Case BriefsHigh Courts

Chhattisgarh High Court: Rajendra Singh Samant, J., dismissed the petition being devoid of merits.

The facts of the case are such that the applicant was charge-sheeted for trial in offence under Sections 13(1)(e) read with 13(2) of Prevention of Corruption Act which was challenged before this Court and was disposed off vide directions to receive the passbooks of the bank accounts, which were under seizure nut will not be able to operate the bank accounts, as there is no specific direction of the Special Court for operation of the accounts. The instant Criminal Revision was filed challenging the legality, propriety and correctness of this order by Special Judge (Prevention of Corruption Act), Raipur, by dismissing the prayer of the applicant to defreeze the bank account, which has been seized by the respondent.

Counsel for the petitioners Mr Kishore Bhaduri and Sunny Agrawal submitted that the prohibitory order of the respondent regarding operation of the bank account is uncalled for in the present situation, hence, it is prayed that the revision petition may be allowed and the impugned order may be set aside and relief be granted to the applicant.

Counsel for the respondent Mr Adil Minhaj submitted that the amount in the bank accounts can be regarded as property under seizure has been acquired unlawfully, cannot be allowed to be disbursed or disposed when the charge sheet has been filed and the prosecution has not come to an end.

The Court relied on judgment State of Maharashtra v. Tapas D. Neogy, (1999) 7 SCC 685 wherein it was held as under

“Then again the time consumed by the Courts in concluding the trials is another factor which should be borne in mind in  interpreting the provisions of Section 102 of the Criminal Procedure Code and the underlying object engrafted therein, inasmuch as if there can be no order of seizure of the bank account of the accused then the entire money deposited in a bank which is ultimately held in the trial to be the outcome of the illegal gratification, could be withdrawn by the accused and the Courts would be powerless to get the said money which has any direct link with the commission of the offence committed by the accused as a public officer. We are, therefore, persuaded to take the view that the bank account of the accused or any of his relation is `property’ within the meaning of Section 102 of the Criminal Procedure Code and a police officer in course of investigation can seize or prohibit the operation of the said account if such assets have direct links with the commission of the offence for which the police officer is investigating into.”

The Court observed that the money in the bank account may be regarded as a property and the seizure of such property on suspicion that it is connected with commission of offence held as property within the meaning of Section 102 of Criminal Procedure Code i.e. Cr.PC and the police officer also has power to prohibit the operation of such account, if such assets have linkages with the commission of offence.

The Court thus held that there is a clear conclusion of the Investigation Agency against the applicant that he has amassed wealth, acquired assets, which are disproportionate to his income “…and the prosecution against the applicant is under contemplation by the respondent side, therefore, no order can be passed to defreeze the bank accounts, which have been seized from this applicant.”

In view of the above, the instant petition was dismissed and disposed off.[Ramesh Kumar Sharma v. State of Chhattisgarh, 2021 SCC OnLine Chh 902, decided on 12-04-2021]


Arunima Bose, Editorial Assistant has reported this brief.

Case BriefsHigh Courts

Bombay High Court: S.C. Gupte, J., dismissed a guardianship petition on the ground of jurisdiction.

A Guardianship petition was filed under Sections 6 and 11 of the Hindu Minority and Guardianship Act, 1956.

Petition sought petitioner’s appointment who was stated to be the father of the two minors for whose guardianship the present petition was filed.

Another relief was sought concerning the minor’s property, particularly a declaration that the respondent mother had unauthorizedly and fraudulently withdrawn or transferred amounts from the bank accounts of the minors for her personal use and benefit and a recovery order by making payment to the petitioner as their natural guardian or by depositing the same in the bank accounts of the minors.

Section 7 read with Section 8 of the Family Courts Act reserves exclusive jurisdiction to entertain a suit or proceeding in relation to the guardianship of the person of any minor unto Family Courts by virtue of Clause (f) of the Explanation to Sub-section (1) of Section 7.

Full Bench of Bombay High Court observed that in view of the provisions of the Family Courts Act, the Court exercising its ordinary original civil jurisdiction relating to matters under the Family Courts Act would lose its jurisdiction to the Family Court, since the former would be a district court and under Section 17 of the Family Courts Act that Act would have an overriding effect.

An application for guardianship of the minor’s person can lie only before the Family Court.

Bench while moving forward with other prayers expressed that an application for a declaration about the property of a minor, which is said to be fraudulently or unauthorisedly transferred, and an order for recovery of that property cannot lie in a guardianship petition independently of any claim for being appointed as a guardian of the person or property of a minor.

“…what lies before a court, other than a family court under Section 7 of the Family Courts Act, is an application for appointment of guardian of the property of a minor or an application for permission to deal with such property. It is only these applications which are made by means of a guardianship or a miscellaneous petition before this court.”

 Petitioner’s case was that the bank accounts were created and monies were deposited into them for the sake of ensuring the minors’ pursuit of education and that these amounts, meant for the minors’ education, were illegally withdrawn by the respondent mother.

To the above, Court stated that is the petition sought to be framed as a petition for making provision for maintenance of the minors by seeking to recover amounts illegally withdrawn by respondent-wife, it would obviously be an application in the nature of a proceeding for maintenance. The said application would also exclusively lie before the family court.

Hence, In Court’s opinion, the instant guardianship petition was dismissed, and this Court had no jurisdiction to entertain the same. [Ashu Khurana Dutt v. Aneesha Ashu Dutt, 2021 SCC OnLine Bom 550, decided on 01-04-2021]


Advocates before the Court:

Mr Shanay Shah i/b. Sapana Rachure for Petitioner.

Mr Santosh Paul, Senior Advocate with Pradip Chavan, Mahir Bhatt and Manan Sanghai i/b. Wasim Ansari for Respondent.

Hot Off The PressNews

Opening of Current Accounts by Banks

On a review, it has been decided to permit banks to open specific accounts which are stipulated under various statutes and instructions of other regulators/ regulatory departments, without any restrictions placed in terms of the circular dated August 6, 2020. An indicative list of such accounts is as given below:

  1. Accounts for real estate projects mandated under Section 4 (2) l (D) of the Real Estate (Regulation and Development) Act, 2016 for the purpose of maintaining 70% of advance payments collected from the home buyers.
  2. Nodal or escrow accounts of payment aggregators/prepaid payment instrument issuers for specific activities as permitted by Department of Payments and Settlement Systems (DPSS), Reserve Bank of India under Payment and Settlement Systems Act, 2007.
  3. Accounts for settlement of dues related to debit card/ATM card/credit card issuers/acquirers.
  4. Accounts permitted under FEMA, 1999.
  5. Accounts for the purpose of IPO / NFO /FPO/ share buyback /dividend payment/issuance of commercial papers/allotment of debentures/gratuity, etc. which are mandated by respective statutes or regulators and are meant for specific/limited transactions only.
  6. Accounts for payment of taxes, duties, statutory dues, etc. opened with banks authorized to collect the same, for borrowers of such banks which are not authorized to collect such taxes, duties, statutory dues, etc.
  7. Accounts of White Label ATM Operators and their agents for sourcing of currency.

2. The above permission is subject to the condition that the banks shall ensure that these accounts are used for permitted/specified transactions only. Further, banks shall flag these accounts in the CBS for easy monitoring. Lenders to such borrowers may also enter into agreements/arrangements with the borrowers for monitoring of cash flows/periodic transfer of funds (if permissible) in these current accounts.

3. Banks shall monitor all current accounts and CC/ODs regularly, at least on a half-yearly basis, specifically with respect to the exposure of the banking system to the borrower, to ensure compliance with instructions contained in a circular dated August 6, 2020 ibid.

Please read the notification here: NOTIFICATION


Reserve Bank of India

[Notifications dt. 14-2-2020]

Hot Off The PressNews

When the 5-judge bench of Dipak Misra, CJ and Dr. AK Sikri, AM Khanwilkar, Dr. DY Chandrachud and Ashok Bhushan, JJ, assembled after Holi Break for Day 14 of the Aadhaar hearing, Senior Advocate Arvind Datar began his submission by asking the Court to consider extending the deadline for linking to avoid a fait accompli. The present deadline is March 31, 2018. Senior Advocate Shyam Divan also added that the Supreme Court’s interim order also says that the arrangement is to last till the conclusion of the case. However, Attorney General KK Venugopal asked the Court to consider the question in the last week of March.

Below are the highlights from Arvind Datar’s submissions on Day 14 of the Aadhaar Hearing:

Main Arguments to be advanced by Arvind Datar:

  • Challenge to Linking Bank Accounts to Aadhaar as per Rule 9 of Prevention of Money-laundering Act, 2002 (PMLA)
  • Aadhaar Act, 2016 could not have been a money bill. Rule 9 violates Article 14. And in the alternative, if the Aadhaar project is upheld, it can’t go beyond subsidies.
  • The Aadhaar/PAN judgment should be revisited in light of the privacy judgment.
  • All State action before the Aadhaar Act, 2016 cannot be saved. There has been a continuous and flagrant violation of this Court’s orders, which should not be condoned.

Challenge to Linking Bank Accounts to Aadhaar as per Rule 9 of Prevention of Money-laundering Act, 2002 (PMLA):

  • There is a Master Direction, that provides for customer identification procedures. The Master Circular covers all issues with respect to bank accounts. The impugned rules give contradictory directions (Aadhaar linking).
  • Under the master circular, there exist provisions for due diligence both at the time of opening the account and subsequently. Suspicious transactions are red flagged and investigated.
  • There is a provision of the master circular that does not require multiple proofs of ID. The customer can submit one of six possible IDs. This conflicts with the Rules, which only allows Aadhaar.
  • The due diligence requirements under the circular, which specify the kinds of suspicious situations under which monitoring of accounts can be done.
  • The Circular completely covers the field. The Circular says that you can open an account with one of six IDs. The core question is that if the Master Circular gives you a choice of six IDs, can Aadhaar then be made the only mandatory ID under separate rules.
  • Aadhaar and PAN or Form 60 are necessary to be provided for bank accounts.
  • Aadhaar is only required to establish the identity of the individuals not the companies. You cannot ask for Aadhaar of the individuals in the company.
  • The impunged rules say that if the Aadhaar number is not provided then the accounts will stop operating. This is in violation of SC order which made Aadhaar voluntary and limited to only specific schemes. It also violates Article 300A as it deprives a person of his property.
  • Chandrachud, J: They are not forfeiting the property. The amount in the account will not get forfeited.
  • Arvind Datar: They are depriving me of the property- deprivation maybe temporary or permanent.
  • Even if Aadhaar Act is assumed valid, the enrolment form says that Aadhaar is free and voluntary. But now Aadhaar has been made mandatory for everything.
  • Aadhaar is entitlement. I am entitled to passport. I may or may not obtain a passport.
  • Law recognises two categories of people- who want an Aadhaar and who do not want an Aadhaar. There’s a choice. But not so in case of PMLA rules. A person runs a risk of getting his account closed.
  • Chandrachud, J: The disability to be able to operate bank accounts doesn’t occur from Aadhaar Act. It does in case of PMLA rules.
  • Arvind Datar: Aadhaar is supposed to be ‘some kind of national detergent’ which will get rid of the fake PAN cards and fake bank accounts. You can’t make a group as suspects.
  • CJI: You’re an account holder and have a status. The statute wants you to establish your identity. (Asks if the argument here is that in light of existing KYC identification systems, we do not need another.)
  • Arvind Datar:  There is no reason why 1 billion people are being asked to link their accounts to Aadhaar. There must be some purpose behind it.  Any rule made must have a nexus with the Act. As far as rule 9 regarding Aadhaar is concerned, it has no nexus with the Act.
  • It is not the intention of Government of India that every transaction from every account should be reported. It is only in connection with the money laundering that the Act has nexus with accounts.

The bench will continue hearing the submissions of Senior Advocate Arvind Datar tomorrow who has told the Court that he will finish his arguments by Lunch tomorrow.

To read the highlights from Senior Advocate Gopal Subramanium’s submissions, click herehere and here.

To read the highlights from Senior Advocate Kapil Sibal’s arguments, click here, here and here.

Looking for the detailed submissions of Senior Advocate Shyam Divan? Read the highlights from Day 1Day 2, Day 3, Day 4 , Day 5, Day 6 and Day 7 of the hearing.

Source: twitter.com/gautambhatia88 and twitter.com/SFLCin

Hot Off The PressNews

Press Release

Some news items have appeared in a section of the media quoting a reply to a Right to Information Act application that Aadhaar number linkage with bank accounts is not mandatory. The Reserve Bank clarifies that, in applicable cases, linkage of Aadhaar number to bank account is mandatory under the Prevention of Money-laundering (Maintenance of Records) Second Amendment Rules, 2017 published in the Official Gazette on June 1, 2017. These Rules have statutory force and, as such, banks have to implement them without awaiting further instructions.

Reserve Bank of India

Case BriefsHigh Courts

Delhi High Court: While considering the present petitions regarding the tenability of the restrictions imposed on over the counter cash withdrawals via Central Notification dated 08.11.2016 (which furthermore banned the use of 500 and 1000 rupee notes as legal tenders), the Division Bench of G. Rohini, C.J. and V. Kameswar Rao, J., dismissed the petitions for want of merit, stating that the restriction imposed under Clause 2(vi) of the Notification is only with regard to cash withdrawal from a bank account over the counter. There are no restrictions or limits for operating the bank account by non-cash method.

The petitioners contended that the impugned Notification immobilizes bank transactions of the money deposited prior to 08.11.2016, which is illegal. It was further contended that the Central Government is not empowered under the Reserve Bank of India Act, 1934 to restrict cash withdrawal from a bank account over the counter. Perusing the contentions, the Bench observed that the Notification dated 08.11.2016 has been made in exercise of the powers conferred by Section 26(2) of the Reserve Bank of India Act, 1934 and the question related to its validity is currently being considered by the Supreme Court. However the Court stated that Clause 2(vii) of the impugned Notification provides that there are no restrictions on the use of any non-cash method of operating the bank account by using cheques, demand drafts etc. Thus, the contention of the petitioner that Clause 2(vi) infringes the right of the account holder to withdraw from his account on demand is incorrect.

Further rejecting the petitioner’s contention that the impugned Notification immobilizes bank transactions of the money deposited prior to 08.11.2016, the Court stated that, “no such distinction can be drawn between the bank deposits of the period prior to 8.11.2016 and after 8.11.2016 since the whole purpose of the restrictions imposed on cash withdrawal up to 30.12.2016 appears to be to meet the demand of liquid cash in circulation in the light of the ban imposed on the bank notes of the denominations of Rs. 500 and Rs. 1000”. The Court further reiterated the settled position of law that a policy decision by the government is beyond the scope of judicial review. [Ashok Sharma v. Union of India, 2016 SCC OnLine Del 6173, decided on 02.12.2016]