ED freezes accounts of Delhi couple in ‘mistaken identity’ case
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New Delhi:In 2022, a Delhi resident who ran a business in Palam was taken aback when she discovered her current bank account related to her small retail readymade garment shop had been debit-blocked by the Enforcement Directorate.
On Monday, ED, the central agency investigating financial crimes, informed the Delhi High Court that their action was "unfortunately, a case of mistaken identity". Since 2019, Bhavya Singh (46) has been running a retail garment shop called 'Kudos' at Shiv Shakti Plaza in Mahavir Enclave, Palam.
Her 50-year-old husband, Amit Kumar Singh, was in charge of the finances and he noticed in January 2022 that he couldn't withdraw money or make any payments using the ICICI Bank current account that was used for business transactions.
This essentially meant that they were unable to pay the wholesalers or pay salaries. When they went to their local ICICI Bank branch, the Singhs were shocked to learn that the freeze was in accordance with ED orders. The bank allegedly told them that "it is a confidential matter and they are not allowed to disclose detail" and would not provide any further information, Indian Express reported.
Months of correspondence with the Reserve Bank of India, ICICI Bank, and ED ensued, but there was no resolution.
“We were not involved in any crime, we have no case against us, nor did we ever. It left us puzzled and harassed, making the rounds of all these offices, writing to them repeatedly with no answers. The bank is just as much to blame as ED. How does the ED go about freezing accounts without any prior notice or summons? Today it was us, tomorrow it can be any other innocent person,” Amit told the Indian Express.
The bank in reply to a mail by the Singhs in January 2022 stated that the account has been frozen “as we have received provisional attachment order no 02/2022 dated 12.01.2022 from the deputy director, Enforcement Directorate, Hyderabad, issued under section 5(1) of Prevention of Money Laundering Act 2022 against Kudos Finance and Investments Private Limited and its fintech associates.”
The Singhs stated in February 2022 that their account is in the name of "Kudos," not "Kudos Finance and Investments Private Limited," and that they had no connection to or transactions with the business that the ED was investigating.
An ED press note from December 2021 states that the fintech company's name surfaced after the ED investigated several Indian NBFCs for entering into agreements with fintechs purportedly backed by Chinese funds that operate mobile apps for instant personal microloans.
On October 31, 2022, the Singhs were in for another shock as they attempted to contact the government for a response during the COVID-19 pandemic. Without notifying them, the bank transferred Rs 1,00,325 from the frozen account to the ED.
They experienced "huge monetary as well as physical and mental loss," according to the Singhs, and this had a negative effect on their business, which "reduced to 20-30% when comparing to the previous growth rate." Finally, through Bhavya, the shop's owner, the Singhs moved Delhi HC in March 2024, almost two years later.
After Singhs' attorneys Ashish Dabas and Anurag Srivastava informed the court that the five directors of Kudos Finance and Investments Private Limited "are totally separate" from the Kudos of the Singhs, a Delhi-based proprietorship firm, the HC issued a notice that same month.
It would take ED almost ten months to acknowledge their mistake in a case of mistaken identity. Arkaj Kumar, the ED's standing attorney, informed Justice Manoj Jain during Monday's hearing that "at the very outset…unfortunately, it was a case of mistaken identity.”
Justice Jain, in its order, recorded, “According to him (Kumar), the account of one entity known as “KUDOS FINANCE AND INVESTMENT PVT. LTD.” was to be attached/frozen but because of the similarity in the name and on account of such utter confusion, the account of the petitioner herein has been attached. He submits that he would have no objection if the writ petition is allowed and the account is directed to be defreezed with immediate effect. It is also undertaken that the above said amount of Rs. 1,00,325/-, which had been transferred from the petitioner’s current account, would be re-transferred to her account within a period of four weeks.”
Singhs’ advocates submitted before the court that the petitioner, “however, reserves her right to seek compensation for such wrongful attachment of her current account.”
According to the Singhs, they still have not received the re-transferred money.
On Tuesday evening, Amit told the Indian Express, “The court should have ordered that they pay compensation to us but it didn’t since ED admitted that it was a mistake at their end. Are we forgiven and told not to pay the interest if we default on loans and admit it was a mistake? Why are the rules different for us common people and agencies like ED? In this age of online transactions, it can just be anyone whose bank account is frozen.”