The salutary principle kept in perspective is circumscribed by procedure laid down under the statute

Therefore, if the salutary principle is kept in perspective, in the instant case, though the Authorised Officer 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.(Para 15)

OPTO Circuit India Ltd. V/s Axis Bank & Ors.

CRIMINAL APPEAL NO.102 OF 2021(Arising out of SLP (Criminal) No.4171 of 2020)

Decided on 03rd February, 2021

Counsel for Appellant: Mr.Mukul Rohatgi

Counsel for Respondent: Mr. S.V. Raju

A three judge bench of the Supreme Court consisting of CJI S.A. Bobde, Justice A.S. Bopanna and Justice V. Ramasubramanian allowed the appeal of defreezing the account of the appellant in order to pay the statutory dues.

The Appellant through an SLP has assailed the order dated 13.08.2020 passed by the High Court of Karnataka in WP No.8031 of 2020 herein raising the issue relating to the freezing of their bank account and now appeals to defreeze the same to pay statutory payments to be made to the Competent Authorities under various enactments is withheld and the payment of salary which is due to the employees.

The learned senior counsel for the appellant while assailing the order passed by the High Court, inter alia contended that the freezing of the bank accounts maintained by the appellant company has prejudiced the appellant, inasmuch as, the amount in the account which belongs to the appellant is made unavailable to them due to which statutory payments to be made to the Competent Authorities under various enactments is withheld and the payment of salary which is due to the employees is also prevented.

The learned Additional Solicitor General for the Respondent contended that the power of seizure is available under Section 102 of the Code of Criminal Procedure, which has been exercised and as such the freezing of the account would remain valid.

This court aptly put down the issue raised by Counsel for the Respondents by stating the following:

Firstly, as noted, it has been the contention of Respondent No.4 that PMLA is a standalone enactment. If that be so and when such enactment contains a provision for seizure which includes freezing, the power available therein is to be exercised and the procedure contemplated therein is to be complied. Secondly, when the power is available under the special enactment, the question of resorting to the power under the general law does not arise. Thirdly, the power under Section 102 CrPC is to the Police Officer during the course of investigation and the scheme of the provision is different from the scheme under PMLA. Further, even sub­section (3) to Section 102 CrPC requires that the Police Officer shall forthwith report the seizure to the Magistrate having jurisdiction, the compliance of which is also not shown if the said provision was in fact invoked. (Para 12)

This Court relied on Chandra Kishor Jha Vs. Mahavir Prasad and Ors. (1999) 8 SCC 266 were it was observed as hereunder:

“It is a well settled salutary principle that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner”.

Relying on the above dictum, the Court observed the following:

Therefore, if the salutary principle is kept in perspective, in the instant case, though the Authorised Officer 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. We have found fault with the Authorised Officer and declared the action bad only in so far as not following the legal requirement before and after freezing the account. This shall not be construed as an opinion expressed on the merit of the allegation or any other aspect relating to the matter and the action initiated against the appellant and its Directors which is a matter to be taken note in appropriate proceedings if at all any issue is raised by the aggrieved party. (Para 15)

Apart from the above consideration, what has also engaged the attention of this Court is with regard to the plea put forth on behalf of the appellant regarding the need to defreeze the account to enable the appellant to pay the statutory dues. The appellant in that regard has relied on the certificate issued by the Chartered Accountant, which indicates the amount payable towards ITDS, PF, ESI, Professional Tax, Gratuity and LIC employees’ deductions, in all amounting to Rs.79,93,124/­. Since we have indicated that the freezing has been done without due compliance of law, it is necessary to direct the respondents No.1 to 3 to defreeze the respective accounts and clear the cheques issued by the appellant, drawn in favour of the Competent Authority towards the ITDS, PF,ESI, Professional Tax, Gratuity and LIC employees’ deductions, subject to availability of the funds in the account concerned. Needless to mention that if any further amount is available in the account after payment of the statutory dues and with regard to the same any action is to be taken by the respondent No.4 within a reasonable time, it would open to them to do so subject to compliance of the required procedure afresh, as contemplated in law. We direct that the respondents shall defreeze the accounts and honour payments advised by the appellant towards statutory dues. (Para 16& 17)

The appeal was allowed, however liberty was reserved to Respondent No.4 thereafter to initiate action afresh in accordance with law, if they so desire.

View/Download Judgment: OPTO Circuit India Ltd. V/s Axis Bank & Ors.

Risikesh Dhanaki