2005 (10) TMI 99 - HC - Customs

Writ jurisdiction - Bank Accounts - Power to stop operation of Bank Account because an investigation was being carried out by the office - HELD THAT - In the present case it is not the case of respondent authorities that the petitioner is either dealing in currency or is charged with illegally transacting in currency by way of import or export. Therefore even this provision cannot support the action of respondent authorities. Though Mr. Oza has addressed the Court in relation to various facts narrated in the affidavit in reply it is not necessary to deal with the same at this stags for the simple reason that the investigation which is in progress should not be affected by any observation or finding which the Court may record in relation to the facts and evidence which is in the stage of being ascertained collated and brought on record. Therefore without entering into any discussion on merits of the facts and evidence suffice it to state that the averments made in the affidavit in reply do not carry the case of revenue any further. Thus the action of respondent No. 4 in preventing the petitioner from operating its account being Current Account No. 051102 000 014580 is bad in law as the respondent Nos. 1 2 and 3 could not have issued any direction under provisions of Section 110(3) read with Section 113(i) and Section 121 of the Act. The respondent No. 4 bank is accordingly directed to release the account of the petitioner being Current Account No. 051102 000 014580 and permit operation thereof forthwith. The petition is accordingly allowed to the aforesaid extent. At this stage Mr. Oza submits that the operation of this order may be stayed for a period of three weeks. Considering the facts available on record the request is rejected.

Summary

Issues:
Challenge to bank's action of not permitting operation of current account under Customs Act provisions.

Analysis:
The petitioner challenged respondent No. 4 bank's action of not allowing operation of the current account under Customs Act provisions. The bank cited Directorate of Revenue Intelligence's direction under Customs Act Sections 110(3) and 121 as the reason for freezing the account. The petitioner argued citing a previous case that the account cannot be frozen during an investigation. The respondent authorities defended their action under Sections 110(1), 110(3), 121, 2(39), and 113(i) of the Act, claiming power to confiscate goods and sale proceeds due to alleged over-valuation in exports linked to a group under investigation.

The judgment analyzed the provisions of Sections 113(i) and 110(3) of the Act. It was noted that these provisions apply before actual export of goods and require goods to be entered for exportation, which was not the case here as goods were already exported. The respondent authorities' reliance on Section 113(i) and 110(3) was deemed unsupported by the law due to the timing and requirements specified in the provisions.

Regarding Section 110(3) empowering seizure of relevant documents or things, the argument that 'currency' could fall under 'things' was dismissed. The court emphasized the Act's focus on import and export of goods, not currency transactions, and clarified that the provision does not apply to currency dealings unless related to legal or illegal import/export transactions. As the petitioner was not involved in currency transactions, this provision did not justify the bank's action.

The judgment concluded that respondent No. 4's action in preventing the petitioner from operating the current account was unlawful. The court directed the bank to release the account and allow its operation immediately. It was clarified that the decision was based on current evidence and would not hinder lawful actions based on future investigation findings. The request to stay the order was denied, and the rule was made absolute with no costs, permitting direct service.