Cal HC stays ED order on freezing bank accounts of Rashmi Metaliks

The Calcutta High Court has stayed an order of the Enforcement Directorate (ED) freezing accounts of Rashmi Metaliks Ltd in connection with its probe into a case related to the alleged loss of revenue to the public exchequer.

The ED had claimed that the company made a wrongful declaration to avail benefits of the Indian Railways' dual freight policy of 2009.

Justice Moushumi Bhattacharya said that an order of the Supreme Court in December 2015 stayed all proceedings in such cases, and also that the ED did not state reasons for its action.

''There shall accordingly be an order of stay of the impugned freezing orders dated 13th July 2022,'' Justice Bhattacharya ordered.

The ED had issued orders on July 13, freezing the bank accounts under The Prevention of Money Laundering Act, 2002 (PMLA), and directed that the funds lying in these accounts will not be transferred or otherwise dealt with except with prior permission of the agency.

The Railways had issued show-cause notices along with claims of penal charges on account of availing lower rate of freight for transporting iron-ore for domestic consumption, and utilization for a purpose other than domestic use, the order noted.

The show-cause notices were challenged by the parties in different high courts, including the Calcutta High Court. Observing that the ED orders of freezing seven bank accounts of Rashmi Metaliks and another group company arises from its case of 2012, Justice Bhattacharya said, ''It can therefore reasonably be presumed that the ED took steps for search and seizure and freezing of the petitioner's bank accounts after seven years from the date on which all pending proceedings were stayed by the Supreme Court.

''This Court is, therefore, inclined to hold that the ED could not have initiated any action against the petitioners during the subsistence of the order of stay of the pending proceedings against petitioner no. 1 (Rashmi Metaliks) by the Supreme Court dated 14th December 2015.” 

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