ED cannot Freeze Bank Accounts without S.17(1-A) PMLA Order: Punjab & Haryana HC directs ED to Hold ‘Tainted’ ₹45 Cr Pending Adjudication [Read Order]

The Punjab and Haryana High Court has held that the Enforcement Directorate (ED) cannot freeze bank accounts and records of an arraigned entity if the directorate has not passed an express order under Section 17(1-A) of the Prevention of Money Laundering Act, 2002 (PMLA).

The decision was given by the High Court against a writ petition filed by M/s Darsh Minerals Pvt. Ltd. who challenged the freezing of its accounts following a raid conducted by the officers of the Enforcement Directorate on March 8, 2025 at the residence of Mohit Goyal - one of the Directors of the company.

The Directorate raised allegations that approximately ₹45.52 crore paid to Goyal formed part of proceeds from the sale of illegally extracted mining material, procured from a site in Village Ratewala, District Panchkula, linked to M/s Tirupati Roadways - an entity against whom an FIR was already registered by the State Vigilance Bureau, Panchkula under Sections 379, 414, 420 of the Indian Penal Code read with Sections 4 and 21 of Mines and Minerals (Regulation of Development) Act, 1957 and sections 13(1)(a) and 13(2) of the Prevention of Corruption Act, 1988.

Vikram Chaudhri, Hargun Sandhu, Rahul Bhargava, Diya Bhagwan and Alisha Sharda appearing for the petitioners contended that apart from the email intimation from the date of search and seizure made by the officer, the ED did not pass any order under Section 17(1-A) of the PMLA.

It was thereby contended that a seizure without recorded and communicated satisfaction under Section 17(1) was impracticable and ED could not invoke the extraordinary power freezing of the alleged tainted property while referring to the decisions of the Supreme Court in Opto Circuit India Ltd. vs. Axis Bank and others (2021) and Vijay Madan LalChoudhary and others vs. Union of India and others (2022).

Additional Solicitor General of India (arguing counsel) Satya Pal Jain and Shobit Phutela appeared for the respondents.

Chief Justice Sheel Nagu and Justice Sumeet Goel recorded that despite queries during the hearing, the ED failed to satisfy it that any express order had been passed recording impracticability of seizure under Section 17(1) to trigger Section 17(1-A), or that any such order was served upon the petitioner.

Accordingly, the Bench concluded that the procedural pre-requisites to invoke Section 17(1-A) were not met and thus the impugned freezing action was unlawful.

The Punjab and Haryana High Court observed that money-laundering is a specialised crime and even though the freezing was vitiated for procedural lapse by the ED, the seized money was directed to be held with the ED as the matter was pending before the PMLA Adjudicating Authority.

The ED was consequently directed to follow the procedure prescribed under Section 17(1-A) of PMLA by not only passing a speaking order showing impracticability of adopting extra ordinary procedure prescribed under Section 17(1-A) of PMLA, but to also communicate the said order to the petitioners before exercising power of freezing.

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