2021 (11) TMI 902 - HC - Money Laundering

Money laundering - Freezing of petitioner's bank account - grievance of the petitioners can be addressed in the proceedings for continuation of freezing orders or not - urgency in the matter as salaries and statutory benefits of the employees have not been paid and the employees would suffer hardship - HELD THAT - This Court is inclined to grant interim order to the extent of payment of salary to the employees of the petitioners. There shall therefore, be a direction to the respondents to permit the petitioners to operate the bank accounts to the extent of ₹ 2 crores, subject to their furnishing bank guarantee for the said amount. The petitioners are permitted to operate the bank accounts with respect to the amounts deposited on or after 12.10.2021, forthwith. Both the learned counsel agree that in terms of this interim order, the Writ Petitions may be disposed of giving liberty to the petitioners to approach the Adjudicating Authority, in accordance with law. Petition disposed or giving liberty to the petitioners and the respondents to raise all legal contentions before the Adjudicating Authority.

Summary

Issues:
1. Release of funds subject to bank guarantee amidst freezing of bank accounts.
2. Urgency in addressing salary and statutory benefits payment to employees.
3. Application of interim relief based on judgments from Delhi High Court and Karnataka High Court.
4. Disposal of Writ Petitions with liberty to approach the Adjudicating Authority.

Analysis:
1. The judgment revolves around the release of funds amounting to ?2 crores subject to a bank guarantee, amidst the freezing of the petitioners' bank accounts as directed by the 1st respondent under the Prevention of Money Laundering Act, 2002. The learned Senior Counsel emphasized the urgency due to non-payment of salaries and statutory benefits to employees, leading to potential hardships.

2. Citing a judgment from the Delhi High Court, the Senior Counsel argued for interim relief allowing the petitioners to furnish bank guarantees or securities to the satisfaction of the Enforcement Directorate (ED) to unfreeze the accounts on a case-to-case basis. Similarly, in a case related to the Foreign Exchange Management Act, 1999, the Karnataka High Court had previously directed the release of amounts for salary payments upon providing a bank guarantee.

3. In light of these precedents, the Court decided to grant an interim order specifically for the payment of salaries to the petitioners' employees. The order permitted the petitioners to operate their bank accounts up to ?2 crores, subject to furnishing a bank guarantee for the same amount. The permission to operate the accounts was limited to funds deposited after 12.10.2021.

4. Consequently, the Court disposed of both Writ Petitions, granting liberty to the petitioners and respondents to raise legal contentions before the Adjudicating Authority. The judgment did not impose any costs and closed any pending miscellaneous applications. The parties were given the freedom to approach the Adjudicating Authority in accordance with the law for further proceedings.