Indians for Amnesty International Trust V. Union of India through its Ministry of Finance and Directorate of Enforcement Bengaluru Zonal Office

WP/51601/2018

AI Insights

The case involves M/s. Indians for Amnesty International Trust, a public charitable trust, which filed a writ petition against the Union of India and the Directorate of Enforcement, challenging the validity of a search and seizure operation conducted on 25/10/2018. The petitioner argued that the search and subsequent freezing of their bank accounts by the Directorate of Enforcement were conducted without notice and were in violation of the Foreign Exchange Management Act, 1999, and the Income Tax Act, 1961. The court referenced a similar case, Greenpeace India Society vs. Union of India, to support its decision to quash the impugned orders.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 803903 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 24-02-2023
• Assessment Year: misc
• Other Referred Cases: Greenpeace India Society vs. Union of India, Shri B.K.Nowlakha & others vs. Union of India & ORS., Windson Electronics Pvt. Ltd. & anr. vs. Union of India & ors., Mr.Darryl Bruce Thorpe & anr. vs. Union of India & ors.
• Laws Referred To: Foreign Exchange Management Act 1999, Income Tax Act 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: H SHETTY
• Assessee Lawyers: RAVIVARMA KUMAR; JAGADEESHA
• Keywords: Illegal; Invalid; Search and seizure; Ultra Vires; Bank account operation halt
• Section: 132; 132(3); 132(8A)

Judgement Text

" - 1 - WP No. 51601 of 2018 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF FEBRUARY, 2023 BEFORE THE HON’BLE MRS. JUSTICE K.S. HEMALEKHA WRIT PETITION NO.51601 OF 2018 (GM-FE) BETWEEN: M/S. INDIANS FOR AMNESTY INTERNATIONAL TRUST, A PUBLIC CHARITABLE TRUST, HAVING ITS REGISTERED OFFICE AT 43/1, 2ND FLOOR, RICHMOND ROAD, BANGALORE – 560 025. ALSO HAVING OFFICE AT #235, GROUND FLOOR, 13TH CROSS, INDIRA NAGAR II STAGE, BANGALORE, KARNATAKA, INDIA – 560 003 REP. BY ITS HONORARY MANAGING TRUSTEE MR. AAKAR PATEL. ... PETITIONER (BY PROF. RAVIVARMA KUMAR, SENIOR ADVOCATE A/W SRI JAGADEESHA B.N., ADVOCATE) AND: 1. UNION OF INDIA THROUGH ITS MINISTRY OF FINANCE NORTH BLOCK, CABINET SECRETARIAT, RAISINA HILL, NEW DELHI – 110 001. REP. BY ITS SECRETARY. 2. DIRECTORATE OF ENFORCEMENT BENGALURU ZONAL OFFICE, 3RD FLOOR, B BLOCK, BMTC, SHANTHINAGAR TTMC, KH ROAD, SHANTHINAGAR, BANGALORE – 560 027 REP. BY THE JOINT DIRECTOR. ... RESPONDENTS Digitally signed by SHYAMALA Location: HIGH COURT OF KARNATAKA - 2 - WP No. 51601 of 2018 (BY SRI H. JAYAKARA SHETTY, SR. CGC) THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, PRAYING TO DECLARE THAT THE SEARCH AND SEIZURE CONDUCTED BY RESPONDENT NO.2 DATED 25.10.2018 IS INVALID, ILLEGAL AND ULTRA VIRES THE FOREIGN EXCHANGE MANAGEMENT ACT 1999 AND ISSUE CONSEQUENTIAL RELIEFS AS THE HON’BLE COURT MAY PLEASE QUASH THE DIRECTION DATED 25.10.2018 (ANNEXURE-D1 & D2) ISSUED BY THE RESPONDENT NO.2 TO KOTAK MAHENDRA BANK, HDFC BANK AND YES BANK TO WHOM THE RESPONDENT HAS ISSUED ORDERS STOPPING THE OPERATION OF PETITIONERS BANK ACCOUNTS. THIS WRIT PETITION COMING ON FOR FURTHER HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:- ORDER The petitioner in this writ petition is seeking the following prayers: (i) to declare that the search and seizure conducted by Respondent No.2 dated 25/10/2018 is invalid, illegal and ultra vires the Foreign Exchange Management Act, 1999 and issue consequential relief as the Hon’ble Court may please. (ii) to issue a writ of certiorari or any other appropriate writ or order quashing the direction dated 25/10/2018, File No.T-3/BGZO/103/2018 (Annexure – D1 & D2) issued by respondent No.2 to Kotak Mahendra Bank, HDFC Bank and YES - 3 - WP No. 51601 of 2018 Bank to whom the respondent has issued orders stopping the operation of petitioner’s bank accounts. 2. Brief facts of the case are that: The petitioner is a registered public charitable trust conducting activities, which are of public purpose and charitable in nature. It is stated that on 25/10/2018 without any notice to the petitioner, search and seizure was conducted at the registered office of the petitioner and another search and seizure took place at the administrative office of the petitioner. It is stated that during the said search and seizure, several documents pertaining to the financial records and other material were seized, cell phones were scrutinized and confiscated from the employees of the petitioner by the officials of the 2nd respondent. The 2nd respondent also issued a direction to the petitioner’s bank and asked to stop the operation in the accounts held by the petitioner. 3. Pursuant to which, the bank accounts of the Trust’s bank in Yes Bank, HDFC Bank and Karnataka - 4 - WP No. 51601 of 2018 Mahindra Bank were frozen by a “Government Order” without any notice to the petitioner by the 2nd respondent. It is stated that the actions taken up by the 2nd respondent issuing directions to the Yes Bank, HDFC Bank and Karnataka Mahindra Bank to stop the operation of the petitioner’s bank is in violation of Section 132 of Income Tax Act, 1961. 4. Aggrieved by the action conducted by the 2nd respondent and issuance of directions dated 25/10/2018 at Annexures-D1 and D2, the present writ petition is preferred. 5. Heard learned senior counsel, Prof. Ravivarma Kumar appearing along with Sri Jagadeesha B.N. learned counsel for the petitioner and Sri H. Jayakara Shetty, learned Senior Central Government Standing Counsel for respondents. 6. Learned senior counsel for the petitioner would submit that the controversy involved in this petition is squarely covered by the orders of this Court in W.P.No.47822/2018 disposed on 14/02/2019 in the case of Greenpeace India Society vs. Union of India and - 5 - WP No. 51601 of 2018 others [Greenpeace India Society], wherein the Co- ordinate Bench of this Court placing reliance on the following judgments quashed the impugned order: (a) Shri B.K.Nowlakha & others vs. Union of India & ORS., [1991 SCC ONLINE DEL 456]; (b) Windson Electronics Pvt. Ltd. & anr. vs. Union of India & ors. [2004 SCC ONLINE CAL 802] and (c) Mr.Darryl Bruce Thorpe & anr. vs. Union of India & ors. [2015 SCC ONLINE BOM 2062]. 4. Learned senior counsel for the petitioner would also submit that against the said order a writ appeal came to be filed by the Union of India in W.A.No.1090/2019 and the Division Bench of this Court disposed of the writ appeal on 12/02/2020 confirming the order of the learned Single Judge. 5. Learned Senior Central Government Standing Counsel appearing for the respondent would fairly submit that no appeal has been preferred against the order passed in W.A.No.1090/2019 by the Union of India as on today and the order in writ appeal has attained finality. Learned CGSC would also submit that this judgment would be applicable - 6 - WP No. 51601 of 2018 only to the present petition and it cannot be a precedent to be applied in all the matters. 6. The said submission is taken on record. 7. In light of the order in Greenpeace India Society stated supra, confirmed in Writ Appeal No.1090/2019, the questions involved therein is no more res integra. The learned senior counsel for the petitioner has taken this Court to the provisions of limitation clause under the provisions of Sections 132(iii)(3) and (8)A of the Income Tax Act, 1961 and the same reads as under: “132. xxx xxx xxx (iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search: Provided that bullion, jewellery or other valuable article or thing, being stock-in-trade of the business, found as a result of such search shall not be seized but the authorized officer shall make a note or inventory of such stock-in-trade of the business;” xxx xxx xxx - 7 - WP No. 51601 of 2018 (3) The authorized officer may, where it is not practicable to seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing, for reasons other than those mentioned in the second proviso to sub- section(1), serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it except with the previous permission of such officer and such officer may take such steps as may be necessary for ensuring compliance with this sub-section. xxx xxx xxx (8A) An order under sub-section (3) shall not be in force for a period exceeding sixty days from the date of the order.” (emphasis supplied) 8. On perusal of the provisions of Section 132(8A) of the Act, it is evident that order under Sub-Section (3) of Section 132 of the Income Tax Act would not be in force beyond sixty days from the date of the order. In light of the provisions of Section 132 (8A), the impugned notice at dated 25/10/2018 at Annexures-D1 and D2 has lost its efficacy by efflux of time as the period of sixty days has expired. - 8 - WP No. 51601 of 2018 9. Accordingly, the impugned order at Annexures-D1 and D2 are not sustainable. For the reasons stated supra, this Court pass the following: ORDER (i) The writ petition is allowed. (ii) The impugned notices dated 25/10/2018 in File No.T-3/BGZO/103/2018 at Annexures-D1 and D2 are hereby quashed. (iii) All the contentions are left open to be urged before the appropriate authority in accordance with law. No order as to costs. Sd/- JUDGE S* "