N.Jeevan Kumar vs Axis Bank And
2023 Latest Caselaw 1299 AP

      THE HON'BLE SRI JUSTICE RAVI NATH TILHARI

               WRIT PETITION No.36939 of 2022

JUDGMENT:-

      Heard Sri I.Koti Reddy, learned counsel, representing Sri

N.Jeevan    Kumar,     learned        counsel   for   the     petitioners,

Sri Josyula Bhaskara Rao, learned Standing Counsel for 1st

respondent, Directorate of Enforcement (in short, ED), Ministry

of Finance and 2nd respondent, Assistant Directorate of

Enforcement, Hyderabad Zonal Office, Hyderabad, Sri

D.V.S.Lokeshwara Rao, learned Standing counsel for 3rd

respondent, Axis Bank Limited.

2. Sri G.Sudheer Kumar and Sri N.Satyanarayana, learned

counsels accepted notice for the respondent No.4, Union Bank

of India, Level-3, CO Annex Building, Saifabad, Hyderabad -

500 004, Telangana, but the appearance is not made.

3. This writ petition under Article 226 of the Constitution of

India has been filed for the following relief:-

"It is therefore prayed that this Hon'ble Court may be pleased to pass an order orders, directions or writ more particular one in the nature of Writ of Mandamus:

(A) Declaring the action of Respondent No 2 in instructing/directing the Respondent Nos.3 and 4, vide emails dated 18.10.2022, to debit freeze the bank

accounts of Petitioner No.1 bearing A/c No.91102004187524 maintained with Respondent No.3 and A/c No.055231100000858, A/c No.055211100004711, A/c No.055211100002962, A/c No.641301010050403 and A/c No. 641304010000001 maintained with Respondent No.4 as arbitrary, illegal, contrary to principles of natural justice and provisions of the Prevention of Money Laundering Act, 2002 and violative of the Fundamental rights guaranteed Article 19(1)(g) and Article 21 of the Constitution of India; and consequently set aside the instructions/directions in emails dt. 18.10.2022 issued by Respondent No.2.

(B) Declaring the action of Respondent No.2 in instructing/directing the Respondent Nos.3 and 4 vide emails dated 18.10.2022 to debit freeze the bank accounts of Petitioner No.2 bearing A/c No.913010024250012 maintained with Respondent No.3 and A/c No.055230100132315, A/c No.055211100002500 maintained with Respondent No.4 as arbitrary, illegal, contrary to principles of natural justice and provisions of the Prevention of Money Laundering Act, 2002 and violative of the Fundamental rights guaranteed Article 19(1)(g) and Article 21 of the Constitution of India and consequently set aside the instructions/directions in emails dt. 18.10.2022 issued by Respondent No.2.

(C) Declaring the action of Respondent No.2 in instructing/directing the Respondent Nos.3 and 4 vide emails dated 18.10.2022 to debit freeze the bank accounts of Petitioner No.3 bearing A/c

No.919010092209062 maintained with Respondent No.3 and A/c No.055211100003013 maintained with Respondent No.4 as arbitrary, illegal, contrary to principles of natural justice and provisions of the Prevention of Money Laundering Act, 2002 and violative of the Fundamental rights guaranteed Article 19(1)(g) and Article 21 of the Constitution of India and consequently set aside the instructions/directions in emails dt. 18.10.2022 issued by Respondent No.2.

(D) Declaring the action of Respondent No.2 in instructing/directing the Respondent No.3 vide emails dated 18.10.2022 to debit freeze the bank accounts of Petitioner No.4 bearing A/c No.055211100003110 maintained with Respondent No.4 as arbitrary, illegal, contrary to principles of natural justice and provisions of the Prevention of Money Laundering Act, 2002 and violative of the Fundamental rights guaranteed Article 19(1)(g) and Article 21 of the Constitution of India and consequently set aside the instructions/directions in emails dt. 18.10.2022 issued by Respondent No.2.

(E) Pass such other order or orders as this Hon'ble Court may deem fit and proper in the interest of justice."

4. The petitioners are challenging the e-mails dated

18.10.2022 by the respondent No.2, the Assistant Director,

Directorate of Enforcement, Hyderabad Zonal Office, Hyderabad

to the 3rd respondent, the Axis Bank Limited and to the 4th

respondent, the Union Bank of India, requesting them to

furnish the balance held in the accounts maintained in those

banks by the petitioner(s)/fixed deposits, with further request

not to entertain debit transactions from the said accounts until

further directions from the Office of the Enforcement

Directorate, informing that the Directorate of Enforcement was

investigating a case against the subject entity and others under

the Prevention of Money Laundering Act, 2002 (in short, PMLA).

5. M/s. C.Gopal Reddy & Co., the 1st petitioner is a

partnership firm engaged in the business of Government works

contracts, private sector works contracts and road metal stone

crusher units. The petitioner Nos.2 to 4 are the partners of the

petitioner No.1.

6. On 22.02.2020, about 42 F.I.Rs were registered at

Ananthpur and Kurnool Police Stations by Road Transport

Officers under certain provisions of the Indian Penal Code (in

short, the IPC) against the 1st petitioner and many others.

Pursuant thereto, the ED initiated proceedings under the PMLA

and an investigation vide ECIR/HYZ0/33/2020 against many

persons, including the petitioner Nos.1 to 3. On 17.06.2022, the

officials of ED conducted search at the residential premises of

the 2nd petitioner under Section 17 (1) of the PMLA and seized

certain items. Thereafter, the ED filed an Original Application

(OA) i.e., O.A.No.685 of 2022 before the Adjudicating Authority

under Section 17 (4) of the PMLA for retention of the movable

properties and the documents etc., seized during searches dated

17.06.2022. The Adjudicating Authority, Delhi, issued a show-

cause-notice dated 02.08.2022, under Section 8 of the PMLA,

along with record of reasons, calling upon the petitioner Nos.1

to 3 to show cause as to why the properties seized on

17.06.2022 be not retained by the 1st respondent. The

petitioner Nos.1 and 2 submitted their reply dated 17.09.2022

and the matter is pending before the Adjudicating Authority.

7. Learned counsel for the petitioners submitted that the

petitioners are not raising any grievance with respect to the

proceedings in O.A.No.605 of 2022 in this writ petition which is

confined to action vide impugned E-mails/letters.

8. Challenging the Emails of the 2nd respondent, Sri I.Koti

Reddy, learned counsel submitted that any order under Section

17 (1-A), PMLA to freeze the Bank accounts, has not been

passed, which order is a pre-condition to issue directions to the

Bank.

9. Sri I. Koti Reddy further submitted that Section 17 of the

PMLA provides for the power to search and seizure of the

property where the Director or any other officer not below the

rank of Deputy Director authorized by the Director for the said

purposes, on the basis of information in his possession, has

reason to believe that any person has committed the act(s)

relating to money-laundering, as specified in Clauses (i) to (iv) of

sub-section (1), and there is need to seize any record or property

found in the search, such property may be seized, recording the

reasons for such belief in writing and where it is not practicable

to seize such record or property, the officer authorized in

Section 17 (1) may make an order to freeze such property. He

submitted that when the law prescribes a particular mode of

doing a thing, it is to be done in that manner alone and in no

other manner. Sending the E-mails to the Banks for stopping

the debit transaction from the petitioners‟ account, without

complying with Section 17 (1-A) is unsustainable in law.

10. Sri I.Koti Reddy, learned counsel further submitted that

the respondent No.2, who has sent E-mails, even if the same be

taken as „order‟, is by the Assistant Director, below the rank of

the Deputy Director and not competent to pass order, vide E-

mails, having the effect of freezing the debit amount. The power

to pass such order to freeze the account under Section 17 (1A),

is with the Director or an officer not below the rank of Deputy

Director authorized by the Director for such purposes.

11. Learned counsel for the petitioners has placed reliance in

the cases of OPTO Circuit India Limited vs. Axis Bank and

others1, J.K. Tyre and Industries Limited vs. Directorate of

Enforcement2, M/s. Radha Krishna Industries vs. State of

Himachal Pradesh and others3 and Directorate of

Enforcement vs. Abdullah Ali Balsharaf and others4.

12. Sri J.Bhaskara Rao, learned Central Government

Counsel, submitted that based on the complaint received from

the Deputy Transport Commissioner, Ananthpur District; an

FIR No. 28/2020 dated 02.02.2020 was registered under

Sections 420, 467, 468, 471 & 472 of IPC, 1860 by ATP-1 Town

PS, Anantapur District, Andhra Pradesh Police, against M/s.

Diwakar Road Lines represented by Smt. J. C. Uma Reddy, for

cheating government authorities by creating forged documents

i.e. NOC pertaining to the registered owners of certain goods

vehicles and obtaining NOCs by uploading fake Police Clearance

Certificate using fake signatures and fake seals belonging to

Tadipatri Town Police Station and used it as genuine for

wrongful gain which is utilized to transfer their two goods

vehicles having registration Nos. AP-02-TC-9666 and TS-09-UB-

7034. Since, prima-facie, there existed a scheduled offence

under Sections 420, 467, 471 & 472 of IPC, 1860, as per the

2021 6 SCC 707

2021 SCC Online Del 4836

2021 6 SCC 771

2019 SCC Online Del 7942

schedule-I of the PMLA-2002, investigation was initiated under

PMLA, in file No.ECIR/HYZO/33/2020, in which during

investigation, it was revealed that several other FIRs were

registered, including against the petitioners herein, for

fraudulently registering various vehicles on the basis of fake,

forged and fabricated documents. Those FIRs were also taken

on record in the ongoing investigation under PMLA-2002.

13. Sri J.Bhaskar Rao, further submitted that the Hon'ble

Supreme Court of India vide judgment dated 29.03.2017 in WP

(Civil) No.13029/1985, ordered that the vehicles which are not

compliant to BS-IV emission norms shall not be sold in India by

any manufacturer or dealer from 1st April 2017 onwards and the

registering authorities were prohibited from registering such

vehicles from 1st April 2017. The manufacturing companies,

including M/s. Ashok Leyland Ltd, were having stock of BS-III

vehicles as on 01.04.2017, which was prohibited for sale and

registration in India, but M/s. Ashok Leyland Ltd. sold such BS-

III vehicles as scrap, inter alia, to M/s. C.Gopal Reddy &

Company, the petitioner 1 herein, after 01.04.2017, who

purchased 104 such BS-III vehicles as scrap and got these

vehicles registered as BS-IV vehicles by submitting fabricated,

false and forged documents before the RTO offices at Nagaland,

Andhra Pradesh and other states, for which various FIRs/cases

were registered at various Police Stations in Andhra Pradesh,

inter alia, against the Petitioners 1 to 4. In respect of two of

those FIRs, charge sheet has been filed by the Tadipatri Town

P.S., Ananthapuramu, i.e. in Crime/FIR No.85/2020 and

Crime/FIR No.544/2020 in which the petitioner Nos.2 to 4 are

the accused in the Charge sheet in Crime No.85/2020 and

petitioner No.2 is an accused in the Charge sheet in Crime

No.544/2020 as well. He submitted that the investigation

under PMLA revealed that by indulging in the scheduled

offence, the petitioner No.1 was in possession of valuable

properties in the form of vehicles, projected as BS-IV, derived

from the criminal activity of scheduled offence and the Proceeds

of Crime (POC). The BS-III vehicles were purchased as scrap

but registered as BS-IV, accordingly, the value attributable to

those vehicles is not the cost of the BS-III vehicle but equivalent

value of BS-IV vehicles. The scrap price of such 104 vehicles

amounted to Rs.14,51,90,016/- and the price of equivalent

model of BS-IV vehicles was Rs.25,69,01,620/-, which

represents part of the proceeds of crime. Further, the petitioners

are into transport business and they plied such vehicles as

genuine BS-IV vehicles in complete disregard of the orders of

the Hon'ble Supreme Court. The Petitioner No.1 utilized such

vehicles in his road construction business and also sold some

vehicles, as genuine BS-IV. The financial benefits thus

generated is the proceeds of crime in the hands of the

petitioners.

14. Sri J. Bhaskar Rao, further submitted that during the

course of investigation searches were conducted on 17.06.2022

at various premises of the petitioners in which various

properties/records were found and seized. An Original

Application dated 15.07.2022 being O.A.No.687 of 2022 under

Section 17 (4) of PMLA was filed before the adjudicating

authority, New Delhi, for retention of the seized records and

properties which is pending and in progress. He submitted

that the instructions were issued to the Banks vide e-mails not

to entertain debit transactions from the accounts of the

petitioners, as a measure to safeguard the balances in the

accounts, with a view to issue provisional attachment order

under Section 5 (1) of the PMLA, 2002, in respect of those

amounts. He submitted that the petitioners acquired proceeds

of crime, out of scheduled offences and the E.D. in discharge of

its statutory duties is bound to investigate and secure the

proceeds of crime or the value thereof. The action taken by the

E.D. is bonafide and in good faith.

15. Sri J. Bhaskar Rao, however admitted that no order was

passed under Section 17 (1-A) of the PMLA. He referred to

Para 36 of the counter affidavit to submit further that since no

order under Section 17 (1-A) was passed, the question of

following the provisions of Section 17 (2) & (4) to forward a copy

of the reasons recorded or/and filing of the application before

the adjudicating authority did not arise at all.

16. Sri D.V.S.Lokeshwar Rao, learned counsel for the Axis

Bank Respondent No.3, submitted that in compliance of the e-

mails communication of Respondent No.2, the Bank issued

information to the petitioners & freezed the debit accounts.

17. I have considered the submissions advanced by the

learned counsels for the parties and perused the material on

record.

18. The pleading in the writ petition as also the submission of

the learned counsel for the petitioners is that any order to freeze

the bank accounts under Section 17 (1-A) of PMLA has not been

passed. The stand taken in the counter affidavit of Respondent

Nos.1 and 2 as also the submission of the learned Counsel for

E.D, is that any order to freeze the Bank accounts under

Section 17 (1-A), has not been passed.

19. It is undisputed that there is no order passed under Section

17 (1-A) of PMLA to freeze the bank accounts of the petitioners.

20. The point for consideration, therefore, is, "whether, in the

absence of any order to freeze the property (Bank Accounts),

under Section 17 (1-A) of the PMLA, the action of the

respondents in directing the Bank Respondent Nos.3 and 4, vide

the impugned e-mails, not to entertain the debit transactions

from the Bank accounts of the petitioners mentioned in the e-

mails, is legally sustainable?".

21. Section 17 of the PMLA, 2002 reads as under:-

"17. Search and seizure:--

(1) Where the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section, on the basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person--

(i) has committed any act which constitutes money- laundering, or

(ii) is in possession of any proceeds of crime involved in money-laundering, or

(iii) is in possession of any records relating to money- laundering, [or]

(iv) is in possession of any property related to crime then, subject to the rules made in this behalf, he may authorise any officer subordinate to him to--

(a) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such records or proceeds of crime are kept;

(b) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (a) where the keys thereof are not available;

(c) seize any record or property found as a result of such search;

(d) place marks of identification on such record or property, if required or make or cause to be made extracts or copies therefrom;

(e) make a note or an inventory of such record or property;

(f) examine on oath any person, who is found to be in possession or control of any record or property, in respect of all matters relevant for the purposes of any investigation under this Act:

(1A) Where it is not practicable to seize record or property, the officer authorised under sub-section (1), may make an order to freeze such property whereupon the property shall not be transferred or otherwise dealt

with, except with the prior permission of the officer making such order, and a copy of such order shall be served on the person concerned:

Provided that if, at any time before its confiscation under sub-section (5) or sub-section (7) of section 8 or section 58B or sub-section (2A) of Section 60, it becomes practical to seize a frozen property, the officer authroised under sub-section (1) may seize such property.

(2) The authority, who has been authorised under sub- section (1) shall, immediately after search and seizure or upon issuance of a freezing order forward a copy of the reasons so recorded along with material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such 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 sub-section (1) shall be required for search under this sub-section. (4) The authority seizing any record or property under this sub-section (1) or freezing any record or property under sub- section (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 sub-section (1) or for continuation of the order of freezing served under sub-section (1A), before the Adjudicating Authority."

22. In OPTO Circuit India Limited (supra), the facts were

that the Enforcement Directorate in order to track the money

trial relating to the predicate offence and prevent layering of the

same had initiated the proceedings under the PMLA. In the said

process, the Deputy Director, Directorate of Enforcement

through the communication dated 15.05.2020 addressed to the

Anti Money Laundering Officer (for short, „AML‟) of the Banks

instructed them that the accounts maintained by the appellant

company therein be „debit freezed/stop operations‟ until further

orders, with immediate effect. Challenging the communication

dated 15.05.2020 writ petition was filed. The High Court upheld

the action. The Hon'ble Apex Court held that in so far as the

reasoning adopted and the objection raised by the High Court

with regard to the power and competence to initiate the

proceedings under the PMLA in view of the action taken for

predicate offence, the High Court was very much justified. The

Hon‟ble Apex Court, further observed that the High Court,

however, ought to have been examined whether the „due

process‟ as contemplated under the PMLA was complied so as to

make it valid and sustainable in law, though the power under

the Act was available. The Hon'ble Apex Court considered the

aspect of freezing/defreezing the account, in view of the

statutory requirements, even if the freezing of the account was

found justified. In the said case, the Directorate of Enforcement

in their counter affidavit took stand while explaining their need

to freeze the account as stated that the "stop operation" was

requested to stop the further layering/diversion of proceeds of

crime and to safeguard the proceeds of crime. But in the

counter affidavit, the stand taken was that the same was not

done under Section 17 (1) of the PMLA. The Hon'ble Apex Court

held that such a stand was contradictory. It was observed and

held that the power to "stop operation", in need to freeze the

account, to stop the further layering/diversion of proceeds of

crime as also to safeguard the proceeds of crime, is a power

available under the PMLA, but the exercise of power by the

competent authority should also be shown to be in the manner

provided in law i.e. under the PMLA.

23. In OPTO Circuit India Limited (supra), the Hon'ble Apex

Court held that the pre-requisite, is that the Director or such

authorised Officer in order to exercise the power under Section

17 of the PMLA should on the basis of information in his

possession, have reason to believe that such person has

committed acts related to money-laundering and there is need

to cease any record or property found in the search and such

belief of the Officer should be recorded in writing. Sub-section

(1A) of Section 17 of the PMLA, provides that the Officer

authorised under sub-section (1) may make an order to freeze

such record or property where it is not practicable to seize such

record or property, but it was clarified and emphasized that the

freezing of the account will also require the same procedure

since a bank account having proceeds of crime shall fall, both

under the ambit of "property and records".

24. It is apt to refer Para Nos.8 and 9 of OPTO Circuit India

Limited (supra), as under:-

"8. 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 information in his possession, have reason to believe that such person has committed acts relating to money-laundering and there is need to seize any record or property found in the search. Such belief of the officer should be recorded in writing. Sub-section (1-A) to Section 17 of PMLA provides that the Officer Authorised under sub-section (1) may make an order to freeze such record or property where it is not practicable to seize such record or property. Sub-section (2) provides that after search and seizure or upon issuance of a freezing order the Authorised Officer shall forward a copy of the reasons recorded along with material in his possession to the Adjudicating Authority in a sealed envelope. Sub-section (4) provides that the Authority seizing or freezing any record or property under sub-- section (1) or (1-A) shall within a period of thirty days from such seizure or freezing, as the case may be, file an application before the Adjudicating Authority requesting for retention of such record or properties seized.

9. For the purpose of clarity, it is emphasised that the freezing of the account will also require the same procedure since a bank account having alleged "proceeds of crime" would fall both under the ambit "property" and "records". In that regard it would be appropriate to take note of Section 2 (1) (v) and 2 (1) (w) of the PMLA which

defines "property" and "records". The same read as follows:

"2. (1) (v) "property" means any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to, or interest in, such property or assets, wherever located;

2. (1) (w) "records" include the records maintained in the form of books or stored in a computer or such other form as may be prescribed;"

25. In OPTO Circuit India Limited (supra), the Hon'ble Apex

Court observed that in that case, except issuing the impugned

communication dated 15.05.2020 to Anti-Money Laundering

Officer to seek freezing, no other procedure contemplated in law

was followed. Such impugned communication also did not even

refer to the belief of the authorised Officer. It was held that

though it was not the requirement that the communication

addressed to the Bank should contain all the details but what

was necessary was an order in the file recording the belief as

provided under Section 17 (1) of the PMLA before the

communication is issued and thereafter the requirements of

Section 17 (2) of the PMLA, after the freezing was made, was

required to be complied with.

26. In the present case, the basic facts to attract the

applicability of the law laid down in OPTO Circuit India

Limited (supra), are almost the same. The respondent No.2

herein issued the E-mail/communication to the respondent

Nos.3 and 4 Banks, requesting not to entertain debit

transactions hence forthwith from the accounts of the

petitioners. The communication, though it is not required to

mention all the details, containing the reasons for the belief of

issuance of such direction to the Bank in the communication

e-mails, does not mention about any order to freeze the account

as per the procedure prescribed, on the record/file of the ED.

The admitted case of the respondents taken in their counter

affidavit is that any order under Section 17 (1-A) of PMLA has

not been passed.

27. This Court in Shobha Woollens Pvt. Ltd. and others vs.

Union of India and others, also held that Sine qua none for

exercise of the powers under either of the Sections 5 and 17 of

the PMLA, is the formation of an opinion, by the competent

officer, that the conditions set out in these sections are found to

exist and in the absence of such a finding, the exercise of power

under these sections would be without basis and cannot

survive.

28. Learned counsel for the petitioners also placed reliance in

the case of J.K. Tyre and Industries Ltd (supra), to contend

that all the accounts should not have been frozen which effects,

day to day working of the petitioners as also the discharge of its

statutory obligations of payment.

29. Sri J.Bhaskara Rao, learned counsel for the respondents

placed reliance in the case of Rose Valley Real Estate And

Constructions Limited and another vs. Union Of India &

Others5, of the Calcutta High Court, to submit that the orders

of freezing the Bank accounts of the persons under investigation

are permissible and should be treated as necessary to the

investigation under progress. So far as the judgment of the

Calcutta High Court is concerned on the point relied upon, the

Hon‟ble Apex Court has held in OPTO Circuit India Limited

(supra) that such power is available but it will require the same

procedure, since a bank account having alleged „proceeds of

crime‟ would fall under ambit of „property‟ and „records‟. Here,

no order has been passed following the due procedure. Simply,

direction could not be issued to the Bank authorities to freeze

the Bank Accounts of the petitioners in the absence of an order

as contemplated by Section 17 (1-A) of the PMLA.

30. In view of the aforesaid, this Court is of the considered

view that though there is power to direct freezing of the account

or to issue the communications as has been issued in the

present case to the Banks, under Section 5 or/and Section 17,

F.M.A.No.4031 of 2014, decided on 30.03.2015

but such power/direction which has the effect of freezing the

property/bank account under Section 17 (1-A) is to be exercised

as per the law by following the procedure prescribed.

31. It is settled in law by various pronouncements, and

reiterated in OPTO Circuit India Limited (supra), by the

Hon'ble Apex Court, that if a statute provides for a thing to be

done in a particular manner, then it has to be done in that

manner alone and in no other manner. It is apt to reproduce

Para No.14 of OPTO Circuit India Limited (supra) as under:-

"14. This Court has time and again emphasised that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner alone and in no other manner. Among others, in a matter relating to the presentation of an Election Petition, as per the procedure prescribed under the Patna High Court Rules, this Court had an occasion to consider the Rules to find out as to what would be a valid presentation of an Election Petition in the case of Chandra Kishor Jha vs. Mahavir Prasad {(1999) 8 SCC 266} and in the course of consideration observed as hereunder:

"17. ... It is a well-settled salutary principle that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner".

Therefore, if the salutary principle is kept in perspective, in the instant case, though the Authorised Officer is vested with sufficient power; such power is circumscribed by a procedure laid down under the statute. As such the power is to be exercised in that manner alone, failing which it

would fall foul of the requirement of complying with due process under law......"

32. In view of the aforesaid consideration, the impugned

E-mails cannot be sustained in law and are liable to be

quashed. The point for determination is answered accordingly.

33. As this Court found that the impugned E-mails deserve to

be quashed on the ground of there being no order passed under

Section 17 (1-A), this Court is of the view that there is no need

to enter into the submission of the learned counsel for the

petitioners that the Assistant Director, the respondent No.2, is

not competent to pass the order under Section 17 (1-A) being

below the rank of the Deputy Director, though prima facie, the

Court is not in agreement, for, the use of the expression the

„officer authorized‟ under sub-section (1) in Section 17 (1-A) in

the phrase "the officer authorized under sub-section (1) may

make an order to freeze such property". The „officer authorized'

under sub-section (1) are: 1) the Director, by the Act itself;

2) any other officer not below the rank of Deputy Director

authorized by the Director for the purposes of Section 17. Now

sub-section (1) in Clause (iv) again uses the expression "he may

authorize any officer subordinate to him to perform the acts" i.e.

as under sub-clauses (a) to (f). Thus, the Director or if any other

officer not below the rank of the Deputy Director has been

authorized by the Director under sub-section (1), such officer

may further authorize any officer subordinate to him, for the

purposes of Clauses (a) to (f). So if the officer not below the

rank of the Deputy Director authorized under sub-section (1),

by the Director, authorizes any officer subordinate to him for

the purposes of sub-clauses (a) to (f) of Clause (iv), such

subordinate officer would also be „an officer authorized under

sub-section (1)‟ for making an order under sub-section (1A) of

Section 17 (1-A). So in case of further authorization as

permitted by Section 17 (1) (iv), in favour of any subordinate

officer to carry out the acts under sub-clauses (a) to (f) such

authorized officer, if in the course of search and seizure, finds

that it is not practicable to seize record or property, he may

make an order to freeze such property with due compliance of

Section 17(1-A). However, as consideration of this submission is

not necessary for the decision of the writ petition, the Court is

not expressing any final view.

34. In OPTO Circuit India Limited (supra), the Hon'ble Apex

Court held that the scheme of the PMLA is well intended, while

it seeks to achieve the object of prevention of money-laundering

and bring to book the offenders, it also safeguards the rights of

the persons who would be proceeded against under the Act by

ensuring fairness in procedure. Hence a procedure, including

timeline is provided, so as to ensure that power is exercised for

the purpose to which the Officer is entrusted with such power.

35. Considering the aforesaid object of the PMLA which is to

achieve preventing money laundering and bring the offenders to

book as also at the same time to safeguard the rights of the

persons who would be proceeded against under the PMLA by

ensuring fairness in procedure, in the light of the facts of the

present case, as brought on record from both the sides, but

without making any observation on the merit of the correctness

thereof or otherwise, that the amount in accounts of the

petitioners with the respondent Banks is alleged to be „proceeds

of crime‟, while setting aside the impugned e-mails it would be

in the interest of justice to prevent the alleged money

laundering, to keep it open to the authorized officer of E.D

under Section 17 of the PMLA to take necessary action, by

proceeding in accordance with law and further, for a period of

15 days from today to restrain the petitioners with direction to

the respondent Nos.3 to 4 Bank, that there shall be no debit

transaction from the aforesaid accounts. The direction for 15

days as aforesaid, shall however abide by any order of the

Authorized officer of the respondent No.1, if passed under

Section 17.

36. In the result, the writ petition is partly allowed in the

following terms:-

i) The impugned Emails annexed as Exs.P1 and P3 are

hereby quashed.

ii) It shall be open to the authorized officer of E.D under

Section 17 of the PMLA to take necessary action, by proceeding

in accordance with law.

iii) For a period of 15 days from today, there shall be no debit

transaction from the accounts of the petitioners in question

with the respondent Nos.3 to 4 Bank.

iv) The above direction of no debit transaction from the

petitioners‟ accounts in question for a period of 15 days, shall

abide by the orders passed by the authorized officer under

Section 17, if any.

37. It is clarified that the impugned E-mails have been

quashed for the reason only that there is no order passed under

Section 17 (1-A) of PMLA. This shall not be construed as an

opinion of this Court on the merits of the allegations or on any

other aspect relating to the matter in issue.

38. No order as to costs.

As a sequel thereto, miscellaneous petitions, if any pending,

shall also stand closed.

__________________________ RAVI NATH TILHARI,J Date: 07.03.2023

Note:-

L.R Copy to be marked Issue C.C today B/o:- SCS

THE HON'BLE SRI JUSTICE RAVI NATH TILHARI

WRIT PETITION No.36939 of 2022

Date: 07.03.2023

Scs