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TMI Blog2021 (2) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... red the action bad only in so far as not following the legal requirement before and after freezing the account. This shall not be construed as an opinion expressed on the merit of the allegation or any other aspect relating to the matter and the action initiated against the appellant and its Directors which is a matter to be taken note in appropriate proceedings if at all any issue is raised by the aggrieved party. What has also engaged the attention of this Court is with regard to the plea put forth on behalf of the appellant regarding the need to defreeze the account to enable the appellant to pay the statutory dues. The appellant in that regard has relied on the certificate issued by the Chartered Accountant, (AnnexureP/ 38 at page 231) which indicates the amount payable towards ITDS, PF, ESI, Professional Tax, Gratuity and LIC employees deductions, in all amounting to 79,93,124/. Since we have indicated that the freezing has been done without due compliance of law, it is necessary to direct the respondents No.1 to 3 to defreeze the respective accounts and clear the cheques issued by the appellant, drawn in favour of the Competent Authority towards the ITDS, PF, ESI, Professiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the scope of consideration in this appeal on the issue of defreezing the bank account so as to enable the appellant to make the statutory payments. In that view, notice had been issued to the respondent through the order dated 11.09.2020 in the following manner " issue notice restricted to the purpose of enabling necessary payment returnable within two weeks". The respondent on being served, having appeared has filed the counter affidavit on behalf of respondent No.4. 4. In that background we have heard Mr. Mukul Rohatgi, learned Senior Advocate for the appellant and Mr. S.V. Raju, learned Additional Solicitor General for the respondent No.4 and perused the petition papers. 5. The instant appeal arises out of the proceedings initiated by respondent No.4 against the appellant under the PMLA. The analogous matter, which was considered by the High Court along with the writ petition which is the subject matter herein related to the action initiated by the Central Bureau of Investigation ('CBI' for short) for the alleged predicate offence and the instant proceedings is a fall out of the same. It is in that background the Enforcement Directorate in order to track the money trail relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner as is contemplated under PMLA. The Directorate of Enforcement (Respondent No.4) in their counter affidavit has taken contradictory stand inasmuch as, while explaining the need to freeze the account has stated that the 'stop operation' was requested to stop the further layering/diversion of proceeds of crime and to safeguard the proceeds of crime, which we notice is a power available under PMLA. But in the counter affidavit it is strangely stated that the same has not been done under Section 17(1) of the PMLA. However, in contrast it has been further averred with regard to the power available under PMLA and that PMLA being a standalone enactment and independent process where under Section 71 of PMLA has an overriding affect over other laws. Irrespective of the stand taken, the power exercised by the Competent Authority should be shown to be in the manner as has been provided in law, in this case under PMLA. 8. To appreciate this aspect, it would be appropriate to refer to Section 17 of PMLA whereunder the freezing of such property or record is also provided. Section 17 of PMLA reads as hereunder: 17. Search and seizure (1) Where the Director or any other officer not below t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Adjudicating Authority shall keep such reasons and material for such period, as may be prescribed. (3) Where an authority, upon information obtained during survey under section 16, is satisfied that any evidence shall be or is likely to be concealed or tampered with, he may, for reasons to be recorded in writing, enter and search the building or place where such evidence is located and seize that evidence: Provided that no authorisation referred to in subsection (1) shall be required for search under this subsection. (4) the authority seizing any record or property under subsection (1) or freezing any record or property under subsection (1A) shall, within a period of thirty days from such seizure or freezing, as the case may be, file an application, requesting for retention of such record or property seized under subsection (1) or for continuation of the order of freezing served under subsection (1A), before the Adjudicating Authority. (emphasis supplied) 9. A perusal of the above provision would indicate that the prerequisite is that the Director or such other Authorised Officer in order to exercise the power under Section 17 of PMLA, should on the basis of informa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de above has not been followed by the Officer Authorised. Except issuing the impugned communication dated 15.05.2020 to AML Officer to seek freezing, no other procedure contemplated in law is followed. In fact, the impugned communication does not even refer to the belief of the Authorised Officer even if the same was recorded separately. It only states that the Officer is investigating the case and seeks for relevant documents, but in the tabular column abruptly states that the accounts have to be 'debit freezed/stop operations'. It certainly is not the requirement that the communication addressed to the Bank itself should contain all the details. But what is necessary is an order in the file recording the belief as provided under Section 17(1) of PMLA before the communication is issued and thereafter the requirement of Section 17(2) of PMLA after the freezing is made is complied. There is no other material placed before the Court to indicate compliance of Section 17 of PMLA, more particularly recording the belief of commission of the act of money laundering and placing it before the Adjudicating Authority or for filing application after securing the freezing of the account to be m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Bose J. in Gordhandas Bhanji: (1) "Public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to effect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself." Orders are not like old wine becoming better as they grow older:" In fact, in the instant case such contention of having exercised power under Section 102 CrPC has not been put forth even in the counter affidavit, either in this appeal or before the High Court and has only been the attempted ingenuity of the learned Additional Solicitor General. Such contention, therefore, cannot be accepted. In fact, in the objection statement filed before the High Court much emphasis has been laid on the power available under PMLA and the same being exercised though without specifically referring to the power available under Section 17 of PMLA. 14. The respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l requirement before and after freezing the account. This shall not be construed as an opinion expressed on the merit of the allegation or any other aspect relating to the matter and the action initiated against the appellant and its Directors which is a matter to be taken note in appropriate proceedings if at all any issue is raised by the aggrieved party. 16. Apart from the above consideration, what has also engaged the attention of this Court is with regard to the plea put forth on behalf of the appellant regarding the need to defreeze the account to enable the appellant to pay the statutory dues. The appellant in that regard has relied on the certificate issued by the Chartered Accountant, (AnnexureP/ 38 at page 231) which indicates the amount payable towards ITDS, PF, ESI, Professional Tax, Gratuity and LIC employees' deductions, in all amounting to ₹ 79,93,124/. Since we have indicated that the freezing has been done without due compliance of law, it is necessary to direct the respondents No.1 to 3 to defreeze the respective accounts and clear the cheques issued by the appellant, drawn in favour of the Competent Authority towards the ITDS, PF, ESI, Professional Tax, Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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