2021 (11) TMI 556 - HC - Money Laundering

Stay against Attachment/Freezing of Bank Account of petitioner - stay against the criminal investigation and prosecution - HELD THAT - If we revert back to the operative portion of the impugned order of learned Single Judge which is reproduced in the earlier portion of this order, what it says is that the respondents (that is the present appellant) are restrained from taking any coercive steps against the petitioner as directed by the Supreme Court. Firstly, this direction preventing the department from taking coercive action against the petitioner nowhere includes stay against the order of attachment imposed by the Department. In any case the order of attachment has not been challenged and could not have been stayed. Question of stay against the criminal investigation and prosecution - HELD THAT - In view of the clarification and modification by the Supreme Court in its own order in the case of Anil Kumar Gadodia, it is provided that the direction for not taking coercive action against the petitioner is given by the learned Single Judge in the impugned order, would not cover any criminal prosecution against him. In other words, it would be open for the department to continue the investigation and prosecution in relation to the alleged actions of the petitioner in accordance with law. Appeal disposed off.

Summary

Issues:
Challenge to order freezing bank account, legality of proceedings under PMLA, interim relief against coercive actions, stay on provisional attachment order, reference to Supreme Court order in similar case, challenge to order of attachment, stay against criminal investigation and prosecution.

Analysis:
The appeal was filed by the Directorate of Enforcement and its Officers to challenge the order passed by the Single Judge in a Civil Writ Petition. The respondent-petitioner sought relief to set aside the order freezing the bank account and declare the proceedings illegal under the Prevention of Money Laundering Act, 2002. The Single Judge initially granted liberty to approach the Court if coercive actions were taken. The petitioner later requested a stay on coercive actions and the provisional attachment order. The Single Judge referred to a similar case pending before the Supreme Court and granted interim protection to the petitioner, restraining coercive steps.

The Department argued that the order of attachment was not challenged in the original petition filed in 2017 and should not have been stayed. They also contended that the criminal prosecution was not challenged, and the Single Judge could not prevent further investigation and prosecution. The Department highlighted that the Supreme Court modified its earlier order in a similar case, allowing full investigation and prosecution.

On the other hand, the petitioner's counsel argued that the case was similar to the one before the Supreme Court, justifying the Single Judge's decision to grant interim protection. The High Court clarified that there was no stay against the attachment order and that the direction preventing coercive action did not cover the criminal prosecution. The Court emphasized that the Department could continue the investigation and prosecution in accordance with the law.

In conclusion, the High Court disposed of the appeal, clarifying that the direction against coercive action did not affect the criminal prosecution. The Court allowed the Department to proceed with the investigation and prosecution. The parties were advised to seek appropriate legal remedies if needed in relation to the investigation and prosecution.