IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 28TH DAY OF SEPTEMBER 2017 PRESENT THE HON’BLE MRS.JUSTICE B.V.NAGARATHNA AND THE HON’BLE DR.JUSTICE H.B.PRABHAKARA SHASTRY W.A.No.5871 OF 2017 (GM-RES) BETWEEN:
Axis Bank Ltd.
(formerly UTI Bank Ltd.) M.G.Road Branch, No.9, Esquire Centre, Block ‘A’, M.G.Road, Bangalore – 560 001, Represented by its Law Officer & Senior Manager, Mr.Balveer Kapoor Singh. .. Appellant (By Sri.D.N.Nanjunda Reddy, Senior Advocate for Sri Rohan Hosmath, Advocate) AND:
1. The Joint Director, Directorate of Enforcement, Bangalore Zone Office, 3rd Floor, B Block, BMTC Building, Shantinagar, K.H.Road, Bangalore – 560 027.
2. The Deputy Director, Directorate of Enforcement, (Foreign Exchange Management Act & Prevention of Money Laundering Act), Department of Revenue, Ministry of Finance, Government of India, 3rd Floor, B Block, BMTC Building, Shantinagar, K.H.Road, Bangalore – 560 027.
3. The Adjudicating Authority, Prevention of Money Laundering, 4th Floor, Room No.20, Deep Building, Parliament Street, New Delhi – 110 001, Represented by its Registrar.
4. The Assistant Director, Directorate of Enforcement. Bangalore Zone Office, 3rd Floor, B Block, BMTC Building, Shanthinagar, K.H.Road, Bangalore – 560 027.
5. DCT Networks Private Limited, (Formerly Manipal Software Pvt. Ltd.) A Company registered under the Provisions of the Companies Act, 1956 With its Registered Office at No.1902, Eden Park, No.20, Vittal Mallya Road, Bangalore – 560 001, Represented by its Managing Director.
6. Union of India, Department of Telecommunication, Office of the Controller, Of Communication Accounts, 1st Floor, Amenity Block, Palace Road, Bangalore – 560 052, Represented by the Controller of Communication Accounts. ... Respondents (By Smt.Lipi A.B., Advocate for Sri P.Karunakar, Advocate for R4) This writ appeal is filed under Section 4 of the Karnataka High Court Act praying to set aside the order dated 21.09.2017 passed in W.P.No.41176/2017 and etc.
This writ appeal, coming on for preliminary hearing, this day, B.V.NAGARATHNA J., delivered the following:
JUDGMENT The appellant herein is the petitioner in W.P.No.41176/2017. That writ petition has been filed by the appellant/Bank assailing orders dated 27.02.2017, 16.08.2017 and such other orders. The appellant has also claimed other incidental and ancillary reliefs in the writ petition.
2. When the writ petition was heard for preliminary hearing, learned Single Judge of this Court granted an interim order, a copy of which is annexed at page 185 of the memorandum of appeal. By that ex-parte interim order, learned Single Judge issued stay of the transfer of the amount contained in Annexure C, while continuing attachment of the said amount. The said interim order dated 12.09.2017 was sought to be vacated by respondent No.4 by filing an application - I.A.No.2/2017. Learned Single Judge on hearing the said application, has modified the interim order and has stated that the payment of the amount made pursuant to the impugned order would be subject to the result of the writ petition. The modification made to the interim order is assailed in this appeal.
3. We have heard learned Senior Counsel for the appellant and perused the material on record. Learned Senior Counsel has drawn our attention to communication, dated 23.08.2017 issued by the Assistant Director, Directorate of Enforcement, Bengaluru, under the provisions of the Prevention of Money Laundering Act, 2002. By that communication a request has been made to the appellant/Bank to transfer a sum of Rs.3,52,65,270/- available in the account of M/s.DCT Networks, the fifth respondent herein, to it.
4. Learned Senior Counsel submits that the said amount was given as a fixed deposit by respondent No.5 by way of a security to the bank guarantee issued by the Bank to respondent No.5 which was to the tune of Rupees Two crores. He submitted that by virtue of the modified interim order the amount is permitted to be transferred.
5. He further submitted that the bank guarantee has been invoked and that a sum of Rupees Two crores has already been paid by the Bank under intimation to respondent No.6. Now by virtue of the interim order, if the amount in the fixed deposit is permitted to be transferred from the account of M/s.DCT Networks, then the Bank would have no hold over its customer - M/s.DCT Networks- Respondent No.5 herein. He drew our attention to Section 8 of the Prevention of Money-Laundering Act, 2002 and Prevention of Money-Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2002 and Rule 8 thereunder to contend that having regard to the said provisions, notice ought to have been issued to the appellant Bank before any such request would have been made to the Bank to transfer an amount lying with it and belonging to fifth respondent, who is the Enforcement Director. In the circumstances, learned Senior Counsel contended that the learned Single Judge was not right in modifying the earlier interim order granted by him.
6. Having heard learned Senior Counsel for petitioner and on perusal of the material on record we find from the writ petition that a request has been made by the Directorate of Enforcement, dated 23.08.2017 seeking transfer of a sum of Rs. 3,52,65,270/- to it under the provisions of the aforesaid Act. The said amount is lying in fixed deposit in the appellant Bank in the account of the fifth respondent namely M/s.DCT Networks. The said amount has not been appropriated by the appellant Bank. It may be that the said amount was taken by way of security for the bank guarantee that was issued by the Bank to the fifth respondent. It also may be a fact that the said bank guarantee has been invoked but the fact remains that the amounts lying with the appellant Bank is in the account of the respondent No.5 and in fixed deposit and the same does not belong to the appellant Bank. Moreover the said amount is not in the form of a hypothecation, mortgage or pledge amount in favour of Bank so as to be covered within the scope of the aforesaid Rules.
7. In the circumstances, learned Single Judge was right in modifying the earlier interim order granted by it. We also find that the learned Single Judge has also protected the interest of the appellant Bank by observing that the said transfer is subject to the result of the writ petition.
8. In the circumstances, we do not find any merit in the appeal. Appeal is dismissed.
Sd/- JUDGE Sd/- JUDGE BRN/cm/-