OPTO CIRCUIT INDIA LTD. versus AXIS BANK & ORS.

Citation: [2021] 2 S.C.R. 81 · Decided: 03-02-2021 · Supreme Court of India · Bench: S.A. BOBDE · Disposal: Case Partly allowed

Cited by 2 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

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   [2021] 2 S.C.R. 81
OPTO CIRCUIT INDIA LTD.
v.
AXIS BANK & ORS.
(Criminal Appeal No. 102 of 2021)
FEBRUARY 03, 2021
[S.A. BOBDE, CJI, A.S. BOPANNA AND
V. RAMASUBRAMANIAN, JJ.]
Prevention of Money-Laundering Act, 2002 – s.17, 2(v) and
s.2(w) – The Directorate of Enforcement initiated the proceedings
against the appellant under PMLA – In the said process the Deputy
Director, Directorate of Enforcement through the communication
dated 15.05.2020 addressed to the Anti Money-Laundering (AML)
Officer of Respondents No.1 to 3 Banks instructed them that the
accounts maintained by the appellant company be ‘debit freezed/
stop operations’ – Aggrieved, the appellant filed writ petition and
sought to quash the communication dated 15.05.2020 issued for
debit freezing the account – The High Court upheld the
communication dated 15.05.2020 – Before the Supreme Court,
appellant pleaded to defreeze the bank accounts for the purpose
statutory payments and payment of salaries to the employees – Held:
In the instant case, the procedure contemplated u/s.17 of PMLA
was not 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 – The
said communication does not refer to the belief of the Authorised
Officer – It only states that the Officer is investigating the case and
seeks relevant document – Thereafter, it abruptly states that accounts
have to be ‘debit freezed/stop operations’ – However, what is
necessary is an order in the file recording the belief as provided u/
s. 17(1) of PMLA before the communication is issued and thereafter
the requirement of s.17(2) of PMLA after the freezing is complied
with – No material placed to indicate compliance of s.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 an application after securing the freezing of the account
– Therefore, freezing is without due compliance of the legal
requirement and not sustainable – The communication dated
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SUPREME COURT REPORTS
[2021] 2 S.C.R.
15.05.2020 is quashed – Since, the freezing was done without due
compliance of law, the respondents directed to defreeze the accounts
and honour payments advised by the appellant towards statutory
dues etc.
Interpretation of Statutes – If a statute provides for a thing to
be done in a particular manner, then it has to be done in that manner
alone and in no other manner – If the salutary principle is kept in
perspective, in the instant case, though the Authorised Officer in
Prevention of Money-Laundering Act, 2002 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.
Prevention of Money-Laundering Act, 2002 – Scheme and
object of – discussed.
Partly allowing the appeal, the Court
HELD: 1. A perusal of s.17 of Prevention of Money-
Laundering Act, 2002 (PMLA) would indicate that the pre-
requisite 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 (1A) 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. [Para 9][89-C-F]
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2. The scheme of the PMLA is well intended. While it seeks
to achieve the object of preventing mo

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