In Brief
OPTO Circuit India Ltd challenged the freezing of its bank accounts by the Enforcement Directorate under the Prevention of Money Laundering Act, 2002 (PMLA), initiated following a CBI investigation into alleged cheating and fund diversion. The High Court upheld the authority's power to initiate PMLA proceedings but the Supreme Court found the freezing invalid due to non-compliance with mandatory procedural requirements under Section 17 of PMLA. The Court held that statutory powers must be exercised strictly according to prescribed procedures, and cannot be validated by post-hoc explanations. Accordingly, the Court directed defreezing of the accounts and payment of cheques for statutory dues (ITDS, PF, ESI, etc.), while preserving the authority's right to initiate action afresh with proper procedural compliance.
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