Karnataka High Court Paves Way For De-Freezing Amnesty International’s Bank Accounts, Says ED’s 2018 Notice Was Valid Only For 60 Days

The Karnataka High Court recently quashed the communication issued by Enforcement Directorate (ED) in 2018 to banks, directing them to freeze accounts of NGO M/s Amnesty International (India) Private Limited, alleging violation of provisions of Foreign Exchange Management Act, 1999, (FEMA). This was in the case of M/S AMNESTY INTERNATIONAL INDIA PRIVATE LIMITED v. UNION OF INDIA (WP 56621/2018) and was presided over single judge bench of Justice K S Hemalekha.


The petitioner is a registered company having registered under the Companies Act, 1956 as “Social Sector Research Consultancy & Support Services (India) Private Limited” and renamed as “Amnesty International (India) Private Limited”, engaged in the business of rendering, inter alia, research (primary and secondary) and consultancy services regarding human rights. It is stated that on 25/10/2018 without any notice to the petitioner, search and seizure was conducted in the premises of the petitioner. It is stated that during the said search and seizure, several documents pertaining to the financial records, various agreements and during the search, cell phones were scrutinized and confiscated from the employees of the petitioner-company 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.  Pursuant to which, the bank accounts of the petitioner in HDFC Bank and Kotak 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 HDFC Bank and Kotak Mahindra Bank to stop the operation of the petitioner’s bank account is in violation of Section 132 of Income Tax Act, 1961. Aggrieved by the action of the 2nd respondent and issuance of directions dated 25/10/2018 at Annexures-F1 and F2, the present writ petition is preferred.


The Court Opined that “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 notices dated 25/10/2018 at Annexures-F1 and F2 have lost their efficacy by efflux of time as the period of sixty days has expired.”


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