Karnataka High Court
M/S Indians For Amnesty vs Union Of India on 16 December, 2020
Author: P.S.Dinesh Kumar
Bench: P.S. Dinesh Kumar
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 16TH DAY OF DECEMBER, 2020
BEFORE
THE HON'BLE MR. JUSTICE P.S. DINESH KUMAR
WRIT PETITION No. 12295 OF 2020 (GM-RES)
BETWEEN :
M/S INDIANS FOR AMNESTY
INTERNATIONAL TRUST
A PUBLIC CHARITABLE TRUST
HAVING REGISTERED OFFICE AT
NO.235, GROUND FLOOR
13TH CROSS, INDIRA NAGAR II STAGE
BANGALORE
KARNATAKA, INDIA-560 038
REPRESENTED BY ITS TRUSTEE
SMT. VIJAY RUKMINI RAO ... PETITIONER
(BY PROF. RAVI VERMA KUMAR, SENIOR ADVOCATE FOR
SHRI. B.N. JAGADEESHA, ADVOCATE)
AND :
1. UNION OF INDIA
THROUGH ITS MINISTRY OF
FINANCE NORTH BLOCK
CABINET SECRETARIAT
RAISINA HILL
NEW DELHI-110 001
2. DIRECTORATE OF ENFORCEMENT
BENGALURU ZONAL OFFICE
3RD FLOOR, B BLOCK
BMTC, SHANTHINAGAR
TTMC, KH ROAD
SHANTHINAGAR
BANGALORE-560 027
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3. THE MANAGER
HDFC BANK, PLOT NO.20
AMAR REGENCY LAYOUT
HORAMAVU MAIN ROAD
BANGALORE-560 043
4. THE MANAGER
KOTAK MAHINDRA BANK
776, 100 FEET ROAD
HAL 2ND STAGE
INDIRA NAGAR
BANGALORE-560 038
5. THE MANAGER
YES BANK LTD
GROUND FLOOR
PRESTIGE OBELISK
MUNICIPAL NO.3
KASTURBA ROAD
BANGALORE-560 001
6. THE MANAGER
IDBI BANK
NO.6, ANANDA NILAYA
100FT ROAD
KORAMANGALA 5TH BLOCK
OPP E-ZONE,
BANGALORE-560 095
7. THE MANAGER
SOUTH INDIAN BANK
12TH MAIN ROAD
HAL 2ND STAGE
P.O INDIRA NAGAR
BANGALORE-560 008 ... RESPONDENTS
(BY SHRI. M.B. NARAGUND, ASG FOR
SHRI. H. JAYAKARA SHETTY, CGC FOR R1 & R2)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA PRAYING TO CALL FOR THE RECORDS FROM
THE RESPONDENTS CULMINATING IN THEIR ORDERS DATED
25.08.2020 AND 26.08.2020, FREEZING THE ACCOUNTS OF THE
PETITIONER WITH R4 TO R8 AND DECLARE THE ENTIRE ACTION OF
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THE R-2 PURPORTED ORDERS DATED 25.08.2020 AND 26.08.2020
FREEZING THE ACCOUNTS (A) HDFC BANK HORAMAVU BRANCH
BANGALORE ACCOUNT NO.50200019793101, VIDE ANNEXURE-B1 (B)
KOTAK MAHINDRA BANK INDIRANAGAR BRANCH BANGALORE
ACCOUNT NO.209044039554 AND 209044039546 VIDE ANNEUXRE-B2
(C) YES BANK KASTURBA ROAD, BANGALORE ACCOUNT
NO.002288700000056 AND 002288700000068 VIDE ANNEXURE-B3
AND B4 (D) IDBI BANK INDIRANAGARA BANGALORE ACCOUNT
NO.0693102000005289, VIDE ANNEUXRE-B5 AND (E) SOUTH INDIAN
BANK INDIRANAGA BRANCH, BANGALORE ACCOUNT
NO.0399053000012158 VIDE ANNEUXRE-B6 AS ILLEGAL, VOID AND
INOPERATIVE.
THIS WRIT PETITION, HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 09.12.2020, COMING ON FOR PRONOUNCEMENT OF
ORDERS THIS DAY, THE COURT PRONOUNCED THE FOLLOWING:-
ORDER
M/s. Indians for Amnesty International Trust ('Trust' for short) has presented this writ petition with prayer inter alia to defreeze seven accounts maintained by the Trust with respondents No. 3 to 7 - Banks.
2. Heard Shri. Ravi Verma Kumar, learned Senior Advocate for petitioner and Shri. M.B. Naragund, learned Additional Solicitor General for respondents No.1 and 2.
3. Shri. Ravi Verma Kumar submitted that petitioner - Trust is a member of Amnesty International Global Movement and a non-political Organization to 4 promote human rights. Petitioner's Bank accounts have been frozen with effect from September 25, 2020. On enquiry, it was informed by the Banks that Trust's accounts were frozen pursuant to directions issued by the Directorate of Enforcement ('ED' for short). When petitioner demanded for written communication, it was advised to approach the ED.
4. Shri. Ravi Verma Kumar further submitted that petitioner is a charitable Trust and does not receive any donations from any Foreign source. In the year 2018, vide letter dated October 25, 2018, the ED had stopped debit operation of petitioner's Bank accounts. Petitioner challenged the same in this Court in W.P. No.51601/2018. By interim order dated November 22, 2018, this Court has permitted the petitioner to operate the accounts so far as the money received after October 25, 2018. The ED has again issued instruction to petitioner's Bankers to freeze the accounts.
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5. Learned Senior Advocate urged that provisions of the Prevention of Money Laundering Act ('PML' Act for short) have been invoked based on R.C. No.220/2019 registered by the CBI. PML Act is a complete Code. Attachment and confiscation of property is provided in Chapter-III of the Act. Under Section 17 of the Act, the Director or Authorized Officer of the ED can conduct search and seizure operations if the Director have reason to believe that any person has committed any act which constitutes money laundering. Under Section 17(1-A), an order can be passed to freeze the property and a copy of such order shall be served on the person concerned. The authority is required to file an application for continuation of the order of freezing before the Adjudicating Authority within 30 days. Adverting to an endorsement dated September 28, 2020 made by the IDBI Bank, learned Senior Advocate submitted that the account has been frozen on August 26, 2020. The respondent ought to have approached the Adjudicating Authority within 30 days which expired on September 25, 6 2020. Therefore, any further continuance of 'debit freeze' is illegal and prayed that the ED may be directed to defreeze the accounts forthwith.
6. Opposing the writ petition, Shri. Naragund, learned Additional Solicitor General for respondents No. 1 and 2 submitted that the matter is still under investigation and by definition 2(1)(na), 'Investigation' includes all proceedings under the Act. Therefore, Section 17(1-A) and Section 17(4) are not applicable to the facts of this case.
7. Learned ASG submitted that an order under Section 5(1) of the Act has been passed on November 26, 2020 in respect of following accounts:
Schedule-A List of accounts held by M/s. AIIPL Balance S. Bank and Communication Account No. Type Latest in No Branch of bank dated Rs.
1 50300453713174 HDFC FD 1500000 E-mail dated
Indiranagar 10.09.2020
Bengaluru
2 50300453714023 HDFC FD 4000000 E-mail dated
Indiranagar 10.09.2020
Bengaluru
Total Rs.55,00,000/-
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Schedule-B
List of accounts held by M/s. IAIT
Balance
S. Communication
Account No. Bank Type Latest in
No of bank dated
Rs.
1 50300406357542 HDFC FD 1000000 E-mail dated
Horamavu 09.09.2020
Bengaluru
2 50300418927611 HDFC FD 4000000 E-mail dated
Horamavu 09.09.2020
Bengaluru
3 50300418928172 HDFC FD 4000000 E-mail dated
Horamavu 09.09.2020
Bengaluru
4 50300437913041 HDFC FD 500000 E-mail dated
Horamavu 09.09.2020
Bengaluru
5 50300437913703 HDFC FD 500000 E-mail dated
Horamavu 09.09.2020
Bengaluru
6 693102000005289 IDBI CA 120072 E-mail dated
Koramangala 26.08.2020
Bengaluru
7 399053000012158 South India CA 115905 E-mail dated
Bank 26.08.2020
Indiranagar
Bengaluru
8 399100000006089 South India FD 1000000 E-mail dated
Bank 26.08.2020
Indiranagar
Bengaluru
9 399101000008348 South India FD 50830 E-mail dated
Bank 26.08.2020
Indiranagar
Bengaluru
10 399101000012994 South India FD 2000000 E-mail dated
Bank 26.08.2020
Indiranagar
Bengaluru
Total Rs.1,32,86,807/-
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8. Learned ASG further submitted that petitioner has an alternative and efficacious remedy of appeal under Section 25 of the PML Act to challenge.
9. Learned ASG submitted that in view of pendency of writ petitions No.56621/2018, W.P. No.57179-185/2018 and W.P. No.57186/2018 and the progress in investigation, the ED has not passed formal orders of attachment in respect of the other accounts. He placed reliance on the Division Bench Judgment in Rose Valley Real Estate and Constructions Ltd., and another Vs. Union of India and others1. Learned Additional Solicitor General urged that the facts of the said case are similar to the case on hand. He submitted that the Calcutta High Court has held that communication issued to the Bank to prohibit/freeze withdrawal of money is to be read as an indispensable temporary measure for preservation of evidence pending investigation in aid of proceedings for attachment and seizure contemplated in Section 5 or 7 of the Act and not to 1 F.M.A No.4031 OF 2014 with CAN NO.11477 OF 2014 9 supplant them. He further submitted that in the said case, the Calcutta High Court has granted three months' time to initiate appropriate proceedings in respect of the accounts making it clear that if the authorities failed to initiate proceedings within the said time limit, the Banks would be at liberty to permit operation of accounts. He further submitted that in this case, this Court may consider granting 45 days' time.
10. In reply, Shri. Ravi Verma Kumar submitted that petitioner - Trust has a monthly expenditure of Rs.39,42,453/- as mentioned in Annexure-L to the writ petition. Petitioner has not been able to give salary to its employees. Therefore, the request made by the learned ASG be rejected and petitioner - Trust may be permitted to operate the accounts unconditionally.
11. I have carefully considered rival contentions and perused the records.10
12. Petitioner is aggrieved by debit freeze of its accounts. It has prayed for defreezing the following accounts in the main prayer:
"(a) HDFC Bank Horamavu Branch Bangalore Account No.50200019793101, vide Annexure-B1.
(b) Kotak Mahindra Bank Indiranagara Branch Bangalore Account No.209044039554 and 209044039546 vide Annexure-B2.
(c) YES Bank Kasturba Road Bangalore Account No.002288700000056 and 002288700000068 vide Annexure-B3 & B4.
(d) IDBI Bank Indirangara Bangalore Account No.0693102000005289, vide Annexure-B5.
(e) South Indian Bank Indiaranagar Branch, Bangalore Account No.0399053000012158 vide Annexure-B6."
although in the interim prayer, petitioner has sought relief in respect of other accounts also.
13. This Court while considering petitioner's writ petition No.51601/2020 has permitted petitioner to operate the account in respect of money received after October 25, 2018 by interim order dated November 22, 2018. That 11 petition was directed against search and seizure under the provisions of Foreign Exchange Management Act, 1999.
14. In the case of Rose Valley, relied upon by learned ASG, the Division Bench of Calcutta High Court has permitted operations for three months. In this case, learned ASG has submitted that respondent - Authority will require 45 days to complete the investigation. Petitioner has submitted the average monthly expenses as per Annexure - L as Rs.39,42,453/- and it can be rounded off to Rs.40 lakhs. The time sought for by learned ASG is one and a half months.
15. In the facts and circumstances of this case, this Court is of the opinion that by following the Division Bench decision of the Calcutta High Court in Rose Valley, it would be just and appropriate to permit operation of account by the petitioner subject to a maximum withdrawal of Rs.60 lakhs to cover expenses for 45 days and to grant one and 12 half months time to the first and second respondents to complete the investigation.
16. Hence, the following:
ORDER
(a) Petition is allowed in part.
(b) Petitioner shall be permitted to operate the accounts bearing No. 50200019793101 - IAIT - HDFC and 2288700000056- IAIT - KOTAK which have balance of more than Rs.30 lakhs, to withdraw Rs.30 lakhs from each account totaling to Rs.60 lakhs subject to condition that the said money is received on or after October 25, 2018 to be in consonance with the order of this Court in Writ Petition No.51601/2018.
(b) Respondents No. 1 and 2 shall complete the investigation and pass appropriate orders within an outer limit of 45 days from the date of receipt of a copy of this order. If the investigation is not completed within the said 13 period, petitioner shall be at liberty to seek appropriate relief before the appropriate forum.
Writ petition disposed of with above directions. No costs.
Sd/-
JUDGE SPS