Bank Account Provisional Attachment Under Section 110(5) Void After Six Months Without Extension: Bombay High Court

Background of the Dispute

The Bombay High Court, in the matter of Di Lusso Furniture LLP. & Ors. Vs Union of India & Ors., dealt with a challenge to the provisional attachment and freezing of several bank accounts under Section 110(5) of the Customs Act, 1962. The attachment was ordered by the Directorate of Revenue Intelligence (DRI), Mumbai Zonal Unit, on 8 July 2025.

The assessee approached the Court under Article 226 of the Constitution of India, seeking:

  • Quashing of communications and orders issued by DRI to various banks directing freezing of bank accounts, and
  • Directions to unfreeze and restore normal operation of their current accounts.

The DRI had acted on preliminary investigation alleging:

  • Misdeclaration of branded luxury furniture,
  • Substantial undervaluation of imported goods, and
  • Misuse of Import Export Code (IEC),

leading to alleged contraventions of the Customs Act, 1962. To “protect the interests of revenue” and prevent possible duty evasion, the DRI provisionally attached the bank accounts by debiting freeze orders for six months.

Earlier Interim Relief by Co-ordinate Bench

Before the final hearing, a co-ordinate Bench of the Bombay High Court, by order dated 22 September 2025, granted partial interim relief. While the provisional attachment orders were not quashed at that stage, the Bench:

  • Allowed normal operation of the bank accounts, subject to:
    • The assessee maintaining a cumulative balance of ₹4,00,83,126 across the frozen accounts, as detailed in paragraph 12 of the writ petition.

The Court reasoned that:

  • The interests of the department would not be prejudiced if the assessee was permitted to use the accounts, as long as the specified amount remained intact.
  • The interim arrangement was purely protective and did not substitute or modify the statutory framework under Section 110(5).

The matter was kept pending and the respondents were directed to file an affidavit explaining whether any proceedings under the Customs Act were actually pending, given the language of Section 110(5) which speaks of action “during any proceedings under the Act”.

The Provisional Attachment Orders

The main provisional attachment order, dated 08.07.2025, issued by the Deputy Director, DRI, Mumbai Zonal Unit, under Section 110(5) of the Customs Act, recited that:

  • Investigations indicated that Di Lusso Furniture LLP was importing branded luxury furniture through misdeclaration of brands and heavy undervaluation.
  • There were indications of “misdeclaration, gross undervaluation to evade applicable duties, and misuse of the IEC resulting in gross violations of the provisions of the Customs Act, 1962.”
  • On the basis of material gathered, the officer formed an opinion that the funds in the specified bank accounts could be used in a manner detrimental to the revenue.

Accordingly, the officer:

  • Ordered provisional attachment of the identified bank account(s) of the assessee for a period of six months from the date on which the accounts are put on debit freeze.
  • Directed the bank to immediately impose a debit freeze on the said account(s).
  • Noted that the order was issued with the approval of the Principal Additional Director General, DRI, Mumbai Zonal Unit.

Similar orders were passed in respect of:

  • Current account No. 772205500055 with ICICI Bank, Worli branch, and
  • Current account with Standard Chartered Bank, Santacruz (West) branch.

Thus, three accounts stood provisionally attached by orders dated 8 July 2025.

Statutory Scheme Under Section 110(5)

The dispute turned primarily on the correct interpretation and application of Section 110(5) of the Customs Act, 1962. The provision, as reproduced by the Court, states: