2006 (9) TMI 198 - HC - Customs

Summary

Issues Involved:
1. Legality of freezing bank accounts under Section 110 of the Customs Act.
2. Scope of "goods" and "things" under Section 110 of the Customs Act.
3. Relevance and procedure of seizure under the Customs Act.
4. Right to privacy and personal liberty under Articles 19 and 21 of the Constitution.

Issue-wise Detailed Analysis:

1. Legality of Freezing Bank Accounts under Section 110 of the Customs Act:
The core issue was whether freezing bank accounts is permissible under Section 110 of the Customs Act. The petitioners argued that their accounts were unjustly frozen during an investigation into M/s. Pooja International, allegedly linked to them. The respondents justified the freezing of accounts for securing the financial interests of the government, alleging defrauding of Rs. 6 crores. The court examined the legality of such action under Section 110 of the Customs Act, which allows seizure of goods, documents, and things if they are liable to confiscation or relevant to proceedings under the Act.

2. Scope of "Goods" and "Things" under Section 110 of the Customs Act:
The respondents contended that under Section 2(22) of the Act, "goods" include "currency and negotiable instruments," thus covering bank accounts. They cited the Calcutta High Court's decision in Rohit Kumar v. Union of India, which interpreted "things" in Section 110(3) to include money in bank accounts. However, the court noted that confiscation under Section 111 is limited to prohibited goods or those with evaded duty, not applicable to bank accounts. The relevance of money in bank accounts would arise only after determining liability through an order, which had not been done in this case.

3. Relevance and Procedure of Seizure under the Customs Act:
The court highlighted that seizure under Section 110(1) is permissible if goods are liable to confiscation, and under Section 110(3), if documents or things are useful for proceedings under the Act. However, no order determining the petitioners' liability had been passed, nor was there any adjudication that the money in the bank accounts was relevant to the proceedings. The court referred to previous judgments, emphasizing that seizure must be supported by statutory provisions and fair procedures. The court also noted that indefinite seizure without due process violates legal standards.

4. Right to Privacy and Personal Liberty under Articles 19 and 21 of the Constitution:
The court underscored that search and seizure powers must balance societal interests and individual rights. Referring to the Supreme Court's judgments, it was noted that such powers affect the right to possession, privacy, and personal liberty under Articles 19 and 21. Any law or procedure authorizing interference must be just, fair, and reasonable, satisfying the triple test of Articles 14, 19, and 21. The court reiterated that seizure of bank accounts must be backed by statutory provisions and reasonable procedures, ensuring protection of fundamental rights.

Conclusion:
The court concluded that the bank accounts of the petitioners could not be indefinitely frozen without proper adjudication or determination of liability. It directed the respondent to pass an appropriate order within one month, releasing the bank accounts unless justified by a subsequent order. The writ petition was disposed of accordingly.