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TMI Blog2025 (1) TMI 1097X X X X Extracts X X X X X X X X Extracts X X X X ..... rported inquiry being conducted under the Foreign Exchange Management Act, 1999 (hereinafter referred to as "the 1999 Act"), the read down and/or read into Section 37 of the 1999 Act in tandem, sync and harmony with Section 132 of the Income Tax Act, 1961 (hereinafter referred to as "the 1961 Act") and to also hold that the powers of search, seizure etc. vested in the 1999 Act are circumscribed, confined and limited to the contravention referred to Section 13 of the 1999 Act. Certain other connected reliefs have also been sought. 1.3 In Civil Writ Petition No. 32476 of 2024, the quashing of ECIR/JLZO/26/24, especially the search and seizure proceedings conducted by the ED on 26.11.2024 and the quashing of the illegal act of freezing of the bank account of the petitioner company have been sought. 1.4 In order to comprehend the issues involved in the present case, the relevant facts, in brief, are required to be noticed. The ED initiated inquiries/investigation under the 1999 Act in respect of the group companies, namely Ms/ Vuenow Infotech Pvt. Ltd. (M/s VIPL), M/s Vuenow Marketing Services Ltd. (M/s VMSL), M/s Zebyte Infotech Pvt. Ltd. (M/s ZIPL) and M/s Zebyte Rental Planet Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have, therefore, cheated and breached the trust of various investors and have also suspected criminal offence under the provisions of Bhartiya Nagrik Suraksha Sanhita, 2023 (hereinafter referred to as "the BNSS") which are the scheduled offences under the Prevention of Money Laundering Act, 2002 (hereinafter referred to as "the 2002 Act"). 1.8 On sharing of the information, FIR No. 463 dated 21.11.2024, was registered at Police Station Sector 58, Gautam Budh Nagar (Noida), under Section 318 (4), 61 (2), 316 (2) of the BNSS. The investigation and searches further revealed that the companies are offering customers the investment opportunities to buy data center assets or cloud particles (servers) through sale and lease back model whereby once a customer buys a data center asset or cloud particle, it will immediately lease back on the long term basis by M/s VMSL marketing affiliates such as M/s ZIPL, M/s ZRPPL for a minimum guaranteed rent. It was revealed that the total storage capacity of currently active servers at Mota Data Center is 553 TB out of which only 1.9 TB space is presently consumed and the storage capacity of 551.1 TB is available or empty. The consumed 1.9 TB data per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the search proceedings, the various incriminating documents were recovered and seized which revealed that 67 bank accounts relating to the said group of companies and the other related entities were used for rotating the money and hence, the accounts were ordered to be freezed under Section 17(1A) of the 2002 Act. For further investigation, the summons were sent to the major shareholders/promoters on 30.10.2024 and 19.11.2024 for recording their statements were issued but none of them joined investigation. 2. Arguments Put Forth by the learned counsel representing the parties 2.1 Heard the learned counsel representing the parties, at length and with their able assistance, perused the paper-book. 2.2 The learned counsels representing the petitioners submit that while carrying out search and seizure, the ED has not followed the procedure and no prior notice before conducting search and seizure was issued to the petitioner company. It is further submitted that no intimation notice or opportunity was given to the petitioner to explain their position and seizure memos failed to disclose the reasons behind the search and seizure. The learned counsel representing the petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As far as Civil Writ Petition No. 30014 of 2024 is concerned, the petitioner, in substance, wants this Court to call for all the records with respect to the purported inquiry being carried out under the 1999 Act. The principles of reading down or reading into a statutory provision are interpretive tools that must be applied based on specific facts and circumstances of the present case. They cannot be invoked as abstract propositions of law. It simply means that these interpretation tools are to be used only to ensure that law is interpreted in a manner that aligns with its intent and purpose. In substance, the petitioner claims that the prior notice before conducting search and seizure has not been issued to the petitioner. Section 37 of the 1999 Act does not envisage any prior notice before conducting the search and seizure. The ED under Section 37 (1) and (2) of the 1999 Act is entitled to take up for investigation the contravention referred to in Section 13. Whereas Section 37 (3) of the 1999 Act authorizes the officers to exercise the like powers which are conferred on the income tax authorities under the Income Tax Act, 1961. Section 13 of the 1999 Act provides for the imposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thers (Civil Writ Petition No. 22688 of 2024) has held that in para 287 of the Vijay Madanlal Choudhary & others v. Union of India & others 2022 SCC Online SC 929, the Supreme Court has held that the authorized officer can order provisional attachment only upon recording satisfaction regarding two requirements. The officer has to form his opinion and provide written reasons for such belief, which must be based on material in his possession rather than on mere assumptions. The judgment passed in Radha Krishan Industries's case (supra) was also considered and explained. 3.7 As already noticed, Section 5 (5) of the 2002 Act mandates the ED to file a complaint stating the facts of such attachment before the Adjudicating Authority within a period of 30 days. The Adjudicating Authority is entitled to adjudicate the matter on receipt of a complaint. Before the Adjudicating Authority all the stakeholders are entitled to participate and explain their position. The Adjudicating Authority is required to decide the matter in a time bound manner. Against the final order of confirmation of attachment, the appeal is maintainable before the Appellate Tribunal. Once the 2002 Act itself provides fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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