The Delhi High Court recently made a decision that changed the situation for the Directorate of Enforcement (ED) regarding the freezing of Poonam Malik's bank accounts. Let's break down what happened in this legal story.
The ED had frozen two bank accounts belonging to Poonam Malik because they suspected money laundering. These accounts were linked to her husband, Ranjit Malik, who was allegedly involved in a major bank fraud case with Sterling Biotech Limited. The freezing orders were issued on September 5, 2018, based on "suspicion" rather than solid proof.
The ED thought that the money in Poonam Malik's accounts was part of a money-laundering scheme connected to her husband's actions. However, neither Poonam nor her husband was mentioned in the initial police reports related to the case.
The freezing orders were challenged, and the Appellate Tribunal agreed with Poonam Malik, ordering her accounts to be unfrozen. The ED wasn't satisfied and took the matter to the High Court.
Justices Subramonium Prasad and Harish Vaidyanathan Shankar looked into the case. They found that the ED's freezing orders were based only on suspicion, not on a solid "reason to believe," which is a legal requirement. The court pointed out that suspicion isn't enough to justify such serious actions.
"Suspicion cannot be equated to a 'reason to believe'. In fact, suspicion cannot also be equated with a 'prima facie' opinion."
The court noted that the ED did not follow the necessary steps outlined in the Prevention of Money Laundering Act (PMLA). The freezing orders didn't meet the legal standards, as they lacked any detailed reasoning or evidence.
The High Court agreed with the Appellate Tribunal's decision to unfreeze Poonam Malik's accounts. The judges rejected the ED's appeals, stating that the freezing orders were issued without properly following the law.
This judgment highlights the importance of sticking to legal standards and procedures, especially when basic rights like property are involved. The court's decision is a reminder that enforcement agencies must have a solid basis for their actions, beyond mere suspicion.
