2022 (10) TMI 633 - HC - Money Laundering

Validity of proceeding pursuant to Annexures-2, 3 8 (series) - seeking de-freezing the Bank account - HELD THAT - From the nature of proceeding undertaken pursuant to Annexure-8 page 69 of the brief, this Court finds, this document is in shape of attachment of property of the Petitioners upon prima facie opinion of existence of offence under the provisions of the Act, 2002 and Annexures-2 3 are all consequential outcomes pursuant to development through Annexure-8. As appears from Annexure-8 the proceeding is still in U/s.17(A) of the Act, 2002 stage and prayer so far it relates to take-out the proceeding U/s.17(A) of the Act, 2002 and the consequential freezing order of attachment to Annexure-8, for not passing of time fixed through the provision at Section 5 and 8 as well, cannot be considered at this stage of the matter. Surprisingly the Petitioners even not filed their objection to the notice vide Annexure-8. For leaving no scope for considering the validity of the notice vide Annexure-8 for its prematureness, this Court dealing with the ultimate prayer of the Petitioners for de-freezing the amount involving the notice under Annexures-2(series) 3, since finds, the development through Annexures-2(series) 3 since not arising out of the subject involving Section 17(1-A) of the Act, 2002, the notice at Annexure-8 (series) cannot be considered in the present proceeding. Petition disposed off.

Summary

Issues Involved:
1. Quashing of proceedings pursuant to Annexures-2, 3, and 8 (series).
2. De-freezing of the bank account as mentioned in Annexure-8 (series).

Issue-wise Detailed Analysis:

1. Quashing of proceedings pursuant to Annexures-2, 3, and 8 (series):

The petitioner sought a writ of certiorari and/or mandamus to quash the proceedings initiated pursuant to Annexures-2, 3, and 8 (series). The petitioner argued that the Director did not comply with the requirements under Sections 5, 8, and 17 of the Prevention of Money-Laundering Act, 2002, when issuing the impugned order at Annexure-8. The petitioner relied on the Supreme Court judgment in *Opto Circuit India Ltd. Vs. Axis Bank and Ors.*, AIR 2021 SC 753, to support their case.

The Court examined the relevant provisions of the Act, including Sections 5, 8, 17, and 20. Section 5 deals with the attachment of property involved in money laundering, requiring the Director to record reasons in writing based on material in possession. The attachment is provisional for up to 180 days and must be reported to a Magistrate or court. Section 8 outlines the adjudication process, providing the person concerned an opportunity to respond before final attachment. Section 17 covers search and seizure, allowing freezing of property under certain conditions, and Section 20 deals with retention of property.

The Court found that the proceedings were still at the stage under Section 17(A) of the Act, and the petitioner had not filed an objection to the notice under Annexure-8. Therefore, the Court could not consider the validity of the notice at this premature stage. The Court noted that the development through Annexures-2 and 3 did not arise from the subject involving Section 17(1-A) of the Act.

2. De-freezing of the bank account as mentioned in Annexure-8 (series):

The petitioner also sought a direction to the Bank authority to release some amount from the frozen account for minimum sustenance. However, the Court observed that the proceedings were still ongoing under Section 17(A) of the Act, and the time fixed through the provisions of Sections 5 and 8 had not yet passed. Therefore, the Court could not consider the request to de-freeze the account at this stage.

The Court concluded that the petitioners had not exhausted their remedies under the Act and had not filed objections to the notice. Hence, the writ petition was premature. The petitioners were given the liberty to bring any surviving cause of action involving Annexures-2 and 3 in appropriate proceedings.

Conclusion:

The writ petition was disposed of, with the Court finding it premature to quash the proceedings or de-freeze the bank account at this stage. The petitioners were advised to pursue appropriate proceedings if they had any remaining cause of action.