1969 (2) TMI 191 - HC - Customs

Summary

Issues Involved:
1. Validity of Sections 23(1)(a), 23(1)(b), 23-D, and 23-F of the Foreign Exchange Regulation Act, 1947.
2. Applicability of the Criminal Procedure Code (CrPC) to the investigation of offences under the Foreign Exchange Regulation Act.
3. Jurisdiction of the Special Police Establishment to investigate offences within a State.

Detailed Analysis:

1. Validity of Sections 23(1)(a), 23(1)(b), 23-D, and 23-F of the Foreign Exchange Regulation Act, 1947:

The petitioner challenged Sections 23(1)(a), 23(1)(b), 23-D, and 23-F on the grounds that they conferred "unfettered, unguided and arbitrary powers" on the Director of Enforcement, which violated the Constitution. Section 23(1) allows the Director to impose penalties or initiate criminal proceedings. Section 23-D outlines the procedure for inquiries, and Section 23-F criminalizes non-payment of penalties imposed by the Director.

The court referenced the Supreme Court decision in Shanti Prasad v. Director of Enforcement, which upheld the special procedure for investigating breaches of foreign exchange regulations, finding it constitutionally valid. The court also cited Union of India v. Sukumar, which reiterated the validity of such procedures. The court held that the adjudication proceedings under Section 23(1)(a) are civil in nature and do not become criminal due to Section 23-F. Thus, the provisions were not unconstitutional.

2. Applicability of the Criminal Procedure Code (CrPC) to the investigation of offences under the Foreign Exchange Regulation Act:

The petitioner argued that the Foreign Exchange Regulation Act prescribes its own procedure for investigation, making the CrPC inapplicable. Section 5(2) of the CrPC states that offences under any other law should be investigated according to the CrPC, subject to any special enactment. The court noted that Sections 19-A to 19-F of the Act confer police powers on the Director of Enforcement and his subordinates, implying that the police cannot investigate these offences except as provided under Section 19-J(2).

Section 19-J(2) specifically allows police officers to arrest without a warrant in public places for offences under Section 4(1) of the Act. The court concluded that the police could not investigate other offences under the Act without a complaint from the Director of Enforcement and the order of a Magistrate. Therefore, the police's general powers under the CrPC were limited by the special provisions of the Act.

3. Jurisdiction of the Special Police Establishment to investigate offences within a State:

The petitioner contended that the Special Police Establishment, being a Central Government force, lacked jurisdiction to investigate offences within a State, as police is a State subject. The court examined the Delhi Special Police Establishment Act, 1946, which allows the Central Government to extend the powers of the Delhi Special Police Establishment to any State with the consent of the State Government.

The court found that the Act was validly enacted under the Government of India Act, 1935, and continued under Article 372 of the Constitution. The consent of the Madras Government was obtained, as evidenced by notifications. The court held that the Central Government's extension of the Special Police Establishment's powers to States was within its legislative competence, and the consent of the State Government provided a safeguard.

The court also rejected the argument that citizens could be subjected to dual investigations by State and Central police, noting that the Special Police Establishment would typically investigate offences notified under Section 3 of the Act. The court concluded that the Special Police Establishment had jurisdiction to investigate offences, including Section 420 IPC, within the State.

Conclusion:

The court dismissed all the petitions, upholding the validity of the challenged provisions of the Foreign Exchange Regulation Act, limiting the applicability of the CrPC to investigations under the Act, and affirming the jurisdiction of the Special Police Establishment to investigate offences within a State. No order as to costs was made.