Abide to the procedural laws! : Supreme Court
The procedural law has been established to provide the methods in which a procedure must be followed and every person is expected to comply with those procedures. It is a well settled salutary principle that if a statutory provision provides for a thing to be done in a particular manner, then it has to be done in that manner and no other manner. This assertion was made by the honorable Supreme Court presided by J. S.A. Bobde, J. A.S. Bopanna and J. V. Ramasubramanian in the case of OPTO Circuit India Ltd. vs Axis Bank &amp; othrs. [CRIMINAL APPEAL NO.102  OF 2021]. When   the   Special   Leave   Petition   was   listed   for admission, the appellant while assailing the order passed by the High Court, inter alia contended that the freezing of the bank accounts maintained by them has prejudiced them, inasmuch as, the amount in the account which belongs to the appellant is made unavailable to them due to which statutory payments to be made to the Competent Authorities under various enactments is withheld and the payment of salary which is due to the employees is also prevented. In that background, this Court though had not found any reason to interfere with the initiation of the proceedings under the Prevention of Money­Laundering   Act, 2002   had, however, limited 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 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 filed the counter affidavit. The honorable court contended, “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 due process under law. We have found fault with the Authorised Officer and declared 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.” The court further held, “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 is before this Court assailing the order dated 13.08.2020 passed by the High Court of Karnataka in WP No.8031 of 2020. Through the said When the Special Leave Petition was listed for admission the learned senior counsel for the appellant alia contended that the freezing of the bank accounts appellant inasmuch as the amount in the account Competent Authorities under various enactments is employees is also prevented. In that background this Money­Laundering Act 2002 had on the issue of defreezing the bank account so as to 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 has filed the counter affidavit on behalf of respondent In that background we have heard Mr. Mukul Rohatgi learned Senior Advocate for the appellant and The instant appeal arises out of the proceedings is a fall out of the same. It is in that background the In the said process the Deputy Director Directorate of Enforcement through the communication dated 15.05.2020 addressed to the Anti Money­Laundering instructed them that the accounts maintained by the appellant company be ‘debit freezed stop operations’ until further orders with immediate effect. It is in that an appropriate writ to quash the communication dated 15.05.2020 issued for debit freezing the account No.914020014786978 maintained with the respondent No.1 account No.200006044354 maintained with the respondent No.2 and the account No. 39305709999 maintained with the respondent No.3. The appellant in has taken into consideration the object with which the PMLA was enacted and the validity of the Act being of parallel proceedings under Section 3 and 4 of PMLA action taken for predicate offence the High Court was power under the Act was available. As already noticed limited to the aspect of freezing defreezing the account appellant to make the statutory payments even if the cannot be lost sight is also the fact as to whether the power available to the competent authority has been The Directorate of Enforcement 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 has not been done under Section 17(1) of the PMLA However in contrast it has been further averred with over other laws. Irrespective of the stand taken the power exercised by the Competent Authority should be such property or record is also provided. Section 1. Search and seizure­ Enter and search any building place vessel vehicle or aircraft where he has reason to suspect that such records or proceeds of b) Break open the lock of any door box locker safe almirah or other receptacle for exercising the powers conferred by clause place marks of identification on or make or cause to be made e) make a note or an inventory of 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 record or property the officer authorised shall not be transferred or otherwise dealt order shall be served on the person Provided that if at any time before its confiscation under sub­section or sub­ section of section 60 it becomes practical to seize a frozen property the search and seizure or upon issuance of a so recorded along with material in his possession referred to in that sub­section to the Adjudicating Authority in a sealed envelope in the manner as may be prescribed and such Adjudicating Authority 3) Where an authority upon information obtained during survey under section 16 is satisfied that any evidence shall be or is may for reasons to be recorded in writing such evidence is located and seize that to in sub­section shall be required for the authority seizing any record or property under sub­section or freezing shall within a period of thirty days from such seizure or freezing as the case may be file an application requesting for retention freezing served under sub­sectionbefore A perusal of the above provision would indicate has committed acts relating to money laundering and that the Officer Authorised under sub­section may forward a copy of the reasons recorded along with from such seizure or freezing as the case may be file an freezing of the account will also require the same note of Section 2(v) and of PMLA which defines “Sec. 2(v) ­ “property” ­ means any property or assets of every description or immovable tangible or intangible and includes deeds and evidencing title to or interest in such “Sec. 2(w) “records” include the records maintained in the form of books or stored in a computer or such other 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 procedure. Hence a procedure including timeline is purpose to which the officer is vested with such power In the instant case the procedure contemplated under not been followed by the Officer Authorised. Except 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 the case and seeks for relevant documents but in the 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 provided under Section 17(1) of PMLA before the of Section 17(2) of PMLA after the freezing is made is of money laundering and placing it before the Adjudicating Authority or for filing application after due compliance of the legal requirement and therefore 12. Mr. S.V. Raju learned Additional Solicitor General made a subtle attempt to contend that the power of seizure is available under Section 102 of the Code of Criminal Procedure which has been exercised and as more than one reason. Firstly as noted it has been the contention of Respondent No.4 that PMLA is a stand­ the power available therein is to be exercised and the procedure contemplated therein is to be complied Section 102 CrPC is to the Police Officer during the different from the scheme under PMLA. Further even sub­section to Section 102 CrPC requires that the Police Officer shall forthwith report the seizure to the That apart the impugned communication dated 15.05.2020 does not refer to the power being exercised reference to the contents of the order communication and the same cannot be justified Election Commissioner New Delhi & Ors. 1 statutory functionary makes an order based on certain grounds its validity must be judged by the reasons so mentioned and cannot be supplemented Otherwise an order bad in the beginning may by the "Public orders publicly made in exercise of a the order of what he meant or of what was in his those to whom they are addressed and must be construed objectively with reference to the language 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 attempted ingenuity of the learned Additional Solicitor General. Such contention therefore cannot be accepted Court much emphasis has been laid on the power available under PMLA and the same being exercised though without specifically referring to the power The respondent No.4 in the counter affidavit has stated that the action initiated against the appellant is based on the complaint dated 02.11.2019 made by the State Bank of India alleging that the appellant its Chairman and the Promoter Directors have conspired and cheated them to tune of Rs. 354.32 crores by diversion of funds abroad. In that regard the CBI has registered the case in FIR No. RC 18(A) 2019 dated 468 and 471 IPC and under Section 13(2) read with section 13(1)(d) of Prevention of Corruption Act 1988 Section 2(1)(x) and of PMLA the case in ECIR­ BGZO 01 2020 was recorded by the Directorate on proceeds of crime. On that aspect we have already herein was only with regard to freezing of the bank account and as to whether while doing so the due statute provides for a thing to be done in a particular in no other manner. Among others in a matter relating to the presentation of an Election Petition as per the out as to what would be a valid presentation of an Therefore if the salutary principle is kept in perspective in the instant case though the Authorised Officer is power is to be exercised in that manner alone failing due process under law. We have found fault with the other aspect relating to the matter and the action plea put forth on behalf of the appellant regarding the relied on the certificate issued by the Chartered Accountant which indicates the amount payable towards ITDS PF ESI Professional Tax Gratuity and LIC employees’ deductions in all amounting to Rs.79 93 124 ­. Since we due compliance of law it is necessary to direct the favour of the Competent Authority towards the ITDS PF ESI Professional Tax Gratuity and LIC employees’ deductions subject to availability of the funds in the account concerned. Needless to mention that if any action is to be taken by the respondent No.4 within a to compliance of the required procedure afresh as In terms of the above the communication dated defreeze the accounts bearing Nos 914020014786978 200006044354 and 39305709999 statutory dues stated supra. Liberty is reserved to Respondent No.4 thereafter to initiate action afresh in Page 2