Karnataka High Court quashes ED direction to block Amnesty International bank accounts

The Karnataka High Court recently quashed directions passed in October 2018 by the Enforcement Directorate (ED) to freeze the bank accounts of the NGO Amnesty International India and Indians for Amnesty International Trust [M/s Indians for Amnesty International Trust v. Union of India]..The order passed on February 24 by Justice KS Hemalekha reasoned that the notices to the banks of the NGO and the Trust had lost efficacy due to 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 Trust told the Court that it is a member of the Amnesty International Global Movement and a non-political organisation that promotes human rights.It had challenged the ED’s search and seizure conducted in October 2018 and subsequent directions issued to Kotak Mahindra Bank, HDFC Bank and YES Bank to stop the operation of its bank accounts..It was argued that the search and seizure was conducted at its registered and administrative office, without notice.Further, the Court was informed that during the search and seizure, several documents pertaining to financial records and other material were seized, and employees’ cell phones were scrutinised and confiscated by ED officials. According to the petitioners, the directions to the bank were violative of provisions of the Income Tax Act. .The Court took into account the judgment in the case of Greenpeace India Society v. Union of India as well as provisions of the Income Tax Act to find that the notices had lost their efficacy as they cannot be in force for a period exceeding sixty days. .Senior Advocate Ravivarma Kumar and Advocate Jagadeesha BN appeared for the petitioners, while the respondents were represented by Advocate H Jayakara Shetty..The Supreme Court in October last year had declined to entertain a plea by the Trust challenging provisional attachment of bank accounts by the ED.The Trust had moved the top court against the Karnataka High Court's refusal to interfere with the ED’s provisional attachment order..In July 2022, the ED found that Amnesty India International and its Chief Operating Officer (CEO) Aakar Patel acted in contravention of the Foreign Exchange Management Act (FEMA), and imposed penalties of ₹51.72 crore and ₹10 crore..[Read Order]