The court emphasizes the need for adherence to statutory requirements for freezing accounts under PMLA, 2002, and questions the lack of specific evidence supporting the ED's actions.
In a significant judgment, the Calcutta High Court has stayed the freezing of three bank accounts of the All India Trinamool Congress (AITC) by the Enforcement Directorate (ED) under the Prevention of Money-Laundering Act, 2002 (PMLA, 2002). The interim order was passed by Justice Krishna Rao, who highlighted the necessity of adhering to statutory safeguards and proper justification before freezing accounts. The accounts were previously frozen based on allegations of money laundering linked to political funding during the West Bengal elections.
The case arose after a complaint lodged by Biswanath Das, a member of the West Bengal Legislative Assembly, accused the AITC of routing funds derived from illegal activities into these accounts. The complaint led to the registration of an FIR under various sections of the Bharatiya Nyaya Sanhita, 2023, and the Information Technology Act, 2000. Subsequently, the ED initiated an investigation under PMLA, 2002, resulting in the freezing of the accounts.
Representing the petitioners, Senior Advocate Dr. Abhishek Manu Singhvi argued that the ED's actions were arbitrary and lacked the necessary "reasons to believe" as mandated under Section 17 of the PMLA, 2002. The court noted that the complaint and subsequent FIR did not pinpoint specific transactions or incidents that justified the freezing action. The court also observed that the ED's failure to present substantial evidence for its actions raised questions about the legality of the freeze.
The court's decision allows the petitioners to operate the accounts under the supervision of a Special Officer appointed by the court, ensuring the political party can meet its operational expenses. The order emphasized that any freezing or seizure must comply with the detailed procedures outlined in the Prevention of Money-Laundering (Forms, Search and Seizure or Freezing) Rules, 2005.
The judgment underscores the court's stance on protecting constitutional rights against arbitrary actions by enforcement agencies. While the court refused to quash the proceedings entirely, it directed the respondents to file an affidavit in opposition, allowing the matter to be adjudicated further.
The case will be revisited on August 26, 2026, with the court awaiting further affidavits to make a final determination.
Bottom line:-
Freezing of bank accounts under the Prevention of Money-Laundering Act, 2002, can only be done upon proper justification, and reasons to believe must be recorded as mandated under Section 17 of the Act.
Statutory provision(s): Prevention of Money-Laundering Act, 2002, Section 17(1), 17(1-A), Bharatiya Nyaya Sanhita, 2023, Section 106, Information Technology Act, 2000, Sections 66C, 66D.
All India Trinamool Congress v. Union of India, (Calcutta) : Law Finder Doc id # 2943890
