The Delhi High Court on Wednesday disapproved of the Enforcement Directorate’s “unreasonable” move to freeze bank accounts of individuals and entities at the request of Brazil’s government, which is probing one of its former provincial governors on charges of corruption and money laundering.
The court stayed the freezing of bank accounts of four entities by the agency till the next date of hearing. The four entities, including Hamilton Housewares, had challenging the ED’s move in the court.
“The action of freezing the entire bank account appears to be unreasonable and not authorised by law,” the court remarked during the resumed hearing of a petition filed Hamilton. “The foreign government has nothing to lose. It is your own citizen who is losing. That is not fair.”
The judge said individuals and companies whose bank accounts have been frozen at the instance of ED will “die by the time” they contest the move and get their accounts released. Three entities moved the court on Wednesday, challenging the ED’s decision.
ED advocate Amit Mahajan told the court that it was not the agency’s intention to inconvenience its citizens. The freezing or seizure of any financial asset in the accounts of Indians was for “repatriation.”
Mahajan said the Indian government has asked Brazil to send a revised letter rogatory to freeze only the alleged proceeds of crime that were transferred to the Indian bank accounts.
Vijay Aggarwal, the counsel for Hamilton Housewares, alleged the ED merely acted as a “courier agent” of a foreign government and failed to provide “reasons to believe” for freezing the bank accounts.
The other three parties argued that the agency’s action was “disproportionate and arbitrary.”
However, the court refused to grant a stay, as demanded by the petitioners, on the proceedings pending before the adjudicating authority of the ED.
ET was the first to report on July 20 that Indian banks had frozen 67 accounts of individuals and companies on the directions of the ED following the request from the Brazilian government.
ET reported on August 13 that the ED had written to the State Bank of India last month to freeze nine accounts in one of its branches, including that of JK Tyre & Industries, under the Prevention of Money Laundering Act.
In its letter dated July 13, ED had said it is “investigating a case” under the PMLA and a search had shown that nine accounts in the case operated at SBI’s Connaught Place branch in New Delhi.
The accounts belong to JK Tyre, Hamilton Housewares, KP Shangvi & Sons, Nancy Krafts, Eastman Industries, Orbit Exports, Bharat Fashions & Apparels, Sheenuj & Co. and RSWM Ltd., according to the ED’s letter, which ET reviewed.
“No withdrawal should be allowed without prior permission of this office till further orders,” the assistant director of the ED wrote.
Hamilton Housewares had produced the letter in court and contended that the bank had frozen credit of over Rs 45 crore in its account at the ED’s request and that the company was unable to pay salaries and transact business.