Orissa High Court
M/S Shree Monolithics Pvt. Ltd vs The Directorate Of Enforcement And ... on 5 May, 2025
THE HIGH COURT OF ORISSA AT CUTTACK
CRLMC No.1008 of 2025
{In the matter of an application under Section 528 of Bharatiya Nyaya Surakhya
Sanhita Act (corresponding provision- Section 482 of the Code of Criminal
Procedure, 1973)}
M/s Shree Monolithics Pvt. Ltd ....... Petitioner
-Versus-
The Directorate of Enforcement and Others ....... Opp. Parties
For the Petitioner : Mr. Kishore Kumar Mishra, Advocate
For the Opp. Parties : Mr. Gopal Agarwal, Senior Advocate
(For Enforcement Directorate)
Mr. Ramachandra Panigrahi, Advocate
for O.P.4
CORAM:
THE HONOURABLE SHRI JUSTICE SIBO SANKAR MISHRA
Date of Hearing: 17.04.2025 :: Date of Judgment: 05.05.2025
S.S. Mishra, J. The petitioner being a registered company has
invoked the inherent jurisdiction of this Court under Section 528 of
BNSS, 2023 (corresponding provision- Section 482 of the Cr.P.C.)
seeking quashing of Annexure-3 issued by the Enforcement Directorate,
Bhubaneswar Zonal Office on 08.01.2025 under Section 17(1-A) of
Prevention of Money Laundering Act, 2002 (herein referred as PMLA
Act) thereby seizing the BMW Car of the Company and also freezed the
account of the petitioner-company.
2. The case of the petitioner is that on 07.01.2025, one of the
Directors of the petitioner's company, namely, S. Subhashree
Priyadarsini had visited to her father's house located at Sector 6, CDA,
Cuttack in the company's BMW Car bearing Registration No.OD-05-
BR-9999. When the car was parked outside the house of the father of
Subhashree Priyadarsini, the opposite party No.3, the Assistant Director
of Enforcement, Bhubaneswar Zonal Office conducted search and
seizure under Section 17 of the PMLA Act in the house of the father of
Subhashree Priyadarsini. The father of the Subhashree Priyadarsini,
namely, Chandra Sekhar Samal is one of the Directors of M/s. Shree
Constructions. During the said search and seizure, the opposite party
No.3 not only seized the car of the petitioner's company but also freezed
the account of the petitioner's company being operated and maintained
with ICICI Bank, Cuttack.
Page 2 of 11
3. Heard Mr. Kishore Kumar Mishra, learned counsel for the
petitioner, Mr. Gopal Agarwal, learned Senior Counsel for the
Enforcement Directorate and Mr. Ramachandra Panigrahy, learned
counsel for the opposite party No.4.
4. Mr. Mishra, learned counsel for the petitioner submits that the
petitioner's company has no clue as to why PMLA Act is invoked
against it. Neither the company nor any of the Directors are involved in
any criminal activity and are prosecuted for any offence(s) which falls
under the schedule of offence under the PMLA Act. Therefore, he
contended that the seizure of the car and freezing of the account vide
Annexure-3 series is a malafide, arbitrary and vexatious action on the
part of the opposite party No.3. Hence, the petitioner's company seeks
quashment of the same.
5. Vide order dated 09.04.2025, notice was issued to the opposite
parties. Mr. Gopal Agarwal, learned Senior Counsel entered appearance
along with his briefing counsel on behalf of the Enforcement Directorate
and has filed the counter affidavit.
Page 3 of 11
6. Perusal of the counter affidavit reveals that one Ratikant Rout is
involved in various criminal activities i.e. extortion, illegal mining
activities, selling and transportation of the dangerous explosive
substances etc., for which he has been prosecuted. Since Ratikanta Rout
is prosecuted for schedule offence, it is alleged that he has generated and
acquired proceeds of crime, PMLA Act is invoked against him.
7. During investigation of the PMLA case, it appears that the
Enforcement Directorate found out some nexus with Shri Chandra
Sekhar Samal, Director of M/s. Shree Constructions. Therefore, a search
and seizure was conducted in the house of Shri Chandra Sekhar Samal. It
also reveals that Subhashree Priyadarsini, one of the Directors of the
petitioner's company happens to be the daughter of Chandra Sekhar
Samal. Therefore, when raid had taken place on 07.01.2025 in the house
of Chandra Sekhar Samal, Subhashree Priyadarsini, his daughter
happens to be present in his house. The BMW Car driven by Subhashree
Priyadarsini was parked in front of her father, Chandra Sekhar Samal's
house. The Enforcement Directorate simply doubting the ownership and
possession of the expensive car have seized the same. After seizure and
Page 4 of 11
freezing of the account, the Enforcement Directorate has now trying to
justify their action by filing the reply to the present petition.
8. However, from the reading of the contention raised by the
Enforcement Directorate in the counter affidavit, I am not able to re-
conciled as to how the petitioner's company is anyway could be linked
with either Mr. Ratikant Rout or Mr. Chandra Sekhar Samal. It is
apparent on record that the car was purchased by the company by
availing 100% loan from BMW Finance Group on the finance scheme.
The petitioner has also availed cash credit loan amount of Rs.7.5 Crores
from the Canara Bank, SME, Bhubaneswar Mancheswar Branch on
31.12.2024
. Part of the said loan amount was also transferred to the
seized account of the petitioner's company for the purpose of facilitating
various business operations. The Enforcement Directorate failed to
answer regarding the link or nexus between the alleged proceeds of
crime and the amount available in the bank account of the petitioner's
company. It has also failed to explain the link or nexus between the
proceeds of crime and acquisition of luxury car of the petitioner's
company. The reply does not disclose anything to link the petitioner's
company with either Ratikant Rout or Chandra Sekhar Samal. Merely
because one of the Directors of the petitioner's company happens to be a
daughter of one of the alleged accused in the PMLA Act, the company
which is a juristic person cannot be roped in to the alleged crime under
the PMLA Act. Therefore, invocation of Section 17 of the PMLA Act
against the petitioner's company is misconceived, arbitrary and an act of
colourable exercise of power.
9. Mr. Mishra, learned counsel for the petitioner has further relied
upon the recent judgment of this Court passed in Lakshman Srinivasan
vrs. Republic of India (CBI)1 and submitted that this Court has
formulated extensive guideline for the purpose of the release of the
seized articles and bank accounts etc. He has pointed out that the BMW
car which has been seized and the account which has been frozen by the
Enforcement Authority vide Annexure-3 series should be set aside and
the seized articles should be released in accordance with the guidelines
formulated by this Court in Lakshman Srinivasan (supra).
2025 LiveLaw (Ori) 65
10. I have perused the entire document placed on record, the counter
affidavit filed by the opposite parties and the judgment cited by both the
counsels appearing for the respective parties. From the admitted factual
scenario of the present case, it is apparent that the petitioner's company
has no nexus or link with either Mr. Ratikanta Rout or Mr. Chandra
Sekhar Samal, those who are facing proceeding under the PMLA Act.
The petitioner's company is also not facing any criminal proceeding
under the schedule offence. Therefore, the seizure of the BMW car and
freezing of the account of the petitioner's company maintained in ICICI
Bank, Cuttack is without authority of law. The Hon'ble Supreme Court
in the case of OPTO Circuit India Ltd. vrs. Axis Bank and others in
Criminal Appeal No.102 of 2021 has held as under:-
"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 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 (1A) 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 (IA) 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.
10. 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(v) and (w) of PMLA which
defines "property" and "records". The same read as follows:
"Sec. 2(v) "property" means any property or assets of every
description, whether corporeal or incorporcal, movable or
immovable, tangible or intangible and includes deeds and
instruments evidencing title to, or interest in, such property or
assets, wherever located."
"Sec. 2(w)-"records" include the records maintained in the form
of books or stored in a computer or such other form as may be
prescribed."
11. The scheme of the PMLA is well intended. While it seeks to
achieve the object of preventing 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 vested with such power and the
Adjudicating Authority is also kept in the loop. In the instant case,
the procedure contemplated under Section 17 of PMLA to which
reference is made 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 made. In that view, the freezing or the
continuation thereof is without due compliance of the legal
requirement and, therefore, not sustainable."
11. The case record also reveals that the Seizing Authority has not
applied his mind while seizing the BMW car which was parked in front
of the house of the Chandra Sekhar Samal who happens to be the father
of Subhashree Priyadarsini, one of the directors of petitioner's company.
The Seizing Authority under Section 17 of the PMLA Act was required
to follow the due process. Immediate before the search and after the
seizure, it was obligatory on the part of the Seizing Authority to forward
a copy of the reasons so recorded along with the material in his
possession to the Adjudicating Authority in a sealed envelope. The
PMLA Act prescribes the due procedure to be followed at the time of
seizure of any articles. In the present case, the Seizing Authority has
absolutely not applied his mind rather mechanically went ahead and
seized the BMW car which appears to have been purchased by availing
bank loan by the petitioner's company. Enough documents have been
placed on record to establish that the car has been purchased by the
petitioner's company by availing bank loan. On the contrary, no
materials have been brought on record by the Enforcement Directorate to
show that the acquisition of car is through the proceeds of crime.
Similarly, no nexus or link could be established by the Enforcement
Directorate with the petitioner's company. Hence, freezing of the bank
account of the petitioner's company is also appears to be illegal.
Therefore, at this stage, this Court is of the view that the seizure of the
BMW car and freezing of the bank account of the petitioner's company
is without authority of law. However, during the investigation process, if
materials come to the fore, it will not preclude the Enforcement
Authority to resort to the remedy under law as against the petitioner's
company at that stage.
12. Suffice it to say that as of today, since there is no material brought
on record by the Enforcement Directorate against the petitioner's
company showing its complacity, hence, the petitioner's company is
entitled to the relief claim in this petition. Accordingly, the present
petition is allowed and the Enforcement Directorate is directed to release
the seized BMW car and defreeze the account of the petitioner's
company forthwith.
13. In view of the aforementioned terms, the CRLMC is allowed and
disposed of.
(S.S. Mishra)
Judge
The High Court of Orissa, Cuttack
Dated the 5th of May, 2025/ Swarna
Designation: Senior Stenographer
Location: High Court of Orissa
