ED asked to follow due procedure in freezing bank accounts of accused

VIJAYAWADA: The procedure contemplated under section 17(1)(A) of Prevention of Money Laundering Act (PMLA) should be followed while freezing the bank accounts of accused, the AP high court said in a recent judgement, while setting aside the e-mails sent by an additional director rank officer of the Enforcement Directorate (ED) to two banks to freeze the accounts of the accused in a case registered for purchase and sale of BS-III buses.
Anantapur and Kurnool district police registered 42 cases against C Gopal Reddy, his wife Lakshmi Devi, son Vishnuvardan Reddy, and others on the allegations that they purchased BS-III buses as scrap and sold them as BS-IV vehicles by forging documents. It was alleged that Gopal Reddy was acting as benami to TDP leader J C Prabhakar Reddy of Diwakar Travels.
The ED initiated proceedings under PMLA as there were allegations of laundering of money received from the sale of buses. An assistant director rank official sent e-mails to two banks where the accused are having accounts and asked to freeze those accounts. Challenging the e-mails, the accused moved the high court, arguing that an assistant director rank official is not a competent authority to freeze the accounts under section 17(1)(A) of PMLA. The ED, on the other hand, argued that section 17 gives them power to freeze bank accounts.
Considering the arguments, Justice Ravinath Tilhari said the ED did not follow the procedure contemplated under section 17(1)(A) of PMLA, according to which only a deputy director rank or above official can send e-mails to any bank for freezing of accounts. Setting aside the e-mails, Justice Tilhari directed the ED to follow the due procedure to freeze the accounts. He further directed the petitioners not to make any debit transactions for 15 days.