TMI Blog2006 (4) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... tc. for the export of cigarettes, tobacco, tea and other commodities to Russia. It is averred that he set up his own business some time in 1992 for export of such commodities. The petitioner claims to have been appointed as Consultant to a Russian company, called ENERGIA which specializes in construction of Hydro and Thermal Power Stations. It is stated that he continues in the capacity as such a Consultant. In October, 2005, the media and various newspapers carried reports relating to the Volcker Report, which had named several persons as recipients of favours, for facilitating in the Iraqi "Oil for Food" programme. The petitioner s son Mr. Andleeb Sehgal and his concern, Hamdan Export were also named. 3. The second respondents (hereinafter referred to as Directorate ) caused two notices to be pasted on 6-11-2005, one outside his house and the other outside the house of Andleeb Sehgal, requiring them to appear in its Offices. The same day apparently raids were conducted in the office of the petitioner and his son. It is claimed that Andleeb Sehgal was required to and appeared on several subsequent occasions before the Directorate in connection with investigations into the Vol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Passport No. B 5079866 2. Z 1378677 Shri Zamil Ajmal Saidi 3. E 1927688 Shri Vijay Dhar 4. Z 1175514 Shri Mohammad Asad Khan 5. D 1106465 and cancelled Kanwar Jagat Singh Passport No. B 5151256 The investigations in the matter are at a very crucial stage and the Directorate is in the process of collection of evidence and recording of statements for which these persons are required in the country. There is also need to ensure that evidence abroad is not tampered with. In view of the foregoing reasons and considering the sensitive nature of the matter and in exercise of the powers conferred upon me under section 37 of FEMA, 1999 read with section 131(3) of the Income-tax Act, 1961, I, hereby impound and retain the above-mentioned passports for the purposes of investigation in the above case. Sd/- (S.K. Panda) Special Director" 6. The petitioner impugns the retention and impounding of his passport as violative of his fundamental rights under Articles 19(1)( d ) 19(1)( g ) read with Article 21 of the Constitution of India. He also alleges that in the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e absence of a specific power to impound passports, the recourse to section 37 was impermissible and illegal. 10. Learned counsel urged that the decisions in Satwant Singh Sawhney v. D. Ramarathnam, Asstt. Passport Officer AIR 1967 SC 1836, and Smt. Maneka Gandhi v. Union of India AIR 1978 SC 597 to say that the right to hold a passport and travel abroad can be only curtailed by reasonable regulations, though valid legislation. The procedure adopted by the respondents was contrary to express provisions of law, and therefore violative of article 19(1)( d )/( g ) and Article 21 of the Constitution of India. 11. The passport could have been impounded only under section 10 of the Passports Act and subject to the conditions stated therein. Section 10 has not been complied with. It was submitted that a passport though a document cannot be impounded under section 37 of FEMA read with section 131 of Income-tax Act during the course of investigations. Counsel submitted that section 37(3) of FEMA states that officers referred to in sub-section (1) shall exercise the like powers which are conferred on Income-tax authorities under the Income-tax Act "and shall exercise such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of passports, that was by no means the only statute which empowered executive authorities to detain or impound passports. It was submitted that the Passport Officer s authority to impound passports under section 10(3) was not exhaustive; on the contrary if there were other statutes or provisions enabling exercise of similar or analogous powers, akin to impounding or detaining passports, those powers had to be seen in the context of their setting. 16. It was submitted that the mandate of Article 21, which extended to the right to hold passports, and travel abroad, was that a person could not be deprived of his liberty or life without complying to a fair procedure, in accordance with law. The provisions of section 37(3) of FEMA and section 131 Income-tax Act could not be called as instances of unfair procedure; the petitioner has in fact not challenged them. 17. The learned Additional Solicitor General next submitted that passport was a document falling within the expression under section 131 of the Income-tax Act, which could be impounded, under section 37 of FEMA. He also submitted that the respondents had validly exercised their independent powers under section 37, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities to seize or deal with classes of documents, other than passports. Adjunct to this line of argument was the contention that reasonable restrictions upon the exercise of the freedom of movement, and right to life, both contained in Part III of the Constitution of India, were enacted in the provisions of the Passports Act, and recourse to any other power, under the guise of exercising independent statutory authority, amounted to an impermissible, unreasonable restriction, upon such rights. 21. Passport is defined under section 3 of the 1967 Act in following terms: "3. Passport or travel document for departure from India. No person shall depart from, or attempt to depart, India unless he holds in this behalf a valid passport or travel document. Explanation. - For the purpose of this section, ( a ) passport includes a passport which having been issued by or under the authority of the Government of a foreign country satisfied the conditions prescribed under the Passport (Entry into India) Act, 1920 (34 of 1920), in respect of the class of passports to which it belongs;" Section 10 of the Act deals with variation, impounding and revocation of passports and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction against the holder of a passport for violating the conditions for grant of passport or for impounding or seizure of the passport should be taken only under the provisions of sections 10, 12, 13 and 14 of the Act and not otherwise. It is also submitted that the police have no power to seize the passport or take action against the holder of a passport under any other Act or otherwise than under the provisions of sections 12, 13 and 14 of the Act. It is contended by the learned counsel for the petitioner that as the petitioner has not committed any offence or violated the conditions for grant of passport, the seizure of the passport of the petitioner effected by the respondents, is illegal." 22. Relevant provisions of FEMA, cited in these proceedings, are extracted below: "13. Penalties. (1) If any person contravenes any provision of this Act, or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes any condition subject to which an authorisation is issued by the Reserve Bank, he shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , when trying a suit in respect of the following matters, namely: ( a )discovery and inspection; ( b )enforcing the attendance of any person, including any officer of a banking company and examining him on oath; ( c )compelling the production of books of account and other documents; and ( d )issuing commissions. (1A) If the Director General or Director or Joint Director or Assistant Director, or Deputy Director or the authorised officer referred to in sub-section (1) of section 132 before he takes action under clauses ( i ) to ( v ) of that sub-section, has reason to suspect that any income has been concealed, or is likely to be concealed, by any person or class of persons, within his jurisdiction, then, for the purpose of making any enquiry or investigation relating thereto, it shall be competent for him to exercise the powers conferred under sub-section (1) on the income-tax authorities referred to in that sub-section, notwithstanding that no proceedings with respect to such person or class of persons are pending before him or any other income-tax authority. (2)****** (3) Subject to any rules made in this behalf any authority referred to in sub-section (1) or sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lating issuance, and denial of passports. As a sequel to this decision, Parliament enacted the Passports Act, 1967. The validity of the enactment, as also the challenge to an order of impounding were examined in Mrs. Maneka Gandhi s case ( supra ). The court held that the procedure prescribed in the 1967 Act was not arbitrary. 26. The above decisions, however are not dispositive of the issues raised in these proceedings. The question which is raised here is whether the respondents could have taken recourse to provisions in other enactments when the Passports Act regulated the issuance, impounding, and revocation of passports. The petitioner relied upon the circumstance that the Passports Act constituted a special legislation, and was a complete code on the subject. In the absence of any condition spelt out under section 10( 3 ) of that Act, and an order by the competent authority, the respondents could not have detained or seized the passport; it in effect amounted to exercise of power that did not vest with them. 27. Somewhat similar questions had arisen before the Gujarat, Andhra Pradesh and Madras High Courts. In the decision of the Gujarat High Court in Abdul Kad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g officer can seize any property, belonging to any person, believed by him to be necessary for the purpose of investigation into the commission of any offence. No doubt, the police officer seizing the property of any person has to record the grounds for doing so in writing and also follow the provisions laid down under section 100, Cr.P.C. which apply to the general provisions as searches. Therefore, it follows that the police officer under the provisions of section 165, Cr.P.C. has got the power to seize the passport if in his opinion it is necessary to control the movement of the person alleged to have committed an offence and to secure his/her presence whenever necessary for the purpose of investigation. Once a passport is seized during the course of investigation by a police officer, under sub-section (5) of section 165, Cr.P.C. the police officer has to send the passport to the nearest Magistrate empowered to take cognizance of the offence and for impounding the same if necessary he has to intimate the passport authority through the concerned Magistrate." 29. Section 38 of the repealed FERA, which was replaced by FEMA, reads as follows : " Power to seize documents, etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and Amendment) Act, 1962 (42 of 1962), (the Foreign Exchange Regulation Act, 1973 (46 of 1973) and other enactments relating to foreigners and foreign exchange." FEMA is a special law relating to foreign exchange. 31. I am, therefore, of the opinion that the power to seize a document under section 10( 3 ) of the 1967 Act is not exhaustive and does not in any manner control or limit provisions in other laws which empower other authorities to independently impound or detain passports in furtherance of the specified objectives of such enactments. Therefore, the respondents acted within their power under section 37(3) of FEMA read with section 131 of the Industrial Act. 32. The reference to proceedings under section 131, of the Income-tax Act too would not make the position any different. Section 131 as it originally stood, talked only of proceedings. However, sub-section (1A) was inserted by way of an amendment. That provision makes a specific reference to enquiry or investigation . Sub-section (3) makes a specific reference to sub-section (1A) while explicitly empowering the authority to impound and retain inter alia, documents produced before it in any proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act. The relevant provisions in this regard, as far as the rationale for impounding passports/documents and their retention in custody, as well as its duration would be section 37(1)/(2) and of FEMA. In this case, the impugned order was issued by a Special Director who is admittedly superior in rank and position to an Assistant Director [referred to in section 37(1)]. Therefore, he clearly had the power to issue the order impounding the petitioner s passport. 34. That brings me to the last facet of the issues raised in these proceedings, namely, whether the reasons mentioned are adequate and whether the petitioner could be at all said to be involved or linked with the transactions in the Volcker Committee Report. The impugned order re-cites four reasons, (1) investigations being at a crucial stage; (2) the Directorate being involved in the process of collection of evidence; (3) recording of statements of 5 persons including the petitioner being undertaken by the Directorate for which their presence was required in the country; and (4) the opinion of the Directorate that there was need to ensure that the evidence abroad is not tempered to. 35. The impugned order also state ..... X X X X Extracts X X X X X X X X Extracts X X X X
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