Karnataka HC Overturns ED Order To Freeze Amnesty International bank accounts

Karnataka HC

The Karnataka High Court recently overturned directions issued by the Enforcement Directorate (ED) in October 2018 to freeze the bank accounts of the NGO Amnesty International India and the Indians for Amnesty International Trust.

A single bench of Justice KS Hemalekha was hearing the matter.

The bench stated that the notices from the NGO and the Trust to the banks had lost their effectiveness due to the passage of time.

“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 notice at dated 25/10/2018 at Annexures-D1 and D2 has lost its efficacy by efflux of time as the period of sixty days has expired,” the single bench noted.

Appearing for the petitioners, Senior Advocate Ravivarma Kumar and Advocate Jagadeesha BN informed the bench that it is a member of the Amnesty International Global Movement and a non-political organisation that promotes human rights.

It had challenged the October 2018 search and seizure carried out by the ED, as well as the subsequent orders given to Kotak Mahindra Bank, HDFC Bank, and YES Bank to halt the use of its bank accounts.

It was asserted that the search and seizure were made without warning at the company’s registered and administrative offices.

The Court was also informed that during the search and seizure, numerous documents relating to bank records and other materials were taken, and ED authorities checked and took away employees’ cell phones.

The petitioners claim that the bank’s instructions violated sections of the Income Tax Act.

The bench determined that the notifications had lost their effectiveness since they cannot be in effect for a period longer than sixty days by taking into account the judgment in the case of Greenpeace India Society v. Union of India as well as provisions of the Income Tax Act.

In October 2022, the Supreme Court turned down the Trust’s request to hear its appeal of the ED’s temporary bank account attachments.

The Trust had filed an appeal with the Supreme Court after the Karnataka High Court refused to intervene in the ED’s provisional attachment order.

The ED found Amnesty India International and its Chief Operating Officer (CEO) Aakar Patel in violation of the Foreign Exchange Management Act (FEMA) in July 2022, and imposed penalties of 51.72 crore and 10 crore.

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About the Author: Nunnem Gangte