the court.