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TMI Blog1971 (12) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... to be fit for appeal to the Supreme Court under Articles 132 and 133 of the Constitution against the aforesaid judgment. The respondents impleaded are (1) Shri A. J. Rana, Deputy Director, Enforcement Directorate, Ministry of Finance, (2) Shri R. C. Dutt, Secretary to the Government of India, Ministry of Finance, (3) Shri M. L. Wadhwa, Enforcement Officer, Enforcement Directorate and (4) Union of India. through the Secretary of Finance. The first appellant was registered as a public limited com- pany in 1961 with its registered office at Ramavaram in Andhra Pradesh. The second appellant, who is the sole proprietor of a concern named Trans world Trades, was appointed the Managing Director of the appellant company. On May 19, 1965. an order was issued on behalf of the Company Law Board under clause (b) of section 237 of the Companies Act, 1956 appointing four persons as inspectors to investigate the affairs of the appellant company on the ground that the Board was of the opinion that there were circumstances suggesting that the business of the appellant company was being conducted with intent to defraud its creditors, members or other persons and that the persons concerned in the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will not inspect those papers while in their possession, and after a fortnight from today, the appellants will be entitled to receive them from the custody of this Court without further orders." In pursuance of the above order, the seized documents were. deported on 19th of May 1966 with the Registrar of this Court. An application thereafter was field in this Court by Shri P. R. Krishnan, Assistant Director in the Enforcement Directorate, praying for a direction to the Registrar of the Court to accept service of an order under section 19(2) of the Act and to hand over the documents in the custody of the Registrar to the Enforcement Directorate. The said application was disposed of without any specific orders. On 22nd of May 1966, the following order was issued by respondent No. 1 - "No. V(358)65 (Part File) (i) ENFORCEMENT DIRECTORATE MINISTRY OF FINANCE Department of Revenue & Insurance Government of India Grams 'DIRENTFERA' Reserve Bank Building 2nd Floor New Delhi- 1. WHEREAS for the purposes of the Foreign Ex- change Regulation Act, the Central Government considers it necessary to obtain and examine certain papers and documents belonging to Shri P. N. Balasubram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oked at C.T.O. New Delhi. 6. Letter dated 30-6-1961 from L.A. Mitchell Ltd. Chemical Engineers, Harvester House, 37, Peter Street,, Manchester-2 to Mr. P. N. Balasubramanian, Transworld Trades, 186 Golf Links, New Delhi-3. 7. All other books, papers and other documents relating to Shri P. N. Balasubramanian Transworld Trades and the Barium Chemicals Ltd., in the possession of the Registrar of the Supreme Court of India under an order dated 6th May 1966 passed by the Hon'ble Supreme Court of India in Civil Appeal No. 381 of 1966 (Barium Chemicals Ltd., Vs. Company Law Board and others)." The order was addressed to the appellant company. Another copy of the order was addressed to appellant No. 2. The appellants thereupon filed petition under Art. 226 of the Constitution of India in the Andhra Pradesh High Court for the issuance of a writ, as mentioned earlier, to quash the order dated May 22, 1966 and other consequential reliefs. One of the grounds taken by the appellants for assailing the impugned order was that the order had been passed mala fide at the instance of Shri Dutt respondent, who was previously Chairman of the Company Law Board and was at the time of the pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not in conformity with section 19 (2) of the Act was repelled. Shri Rana respondent. it was further held, was authorised to sign on behalf of the President. The impugned order as such was found to be in conformity with Art. 77 of the Constitution. The appellant did not press the ground that section 19(2) of the Act was violative of Articles 14, 19(1) (f) and (g) and 20(3) of the, Constitution in view of an earlier decision of this Court but reserved the right to agitate the question in appeal in this Court. The High Court also overruled an objection taken on behalf of the respondents relating to territorial jurisdiction. In the result, the petition, as stated earlier, was dismissed. Before proceeding further, it may be mentioned that the Act was enacted, as according to its preamble, "it is expedient in the economic and financial interests of India to provide for the regulations of certain payments, dealings in foreign exchange and securities and the import and export of currency and bullion". Section 19 of the Act confers power to call for information. Sub-section (2) of that section, with which we are concerned, reads as. under :- "2. Where for the purpose of this Act the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , therefore, follow that the power under the above provision can be exercised either by the Central Government or by the Reserve Bank. The occasion for the exercise of this power Would arise when either of them, viz., the Central Government ,or the Reserve Bank, considers it necessary or expedient for the purpose of the Act to obtain and examine any information, booker document. It is only when the said requirement is satisfied that the Central Government or the Reserve Bank, as the case may be, can proceed in the manner indicated above in clause 2(a) or 2(b). We are in the present case not concerned with the Reserve Bank nor with the situation wherein it was considered expedient to obtain and examine any information, book or other document. The impugned order purports to have been made by the Central Government because, according to it, the Central Government considered it necessary for the purpose of the Act to obtain and examine the papers and documents specified in the schedule to the order. The question which arises for determination is whether the authority concerned applied its mind so as to show that the Central Government considered it necessary for the purpose of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be specified in the order. This is apparent from the concluding part of the said .sub-section wherein there is reference to 'such information, book or other document. The word 'such' points to the necessity of specifying the information, book or other document in the order. It is, no doubt, true that the order can relate to a large number of books, documents or information, it is all the same imperative that the same should be particularized in the order. According to sub-section (1-A) of section 23 of the Act, if any person contravenes any of the provisions of this Act or of any rule, direction or order made thereunder, for the contravention of which no penalty is expressly provided, he shall, upon conviction by a ,court, be punishable with imprisonment for a term which may ,extend to two years, or with fine, or with both. The fact that penal consequences follow from non-compliance with an order made under sub- section (2) of section 19 also highlights the importance of specifying the information book or other document in the order. The order under the above provision of law is addressed to the person who is either in possession of requisite information book or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere has to be- some nexus between the documents sought to be obtained and tic purpose of the Act. Where such a nexus is missing and the document has no relevance for the purpose of the Act, the condition precedent to the making of an order under section 19(2) must be held to be non-existent. The fact that an omnibus order was made in respect of all documents relating to the appellants, which were in the custody of the Registrar under the orders of this Court, including some of the documents which have not even the remotest bearing on the matters covered by the Act, goes to show that there was no due application of the mind by the authority concerned. As mentioned earlier, an essential condition precedent to the making of an order under section 19(2) is that the authority concerned should have considered it necessary to obtain-and examine for the purpose of the Act the specified information, book or other document. The element of due care and attention which is an essential ingredient of the phrase 'considers it necessary' is lacking in this case. As such, the impugned order should be held to be not in conformity with sub-section 19 of the Act. Mr. Chagla on behalf of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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