Court directs immediate defreezing of M/s. Dhruv Jewellers' bank account, emphasizing statutory limit on attachment period despite ongoing adjudication proceedings
In a significant judgment delivered on September 11, 2026, the Madras High Court clarified the statutory limitations on the provisional attachment of bank accounts under Section 110(5) of the Customs Act, 1962. The Court held that such provisional attachments cannot legally continue beyond a maximum period of twelve months, including any extensions, even if adjudication proceedings are pending.
The case arose when M/s. Dhruv Jewellers, engaged in the export of gold jewellery, challenged the freezing of its bank account by the Principal Commissioner of Customs. The bank account had been provisionally attached on August 4, 2022, following a search conducted at the petitioner's premises. Although no incriminating material was found during the search, the Customs authorities froze the account under Section 110(5) of the Customs Act.
The petitioner contended that the attachment had exceeded the statutory period, which permits provisional attachment for six months, extendable by a further six months upon reasons recorded in writing. The respondents argued that since a show cause notice under Section 124 of the Customs Act had been issued and adjudication proceedings were ongoing, the attachment could continue.
Rejecting this contention, Justice Hemant Chandangoudar emphasized that the statutory limitation of twelve months is absolute and cannot be extended by administrative actions or the pendency of adjudication. The Court relied on the Supreme Court's precedent in Kesari Nandan Mobile v. Office of Assistant Commissioner of State Tax (2025), which held that provisional attachments must cease once the statutory period expires.
The judgment directs the third respondent, the bank, to immediately defreeze the petitioner's bullion account and allow operations. However, the Court clarified that this order does not prevent the Customs authorities from initiating any other legal action permissible under the law.
This ruling reinforces the principle that statutory provisions govern the duration of provisional attachments, ensuring protection against indefinite freezing of assets without final adjudication. It is expected to have wide implications for similar cases involving provisional attachments under the Customs Act and other statutes with time-bound enforcement powers.
Bottom Line:
Customs Act, 1962 - Provisional attachment of bank account under Section 110(5) cannot continue beyond the maximum statutory period of twelve months, even if adjudication proceedings are pending.
Statutory provision(s):
Customs Act, 1962 Section 110(5), Section 124
M/s. Dhruv Jewellers v. Principal Commissioner of Customs, (Madras) : Law Finder Doc Id # 2982052
