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Era Infra Engineering Ltd Lost Their Case to AXIS BANK in Delhi HC
ERA INFRA ENGINEERING LIMITED has filed the subject petition seeking initiation of contempt proceedings against the respondent-Axis Bank for failing to comply with the judgment dated 14.11.2019.
The Court had directed to freeze of the bank account, in exercise of powers under Section 102 of the Prevention of Money Laundering Act, 2002 ‘PMLA’, could not be sustained and was quashed. However, it was held that said order would not affect the order dated 07.10.2019 passed by the authority under Section 5 of the PMLA.
Petitioner filed the subject petition contending that despite order dated 14.11.2019 disallowed the freezing of the bank account, Bank did not permitted the operations of the bank account.
Enforcement Directorate passed an order under 102 of Cr.PC directing 74 bank accounts of petitioner – Era Infra Engineering Pvt. Ltd. to be frozen including Bank Account No., i.e. the account in question. Subsequently, on 08.05.2018, the National Company Law Tribunal, Principal Bench, New Delhi in appointed Mr. Rajiv Chakraborty, Petitioner herein as the Interim Resolution Profession (IRP) of Era Infra Engineering Pvt Ltd. (EIEL).
On 04.10.2018, the Adjudicating Authority under Prevention of Money Laundering Act, 2002 passed an order exercising powers under section 102 of Cr.PC and directed that bank accounts be remain frozen.
On 07.10.2019, Enforcement Directorate passed a Provisional Attachment Order under Section 5(1) of the PMLA provisionally attaching 49 bank accounts of EIEL including the account being maintained with Axis Bank.
At the time of attachment, balance in the said account was Rs.80,64,056.49. It is contended that the Provisional Attachment Order dated 07.10.2019 was challenged by the Petitioner before the National Company Law Tribunal, Principal Bench, New Delhi by an application, which is still pending. The Income Tax Authorities credited an amount of Rs.19,22,11,330 as income tax refund pertaining to assessment year 2015-16 in the subject bank account.
The Enforcement Directorate directed the Nodal Officer, Axis Bank to immediately transfer and credit the attached amount in four different accounts including the account in question to the Directorate of Enforcement. Bank had written an email to the Enforcement Directorate, requesting for confirmation or NOC for de-freezing.
Bank also requested the Petitioner to provide NOC from Enforcement Directorate for unfreezing of the accounts. However, Respondents did not receive any response from the Enforcement Directorate.
Bank that they had sought for a clarification as they are not a party to the proceedings and they wanted to ensure that there was no other proceedings initiated by the parties and further that action taken by the bank was by way of abundant caution and they had no intention to willfully disobey the orders of the Court.
The Income Tax Department had exercised a lien over the said account under Section 226 of the Income Tax Act and it was only on 15.07.2020 that the Income Tax Department had permitted the bank to release the bank account in question from the said lien.
It may be further noted that the Directorate of Enforcement has passed another provisional attachment order attaching the amount of Rs.19,22,11,271/-, which is the credit balance in the subject account of the petitioner with the Axis Bank.
The court said that "I find that there is no wilful default on part of the respondent bank in not permitting operation of the bank account for the period that they were seeking clarification from the Enforcement Directorate as well as the Income Tax Department. The bank seems to have acted only by way of an abundant caution in seeking a clarification from the Enforcement Directorate as well as from the Income Tax Department.
The cautious approach of the bank seems justified in view of the fact that the Enforcement Directorate has passed a further provisional attachment order attaching the amount of Rs.19,22,11,271/-, which was the credit balance in the subject account. I find no merit in the petition. The petition is accordingly dismissed."
Dismissing the case for no willing fault of the back to deprived the petitioner for their merit less case.
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