Calcutta High Court Reserves Order On TMC's Plea For Interim Relief Against ED's Freeze On Bank Accounts

The Calcutta High Court on Monday reserved orders on an interim plea filed by the Trinamool Congress (TMC) challenging the Enforcement Directorate's (ED) decision to freeze the party's bank accounts under the Prevention of Money Laundering Act, 2002 (PMLA).Senior Advocate Abhishek Manu Singhvi, assisted by Advocate Nizam Pasha, appearing for the TMC, argued that the freezing of a recognised political party's bank accounts struck at the very foundation of democracy and amounted to an assault on the constitutional scheme. Additional Solicitor General SV Raju, appearing for the ED, opposed the plea, contending that the agency had acted strictly within the statutory framework of the PMLA and possessed the requisite "reason to believe" for taking action.At the outset, Singhvi addressed objections regarding the maintainability of the petition. He submitted that under the TMC constitution, the party's working committee had duly authorised the deponent to institute the proceedings and that the relevant authorisation had already been placed on record.The ED, however, argued that the petition itself was not maintainable in view of an ex parte order passed by a civil court restraining the petitioners from initiating proceedings. ASG Raju contended that the petition had been filed in violation of that order and that the petitioners had suppressed material facts from the High Court.Rejecting the allegation, Singhvi submitted that the civil court's order had been passed ex parte on July 7 without notice to the present petitioners. He further argued that the ED had itself failed to place the order before the Court when earlier proceedings concerning the freezing of accounts were being heard."They are trying to delay the matter so that my accounts remain frozen," Singhvi submitted.Emphasising the wider constitutional implications, Singhvi argued that the case transcended an ordinary dispute over bank accounts."When a political party is frozen, it impinges on democracy itself. That touches the basic structure," he submitted.Singhvi further alleged that the ED and other State agencies had effectively recognised a rival faction within the TMC despite no such recognition having been granted by the Election Commission."They have frozen it and the rival faction of the TMC is being de facto recognised by the ED and State Police. The Election Commission has not recognised them but these agencies have," he argued.Referring to the political circumstances, Singhvi contended that disputes regarding any alleged split or merger within the legislature party remained pending before the Speaker under the Tenth Schedule and could not be pre-empted by investigative agencies.According to Singhvi, the timing of the freezing action was also significant. He submitted that the ED froze the accounts on July 7 despite being aware that a court was likely to pass orders directing defreezing on July 9."There is a direct order for defreezing of accounts. Before he gives the order, the ED on apprehension seized our bank accounts," Singhvi argued.Calling the action unprecedented, Singhvi remarked that no political party had previously faced the freezing of nine bank accounts in this manner. He urged the Court to view the issue in its broader constitutional context."Please look at the larger picture. Please don't allow this destruction of democracy," he submitted.Senior Advocate Kishore Datta, also appearing for the TMC, challenged the very jurisdiction of the ED to invoke the PMLA. He argued that the agency was investigating alleged irregularities relating to the purchase of an aircraft despite there being no scheduled offence or predicate case concerning the aircraft transaction."Today the ED is investigating the aircraft issue on which there is no predicate case," Datta submitted.Relying upon the Supreme Court's judgment in Vijay Madanlal Choudhary, Datta argued that proceedings under the PMLA necessarily presupposed criminal activity generating "proceeds of crime" and could not rest merely on assumptions.He further contended that Section 17 of the PMLA required the existence of statutory preconditions, including recorded "reasons to believe", before search or seizure powers could be exercised.Datta also referred to an earlier order of a coordinate Bench which, according to him, had observed that the authorities had hurriedly sought freezing of the party's accounts shortly after registration of the FIR and without sufficient supporting material.The Court, however, questioned whether, at the present stage when the adjudicatory process under Section 17 of the PMLA was still underway, the writ court could examine the existence of proceeds of crime.Responding, Datta submitted that Section 17(4) itself demonstrated that judicial scrutiny was available where the statutory preconditions for invoking the PMLA were absent. He also argued that the freezing of all operational accounts had paralysed the functioning of the political party, affecting payment of...

Calcutta High Court Reserves Order On TMC's Plea For Interim Relief Against ED's Freeze On Bank Accounts

Srinjoy Das

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Srinjoy Das

Calcutta High Court Reserves Order On TMC's Plea For Interim Relief Against ED's Freeze On Bank Accounts

Srinjoy Das

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