The Andhra Pradesh High Court held that the authority cannot pass provisional attachment order under section 5 of the Prevention of Money Laundering Act, 2002 without recording the reason.
Sri I. Koti Reddy, counsel for the petitioners, Sri Josyula Bhaskar Rao, Standing Counsel for Respondent Nos.1 to 4 and Sri G. Sudhakar Kumar, Standing Counsel for the 5th respondent-Union Bank of India.
The Deputy Director of Enforcement has passed a provisional attachment order contrary to and thereby attached several accounts of the petitioners along with the other properties. The petitioners submitted that Account Nos.641301010050403 and 641304010000001 are specifically shown in the schedule of properties annexed to the impugned order, dated 14.03.2023, at Serial Nos.1 & 2 in the table under the head ‘Movable Properties’.
It was stated that they were opened by the petitioners about a contract entered with the National Highway Authority of India for laying National Highways. In the said two accounts only transactions relating to the contract entered with the National Highway Authority of India are reflected and no transactions with any third parties are found.
It was contended that as per Section 5(1) of the PML Act, the authorities must give reasons to believe for attaching the property before passing the provisional attachment order which was not done in the petitioner’s case.
The deposits were made by the National Highway Authorities only and no private transactions or third-party deposits are made. It was submitted that if the authorities want to attach the said accounts also they should do so by giving proper reasons for attaching the said accounts. By attaching the said accounts, the petitioners are unable to complete the contract works and are unable to pay salaries to the employees.
As per Section 2(u) of the PML Act, the authorities can attach the properties of the equal value of the proceeds of the Crime and therefore, the respondent authorities have rightly attached the properties listed in the impugned order.
In these circumstances, attaching the two accounts, through the impugned provisional attachment order, that too, without assigning any reasons, does not align with Section 5(1) of the Act, 2002.
The Court comprising Justice Ravi Cheemalapati observed that the authority failed to record the specific reasons for attaching Account Nos.641301010050403 and 641304010000001.The Court set aside the impugned order only to the extent of attaching Account Nos.641301010050403 and 641304010000001 of the Union Bank of India.
However, the Court has given the liberty to the 2nd respondent-Deputy Director to look into the said two accounts and if he finds that the said two accounts are to be attached, he may do so by passing a fresh reasoned order, by law.
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