9911796707
TMI Blog1995 (11) TMI 352X X X X Extracts X X X X X X X X Extracts X X X X ..... as-3. According to the first petitioner, after visiting a nearby Jain temple in the morning, he generally used to sit in the shop for some time, for the past more than three years. Petitioner No. 1 states in his affidavit that the petitioners have been constrained Jo take exception to the misuse of provisions of the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as "the FERA"), by a number of overenthusiastic Enforcement Officers under the sway of the fickle mistress that absolute power happens to be, against some luckless victims, like the petitioners. It is stated that the petitioners have fallen into the bad books of the Enforcement Officers. There was a raid on October 1, 1993, in the shop belonging to the elder son, Vijayaraj Jain. Nothing incriminating could be recovered, though a mahazar was prepared on that day. It is averred that after a lapse of more than seven months, the respondents, with a number of other Enforcement Officers, repeated the same exercise without any reasonable or probable cause, simultaneously at the residence of the first petitioner and the shop of his eldest son at Ekambareswarar Agraharam on May 10, 1994. At that time, the first petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Officers took the petitioners to their illegal custody without there being any reason to believe that the petitioners are guilty of any offence punishable under any of the provisions of the FERA. They did not inform the petitioners about the grounds of their arrest from the shop on May 10, 1994. It is said that the petitioners were served with summons only under section 40 of the FERA, 1973, but actually the petitioners were arrested by respondents Nos. 3 and 4 at about 4 p.m. on May 10, 1994, and lodged in the Enforcement Directorate Office at Shastri Bhavan. The petitioners have stated that at dead of night, the third respondent dictated an inculpatory prolix statement to each of the petitioners separately to be written in their own handwriting, wherein they have freely used the words like "Singapore", "Deen", whereby they could attribute an offence of violation of the provisions of the FERA against the petitioners. Copy of the statement of the petitioners so recorded by the Enforcement Officers was not given to any of them, for reasons best known to the Enforcement Officers. The petitioners would say that the statements in question are not their voluntary statements and they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... detention in the guise of summoning the detenus to the Enforcement Officers either to give evidence or produce a document. It is stated that the detention of the petitioners was, therefore mala fide, contrary to law and extra-statutory. It is said that section 35 of the FERA empowers an Enforcement Officer to arrest persons suspected of being guilty of any offence punishable under the FERA. Again, arrests are to be generally resorted to where the detected offence is of a serious nature, or there is evidence of personal culpability and a strong prima facie case and the likelihood of the person tampering with the evidence or by remaining absconding. It is said that there is no such allegation so far as the petitioners are concerned. It is also said that procedural fairness is among the key purposes of the Constitution of India. According to the petitioners, their arrest is in direct violation of article 21 of the Constitution. The petitioners would say that there is a tendency on the part of the enforcement authority to bolster up a false case for its own subjective satisfaction or for statistical purposes. It is said that the powers conferred on the Enforcement Officers under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay 10, 1994, from the premises bearing Door No. 11-C/1, Ekambareshwarar Agraharam, Park Town, Madras-3, to be unconstitutional, ultra vires, illegal and prohibiting the respondents from continuing the investigation relating to petitioners, and also for other reliefs which this court may deem fit and proper in the circumstances of the case. Along with the writ petition, the petitioners filed W.M.P. No. 14267 of 1994, praying for an order staying all further proceedings as incorporated in Summons No. T3/130/S2/C/94, dated May 10, 1994, pending disposal of the writ petition. The writ petition came up for admission on May 18, 1994. This court ordered notice in W.M.P. No. 14267 of 1994, while admitting the writ petition. For the writ petition, a counter affidavit was filed by the respondents, stating that the officers of the Enforcement Directorate, while conducting investigations under the FERA, have been acting strictly in accordance with the procedure laid down by law. The allegation that the petitioners were in the bad books of the Enforcement Officers is denied. It is stated that the Directorate of Enforcement conducts investigation when there is sufficient material in their han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gave voluntary statements, in their own handwriting, in which they have used the words "Singapore" and "Deen". It is further contended that a show-cause notice dated October 20, 1994, for contravention of section 9(1)(b) of the FERA, to the extent of Rs. 3,20,000 has been issued to the first petitioner. The said show-cause notice has been returned undelivered with the remarks "Not found, not claimed and later served in person on January 11, 1995''. In the said show-cause notice, the petitioners were also informed that if they want they can also inspect the originals of the documents which the department wants to rely on. In the later portions of the counter-affidavit, the respondents have also stated that the petitioners were never arrested nor detained, as alleged in the affidavit, and that there was no violation of article 21 of the Constitution of India. It is further stated that the department had enough material in its possession, leading the officers to believe that the facts and circumstances of the case necessitated a search and seizure. It is further stated that the seizure of currency of Rs. 3,21,800 was made by the officers concerned, as the first petitioner was not abl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ths from the date of seizure of the amount from the business premises. It is said that though the search and seizure were on May 10, 1994, proceedings have been initiated only on January 11; 1995, when the first petitioner received the show-cause notice which, according to the petitioners, is beyond six months, and hence invalid. It is also stated that since it is beyond six months, the respondents are not entitled to retain the amount seized and the same is liable to be returned. It is also stated that before initiation of proceedings, there was no reason to believe that the petitioners have violated any of the provisions of the FERA, and the respondents are only fishing on suspicion, and the entire procedure adopted by the respondents is illegal. Since the respondents have already filed a counter-affidavit in the amendment petition, meeting all the contentions made therein, a further counter-affidavit was not filed by the respondents to the amended writ petition. Writ Petition No. 9539 of 1994 : This writ petition is filed by the two sons of the first petitioner in W. P. No. 9380 of 1994. In the affidavit filed in support of the said writ petition, which is sworn to by the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers) and one note book with 23 written pages. It is further said that the amount represented the trade balance of the shop premises, a proper account of which is maintained by the first petitioner. Neither the petitioners' father nor their servant was concerned or connected with the Indian currency in question. The same was disclosed by the father to the Enforcement Officers. A mahazar was prepared on May 10, 1994, both at the residential premises and the shop premises. Copies of the same have been filed along with the writ petition. It is said that the second petitioner was arrested from the residence, and the petitioners' father and their servant were arrested from the shop premises by about 4 p.m. on May 10, 1994. They were not informed about the ground of arrest. They were lodged in the hall of the Enforcement Directorate at the III Block in the III Floor of the Shastri Bhawan Building for two days without being produced before any Magistrate and without permitting them to contact any of their family members or any advocate. It is said that on May 10, 1994, night, the fourth respondent directed the detenus to give a statement in their own hand-writing, as dictated by the office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , a copy of the same has not been given to him, and the statement given by him is not voluntary. It was obtained under coercion and as dictated by the fourth respondent herein. It is said that section 37 of the FERA confers drastic powers of search and seizure on the Enforcement Officers, and, that, unlike similar English statutes, there is no requirement of taking prior approval of any other authority after placing the materials on the basis of which the search is proposed to be conducted. The only safeguard against abuse of power is the requirement of having "reason to believe". But even this slender requirement is invariably followed in the breach rather than in its compliance. It is said that the Enforcement Officers make a scare-crow of his ritual by adopting ingenious methods. The Enforcement Officers would bring with them a cluster of search warrants sealed and signed in advance by some Enforcement Officers, comparatively higher in rank, and they would fill up the blanks at the time of conducting the raid, to show the said search warrant from a distance and call upon the occupant of the house or shop to put his signature on the so-called search warrant, without giving him a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw. To prosecute any citizen, they do not require any independent evidence or tangible material. The inculpatory statement of the person concerned, obtained by threat and inducement, is made admissible in courts. It is said that the phrase "reason to believe" has practically lost it legal as well as grammatical meaning in the Enforcement Branch. The Enforcement Officials have unlimited powers to enter people's premises and take their property away, and these powers are frequently exercised on a massive scale. When their action is challenged in a court of law, the officers refuse to divulge the grounds for formation of the belief on the ground that it would frustrate the investigation altogether. It is said that the process has gone too far. It is further said that the arrest of the second petitioner from his residence on May 10,1994, at about 4 p.m. by the Enforcement Officers and keeping him in their illegal custody till 9.30 p.m. on May 11, 1994, is unconstitutional, ultra vires and in colourable exercise of the power of arrest enjoyed by the over-enthusiastic Enforcement Officers arrayed as parties to these writ petitions. Further, according to the petitioners, the arrest and de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent, Union of India, to set the criminal law in motion against respondents Nos. 3 and 4 and six other Enforcement Officers responsible for the illegal search and seizure of the Indian currency of the first petitioner and arrest and detention of the second petitioner, and for other reliefs as this court may deem fit and proper in the circumstances of the case. A detailed counter-affidavit has been filed by the respondents, and the same is sworn to by the second respondent, Deputy Director of the Enforcement Directorate, stating as follows: On the basis of reliable information, the shop premises of Vijay Steel Centre were searched on January 19, 1993, by the officers of Emforcement Directorate, in terms of section 37 of the FERA. While the first petitioner's shop premises were searched between 11.45 hrs. and 15.40 hrs. on May 10, 1994, his residence was searched the same day between 13.30 hrs. and 14.15 hrs. As regards the amount of Rs. 3,21,800, the father of the petitioners explained in his statement dated May 10, 1994, that on the morning of May 10, 1994, he had received Rs. 3,20,000 from an unknown person by order of one Deen of Singapore having telephone No. 2944422 and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the documents specified therein, in the Schedule. The searches did not result in the seizure of the first petitioner's passport or his bank pass book or the details of his properties, and, therefore, the first petitioner had been asked to produce the same during his appearance. All the necessary ingredients of a summons under section 40 of the FERA were complied with, and the same was also clearly pointed out in the summons. The second petitioner was not at all arrested. He gave a statement before the Enforcement Officer on May 10, 1994, under section 39 of the FERA, in his residence itself after the search was completed. He was not brought to the office of the respondents at all. The respondents deny the allegation that the second petitioner was kept in illegal custody. It is stated that copies of the statements will be furnished to the petitioners as and when proceedings are initiated for adjudication. It is further stated by the respondents in their counter that the search under section 37 of the FERA is not such a simple procedure as averred by the petitioners. Certain procedures have to be followed invariably while conducting search and seizure operations. It is not mandato ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 3,21,800 seized by the respondents. A learned judge of this court, after hearing both sides, dismissed the said petition. It is against that order, Writ Appeal No. 679 of 1995 has been filed. In the order dismissing W.M.P. No. 16365 of 1994, the learned judge has directed that both the writ petitions may be heard together. When this writ appeal came up for admission, this court felt that it is better to dispose of the writ petitions also along with the writ appeal, and hence they were also called for hearing. In the writ appeal also, the petitioners (appellants) have filed C.M.P. No. 8257 of 1995, to restrain the respondents-Enforcement Officers from continuing the adjudication proceedings, C.M.P. No. 8258 of 1995, for a direction to the respondents to return Rs. 3,20,000, seized from the father of the petitioners. In the writ appeal, the appellants are referred to as sons, who are the petitioners in W.P. No. 9539 of 1994. Even though the constitutionality of section 40 of the FERA was questioned in the writ petitions rejoinder and reply affidavit, at the time of arguments, learned counsel for the petitioners submitted that he reserves that argument to be raised in some o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration anything contained in the file as the same had not been disclosed in any proceedings before the court even though a counter-affidavit has been filed in both the writ petitions. According to learned counsel for the petitioners, if we look into the files the petitioners will be prejudiced and he pleaded that we should not look into the same. Section 37 of the FERA reads thus: "37. (1) If any Officer of Enforcement, not below the rank of an Assistant Director of Enforcement, has reason to believe that any documents which, in his opinion, will be useful for, or relevant to, any investigation or proceeding under this Act, are secreted in any place, he may authorise any Officer of Enforcement to search for and seize or may himself search for and seize such documents. (2) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to searches, shall, so far as may be, apply to searches under this section subject to the modification that sub-section (5) of section 165 of the said Code shall have effect as if for the word 'Magistrate', wherever it occurs, the words 'Director of Enforcement or other officer exercising his powers' were substituted." The langua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the Customs Act. It is further held in that case that once it is held that there are materials relevant and germane, the sufficiency of the materials is not open to judicial review. We are only concerned whether there was material or not, and not its sufficiency. For that is a matter which the officer of the department has to consider, and whether that material has got any connection with the search and seizure. In paragraph 16 of the said judgment, their Lordships held thus: "... 'reasonable belief' that the goods were smuggled goods, is not a question on which the court can sit on appeal. The circumstances under which the officer concerned entertains a reasonable belief, have to be judged from his experienced eye of one who is well equipped to interpret the suspicious circumstances and to form a reasonable belief." In Pukhraj v. D.R. Kohli, AIR 1962 SC 1559, their Lordships were considering the question of confiscation of goods under Sea Customs Act. A contention was taken before the court that seizure of gold from the appellant in that case had been effected by the officer concerned without any reasonable belief that the goods were smuggled. The argument was that the questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material before the Collector, to justify the finding that the gold was smuggled." In S. Narayanappa v. CIT, AIR 1967 SC 523, 524; [1967] 63 ITR 219, 221, the question that came up for consideration was under section 34 of the Income-tax Act, regarding the reopening of the assessment. While interpreting "reason to believe" under section 34 of the Income-tax Act, their Lordships held thus: "It is true that two conditions must be satisfied in order to confer jurisdiction on the Income-tax Officer to issue the notice under section 34 in respect of assessments beyond the period of four years, but within a period of eight years, from the end of the relevant year. The first condition is that the Income-tax Officer must have reason to believe that the income, profits or gains chargeable to income-tax had been underassessed. The second condition is that he must have reason to believe that such 'underassessment' had occurred by reason of either (i) omission or failure on the part of an assessee to make a return of his income under section 22, or (ii) omission or failure on the part of the assessee to disclose fully and truly all the material facts necessary for his assessment for that yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Assistant Collector shall give reasons. The power conferred on him under section 105 is not subject to any such condition. Though he cannot make a search or authorise any officer to make a search unless he has reason to believe in the existence of the facts mentioned in the section, the section does not compel him to give reasons. While it may be advisable, and indeed proper, for him to give reasons, the non-mention of reasons in itself does not vitiate the order. Nor can we agree with the appellant that the particulars of the nature of the goods and of the documents should be given in the authorisation. Obviously, no question of giving of particulars arises if he himself makes the search, but if he authorizes any officer to do so, he cannot give the particulars of the documents, for they will be known only after the search is made..." In Balumal Jamnadas Batra v. State of Maharashtra [1975] 4 SCC 645; AIR 1975 SC 2083, 2085, was also a case under the Customs Act, where a person was carrying gold. Their Lordships of the Supreme Court justified the action of the department and held that there was "reason to believe" for the following reasons: "The very appearance of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act are secreted. The material on which the belief is grounded may be secret, may be obtained through intelligence or occasionally may be conveyed orally by informants. It is not obligatory upon the officer to disclose this material on the mere allegation that there was no material before him on which his reason to believe can be grounded. The expression 'reason to believe' is to be found in various statutes. We may take note of one such. Section 34 of the Indian Income-tax Act, 1922, inter alia, if provides that the Income-tax Officer must have 'reason to believe' that the income, profits or gains chargeable to income-tax have been under assessed, then alone he can take action under section 34. In S. Narayanappa v. CIT [1967] 63 ITR 219; [1967] 1 SCR 590; AIR 1967 SC 523, the assessee challenged the action taken under section 34 and amongst others it was contended on his behalf that the reasons which induced the Income-tax Officer to initiate proceedings under section 34 were justiciable, and, therefore, these reasons should have been communicated by the Income-tax Officer to the assessee before the assessment can be reopened. It was also submitted that the reasons must be suffici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant to any proceeding under the Act. The legislative policy reflected in the section is that the search must be in regard to the two categories mentioned in the section. The court further observed that though under the section, the officer concerned need not give reasons, if the existence of belief is questioned in any collateral proceedings, he has to produce relevant evidence to sustain his belief. A shield against the abuse of power was found in the provision that the officer authorised to search has to send forthwith to the Collector of Customs a copy of any record made by him. Sub-section (2) of section 37 of the Act takes care of this position inasmuch as that where an officer below the rank of the Director of Enforcement carried out the search, he must send a report to the Director of Enforcement. The last part of the submission does not commend itself to us because the file was produced before us and as stated earlier, the officer issuing the search warrant had material which he rightly claimed to be adequate for forming the reasonable belief to issue the search warrant. It was, however, contended that when sub-section (2) of section 37 is read in juxtaposition with su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 66 ITR 664; AIR 1968 SC 59, held that 'the obligation to record in writing, the grounds of the belief as enjoined by section 165(1), if not complied with would vitiate the issuance of the search warrant and the seizure of the articles'. It was then submitted that if the search is illegal, anything seized during such an illegal search has to be returned as held by a learned single judge of the Calcutta High Court in New Central Jute Mills Co. Ltd. v. T.N. Kaul, AIR 1976 Cal 178. Section 37(2) provides that 'the provisions of the Code relating to searches, shall so far as may be, apply to searches directed under section 37(1). Reading the two sub-sections together it merely means that the methodology prescribed for carrying out the search provided in section 165 has to be generally followed. The expression 'so far as may be' has always been construed to mean that those provisions may be generally followed to the extent possible. The submission that section 165(1) has been incorporated by pen and ink in section 37(2) has to be negatived in view of the positive language employed in the section that the provisions relating to searches shall so far as may be apply to searches under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of writ petitions (Mohideen Abdul Kadir v. Collector of Central Excise-order dated September 28,1989), wherein a Division Bench has held thus: "Dealing with W.P. Nos. 11181 and 11246 of 1988, learned counsel contended that there was no basis for the authorities to entertain a reasonable belief that Rs. 20 lakhs of Indian currency seized in the case, were liable for confiscation and that, therefore, the seizure is illegal. Reliance was placed upon the decision of the Supreme Court in Pukhraj v. D.R. Kohli, AIR 1962 SC 1559, wherein the court held that possession of 290.6 tolas of gold with a person who was travelling without a ticket, was prima facie sufficient to justify a reasonable belief and that the court was not sitting in appeal over the decision of the officer. It is also pertinent that this question was gone into and these observations were made in an appeal against the orders of confiscation and penalty. In the instant case, Rs. 20 lakhs found in a lorry booking office sought to be transported in a goods vehicle without way bills or any other record, are circumstances enough, for a reasonable belief." In Superintendent of Central Excise v. A. Govindarajan [1976] Tax LR 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id that "reasonable belief only means a belief within the limits of reason based on the materials available and not an absurd conclusion". In that case, a learned judge of the Kerala High Court upheld the contention of the department regarding "reasonable belief" only on the ground of appearance of goods, inscriptions thereon and the fact that the accused were not in a position to give proper explanation for the possession of such a large quantity of yarn in unopened bundles. In Union of India v. Shyamsundar, AIR 1994 SC 485, the question that came up for consideration was, whether the Enforcement Officers had reason to believe that certain wrist watches of foreign origin, in the possession of the accused therein, were smuggled watches. The trial court as well as the first appellate court convicted the accused. The High Court reversed the same. The matter was taken before the Supreme Court. Their Lordships, following the decisions in Pukhraj v. D.R. kohli, AIR 1962 SC 1559 and State of Gujarat v. Mohanlal Jitamalji Porwal [1987] 2 SCC 364; AIR 1987 SC 1321, held thus (page 486): "The learned Additional Solicitor-General, Mr. K.T.S. Tulsi, took us very meticulously through the rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne circumstance to hold that there was "reasonable belief". In N. Nagendra Rao and Co. v. State of Andhra Pradesh [1994] 6 SCC 205, 216; AIR 1994 SC 2663, 2670, the Supreme Court had occasion to consider the expression "reason to believe" in the Essential Commodities Act. In paragraph 5 of the judgment, it was held thus: "The expression 'reason to believe' has been interpreted by this court to mean that even though formation of opinion may be subjective but it must be based on material on the record. It cannot be arbitrary, capricious or whimsical. It is, thus, a check on exercise of power to seize the goods ..." It is on the above settled position of law, we have to consider whether there was "reasonable belief" on the part of the respondents in this case to order search and seizure, and whether the act done by them was in any way tainted with mala fides or lacking in good faith. It is not disputed by the parties that there was a prior search in the premises of the first petitioner in W.P. No. 9539 of 1994. Of course the search did not result in the recovery of any incriminating materials. That search was not questioned by any one. It is averred in the counter-affidavit that e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... last few years, I have repeatedly observed that if the respondents want to rely upon any records or other public documents, extracts of the material portion thereof (if not copies) should be appended to the counter-affidavit so that the petitioner might have timely notice and an opportunity to contradict them in his affidavit in reply". The said decision has no application to the facts of this case. Here, we are concerned with an investigation which, in the very nature, is secret. The very purpose of the investigation will be thwarted if the details are published or made open. In this connection, it is worthwhile to consider a Bench decision of the Patna High Court in Ram Swamp Sahu v. CIT [1992] 196 ITR 841, where it was held thus (headnote): "... the documents and information on the basis of which the authority had arrived at his satisfaction for conducting the search and seizure could not be disclosed to the petitioner as it would hamper the inquiry pending against them ..." In fact, in most cases concerning the challenge of search and seizure, we find that courts have been perusing the file produced by the Department for their satisfaction. But, in the instant case in view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inister. The file alleged to contain the information was also produced before the court, and, after perusing the file, the court said that one of the documents produced before the court could be the basis for the formation of requisite belief in the case. In fact the Enforcement Directorate in that case was directed to make an enquiry about the nationality of the petitioner therein, and, it was, while making such enquiry, they searched the premises of the petitioner therein. The facts of that case are entirely different, and they have no relevancy to the facts of this case. These writ petitions have also been prepared on the basis of the decision in Bishnu Krishna Shrestha v. Union of India [1987] 168 ITR 815 (Cal). The Calcutta High Court has also held that if the search is held invalid, the document which was taken into custody must also be returned. This court as well as the Supreme Court have held otherwise, vide Dr. Partap Singh v. Director of Enforcement, Foreign Exchange Regulation Act [1985] 58 Comp Cas 477 ; [1985] 155 ITR 166; AIR 1985 SC 989. Learned counsel for the petitioners also relied on various other decisions to impress upon us that the "reason to believe" must b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addressee refused to accept the same. No doubt the presumption is rebuttable and it is open to the party concerned to place evidence before the court to rebut the presumption by showing that the address mentioned on the cover was incorrect or that the postal authorities never tendered the registered letter to him or that there was no occasion for him to refuse the same. The burden to rebut the presumption lies on the party, challenging the factum of service. In the instant case, the respondent failed to discharge this burden as he failed to place material before the court to show that the endorsement made by the postal authorities was wrong and incorrect. Mere denial made by the respondent in the circumstances of the case was not sufficient to rebut the presumption relating to service of the registered cover." This court in Deputy Director, Enforcement Directorate v. Naina Maricair, AIR 1990 Mad 22, has held that proceedings under section 51 of the FERA commenced as soon as a show-cause notice is issued, and not when a notice of hearing is issued. In paragraph 15 of the judgment, it is held thus (page 28): "We shall now refer to some of the decisions placed before us. As rightly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, hold that adjudication proceedings under section 51 of the Act commence, when a show-cause notice is issued by the adjudicating officer under rule 3(1) and not when a notice of hearing is issued under rule 3(3)." In this case, learned Additional Central Government standing counsel showed before us the postal cover sent to the first petitioner in W.P. No. 9380 of 1994, which was returned. It is seen therefrom that the same was despatched on October 20, 1994, but the same could not be served for the reasons "not found" "not claimed". It is the same notice that was again issued to the first petitioner in W.P. No. 9380 of 1994, who received the same after a period of six months, i.e., on January 11, 1995. Therefore, under no stretch of imagination can it be said that the proceedings are vitiated. Learned counsel for the petitioners further submitted that Indian currency is not a document, for the purpose of section 34 of the FERA and hence the Department cannot continue to retain the same. For the said purpose, learned counsel relied on the. decision in Koidunny (M.K.) v. Collector of Customs and Central Excise, Cochin [1971] MLJ (Crl.) 553. In that case, a learned judge of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of the Department that they were summoned at 6 p.m. only to enable them to close the business for the day. It is also their case that immediately after the statement was taken, they were discharged, and they were never arrested. In this case, the second petitioner, in W.P. No. 9380 of 1994 has not filed any affidavit alleging that he was detained. He has also given a statement before the Enforcement Directorate. Under the FERA, the department is given power to arrest any person. If the Department has intention to arrest any person, there is nothing to prevent it from issuing a warrant. Section 35 of the FERA enables the Department to do so. When they have got such a power, they need not summon persons, and thereafter, detain them. Moreover, there is a denial by the Department regarding the alleged arrest. Except for a mere allegation in the petitions there is no evidence on the part of the petitioners, to prove the same. Learned counsel for the petitioners also submitted that it was improper on the part of the Enforcement Officers to direct the petitioners in W.P. No. 9380 of 1994 to appear before them after 6 p.m., and thereafter, detain them for questioning, and that is als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whatever answers are given by the witness can be taken down by the officer'." It has been submitted that in the present case, the statements should be excluded from consideration since the respondents have been made to write down statements in their own hand. Though there is no provision of law under the Customs Act requiring a person to write down his own statement, at the same time there is no prohibition to a person giving his statement in writing in his own hand. In fact, it would be better if the authorities under the Customs Act and the FERA take the statements of a person in his own hand, so that there may not be any complaint subsequently, that the authorities have not recorded the statements properly. We have drawn strength for the above view from the observation made by the Supreme Court in the judgment in Amba Lal v. Union of India, AIR 1961 SC 264, 267, reading as follows: "It would have been better if the customs authorities had taken that admission in writing from the appellant, for that would prevent the retraction of the confession on second thoughts. That apart, it is more satisfactory if a body entrusted with functions such as the customs authorities are entrus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said that such a person comes into the custody of the Customs Officer concerned, amounting to arrest? In our view, there is no such custody amounting to an arrest in such a situation. Further, as rightly pointed out by Mr. P. Rajamanickam, the learned public prosecutor, there is no question of surveillance, official or unofficial, in summoning a person for interrogation, and a person taken for interrogation cannot be said to have been arrested within the meaning of the said term. If such wide interpretation is given, then even the attendance of a person before a police officer under section 160(1) of the Criminal Procedure Code, would amount to an arrest. That is definitely not the law". Learned counsel for the petitioners submitted that before filing the writ petitions a telegram was issued to the Chief Justice requesting him to direct the respondents to release the detenus, and an attempt was made to file a writ of habeas corpus during vacation, and all this will show that the petitioners were detained. According to him, the denial by the Department regarding the arrest and detention, cannot be believed. We are of the view that the sending of the telegram and the attempt to f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In our view, a proceeding under section 41 of the Act can be held to have commenced on issuance of the show-cause notice ..." The respondents have a case that the amount that was seized by them belonged to the father, and not to the sons (petitioners in W.P. No. 9539 of 1994). The statement given by the father is also relied on by them for the said purpose. The statement has been written by the father himself in his own handwriting. An English translation of the same has also been produced, wherein he has admitted that he received a sum of Rs. 3,20,000 from an unknown person under instructions from one Deen of Singapore. In this connection, it should also be remembered that the said amount was recovered from the drawer of a counter table, in the shop. The source is not properly explained. Apart from an allegation in the writ petitions that it represented the trade balance as on that date, there is no other explanation as regards the source for the presence of the said sum in the shop at the time of seizure. Apart from the statement of the father, there is no other statement from any of the petitioners. The question of trade balance was raised only in W.P. No. 9539 of 1994, long af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, facts will have to be proved, and the petitioners also will be given opportunity to adduce their evidence. He wanted that this court should not interfere at this stage. Learned counsel for the petitioners contended that when the show-cause notice is issued without any basis, the same amounts to an abuse of process or something done without jurisdiction. We have already held that the respondents had reason to believe that there was material for ordering search and seizure. The question whether proceedings have to be initiated under section 51 of the FERA is to be decided by the Department after the explanations of the petitioners are received. At this preliminary stage, the court will be reluctant to interfere. In Assistant Collector of Central Excise, Chandan Nagar v. Dunlop India Ltd. [1985] 58 Comp Cas 145; AIR 1985 SC 330, their Lordships of the Supreme Court deprecated the practice of invoking the extraordinary jurisdiction of this court when the petitioners have got effective alternative remedy. In that case, it has been held thus (headnote): "Article 226 is not meant to shortcircuit or circumvent statutory procedures. It is only where statutory remedies are entirely il ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any order. This power is exercised by the Central Government suo motu. Of course the power is to be exercised on giving notice to the person concerned. The provisions contained in section 131(5) of the Act speak of limitation only with regard to non-levy or short-levy. It is significant that section 131(5) does not speak of any limitation in regard to revision by the Central Government of its own motion to annul or modify any order of erroneous refund of duty. The provisions contained in section 131(5) with regard to non-levy or short-levy cannot be equated with erroneous refund inasmuch as the three categories of errors in the levy are dealt with separately. The appellant's prayers for writs of certiorari and mandamus are misconceived. There is no order either judicial or quasi-judicial which can attract certiorari. No mandamus can go because there is nothing which is required to be done or forborne under the Act. The issue of the notice in the present case requires the parties to represent their case. There is no scope for mandamus to do any duty or act under the statute. A writ of prohibition cannot be issued for the obvious reason that the Central Government has jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Surely matters involving the revenue where statutory remedies are available are not such matters. We can also take judicial notice of the fact that the vast majority of the petitions under article 226 of the Constitution are filed solely for the purpose of obtaining interim orders and, thereafter prolong the proceedings by one device or the other. The practice certainly needs to be strongly discouraged.' In addition to this, we may point out here that a Division Bench of this court in Karnataka State Road Transport Corporation v. Karnataka State Transport Authority, AIR 1984 Kar 4, had an occasion to consider as to under what circumstances the extraordinary jurisdiction of this court under article 226 of the Constitution can be exercised when there exists an equally efficacious alternative remedy of appeal and it was held thus (page 10): 'Even where an equally efficacious alternative remedy exists, where, however, fundamental rights are affected, where rules of natural justice are violated, or where there is a failure on the part of the authority concerned to confine itself within the bounds of its legitimate jurisdiction or where there is a failure to exercise a jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be challenged in appeals or other remedies can hardly be doubted. 8. The fact that the notices are show-cause notices and the petitioner has an opportunity to appear and urge its case does not touch on the jurisdiction of this court to examine them and decide the question at the threshold itself. 9. But the excise duty is payable on the manufactured goods by the manufacturer in the first instance though it may happen that he may pass on the same to the buyer of goods or consumer. On the very terms of the show-cause notices, the petitioner is bound to pay the excise duty which it has not been paying from March 1, 1978. In all probability, the superintendent is likely to stick to his view expressed in the show-cause notices. In the circumstances, I consider it proper to examine the validity of the show-cause notices and decide the questions finally. Paras. 10 to 16 .... 17. On the above discussions, it follows that the action of the superintendent is manifestly illegal and the same justifies the interference by this court'." In view of the above said legal position, we find force in the submissions made by learned Additional Central Government standing counsel. In these writ p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment during the course of any investigation or proceeding under this Act. Sub-section (3) of section 40 of the FERA also says that all persons so summoned shall be bound to attend either in person or by authorised agents, and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and produce such documents as may be required. We have already stated that the father of the petitioners in W.P. No. 9539 of 1994, has given a statement in respect of certain documents seized that the handwriting is that of his son Vijayaraj Jain, the first petitioner in W.P. No. 9539 of 1994. The father as well as the servant (petitioners in W.P. No. 9380 of 1994) have stated that only Vijayaraj Jain knows the contents and veracity of the documents seized. It is on the basis of the said information given by the father and the servant, the Department wanted the son also to be summoned. Under section 40 of the FERA, the department has power to summon any person during the course of investigation. When a proceeding is pending against the father under section 9(1) of the FERA, for an alleged violation of section 9(1)(b) of the FERA, on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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