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K.M. Amir Abdul Kader Vs. the Deputy Director, Enforcement Directorate, Madras - Court Judgment

LegalCrystal Citation
SubjectFERA
CourtChennai High Court
Decided On
Case NumberW.P. No. 11506 of 1984
Judge
Reported inAIR1986Mad140; 1985(5)ECC277
ActsForeign Exchange Regulation Act, 1973 - Sections 9(1), 33, 41 and 53(1); Customs Act, 1962 - Sections 110
AppellantK.M. Amir Abdul Kader
RespondentThe Deputy Director, Enforcement Directorate, Madras
Appellant AdvocateM. Abdul Kareem, Adv. for ;K.A. Jaffar, Adv.
Respondent AdvocateS. Veeraraghavan, Adv.
Cases ReferredArjunan Chettiar v. Enforcement Officer
Excerpt:
.....of proceedings under section 51 for more than a year after seizure--demand for return of seized currency by petitioner--issue of show cause notice after one and half years--refusal to return seized currency by department--not justified--documents cannot be retained beyond one year if no proceedings are initiated or commenced under section 51 or section 56--words and phrases--seized currency is 'document' within meaning of section 33 for purpose of sections 33, 34 and 36 to 41--peculiar nature of currency--possibility of only evidence being destroyed if currency is returned--proceedings to be completed within four months and currency to be returned--foreign exchange regulation act (46 of 1973), sections 9(1)(b), 33, 34, 36 to 41, 51, 53, 56. - - 41 of the act and, therefore,..........since proceedings have been initiated, the petitioner is not entitled to ask for a return of the seized currency. the power of the enforcement directorate to retain the currency and documents till the completion of the proceedings was sought to be justified on the basis of a decision of this court dt. 2 1-9-1976 in w. a. 237 of 1976 the enforcement officer, madras 6 v iso arjunan chettiar : (reported in : air1977mad279 ). while accepting the demand made by the petitioner through his counsel's letter dt. 27-7-1984, for the return of the seized currency, the respondent maintained that the retention of the currency was not illegal and that the petitioner should have replied to the show cause notice and, proved his bona fides and taken back the currency. the currency seized, would not.....
Judgment:
ORDER

1. In this writ petition, the petitioner has prayed for the issue of a writ of mandamus directing the respondent herein to return to the petitioner Rs.1.72 lakhs seized from him by the officials of the Enforcement. Directorate under a mahazar dt. 2-6-1983, under the following circumstances.

On 2-6-1983, the officers of the Enforcement Directorate stopped the petitioner near Geetha Hotel. Mount Road, Madras 2 and searched him in the premises of Messrs Singh Trading Co. at No. 9 Blackers Road, Madras 2, which led to the recovery of a sum of Rs.1.72 lakhs in Indian currency from the person of the petitioner, which was seized by the officers of the Enforcement Directorate, in the belief that the currency could be required for further investigation and proceedings to be initiated against the petitioner under the provisions of the Foreign Exchange Regulation Act 1973 (hereinafter referred to as the 'Act'). Only on 3-12- 1984, a show cause notice was issued to the petitioner for the alleged contravention of .S. 9(1)(b) of the Act, requiring him to show cause as to why proceedings under S. 51 of the Act should not be initiated and why S. 63 of the Act should not be invoked in respect of the currency seized from the petitioner. In the meanwhile, realising that the officers of the Enforcement Directorate had not initiated any proceedings against the petitioner, within one year from the date of the seizure of the currency, the petitioner issued a lawyer's notice on 27-7-1984 demanding the return of the currency notes seized from the petitioner, but no reply was received by him. Charatterising the withholding of the currency seized by the officers of the Enforcement Directorate as illegal, the petitioner has come up before this Court in this writ petition praying for the relief set out earlier.

2. In the counter filed by the respondent, while accepting the seizure of Rs.1.72 lakhs from the petitioner in Indian currency on 2-6-1983, the respondent referred to the issue of show cause notice to the petitioner under S. 9(1)(b) of the Act, on 3-12-1984 and stated that since proceedings have been initiated, the petitioner is not entitled to ask for a return of the seized currency. The power of the Enforcement Directorate to retain the currency and documents till the completion of the proceedings was sought to be justified on the basis of a decision of this Court dt. 2 1-9-1976 in W. A. 237 of 1976 the Enforcement Officer, Madras 6 v ISO Arjunan Chettiar : (reported in : AIR1977Mad279 ). While accepting the demand made by the petitioner through his counsel's letter dt. 27-7-1984, for the return of the seized currency, the respondent maintained that the retention of the currency was not illegal and that the petitioner should have replied to the show cause notice and, proved his bona fides and taken back the currency. The currency seized, would not according to the respondent, fall and, therefore, the petitioner cannot pray for the return of the seized currency within the expression document occurring in S. 41 of the Act and, therefore, the petitioner cannot be heard to complain about the retention of the currency by the Enforcement Directorate or seek a return thereof

3. The learned counsel for the petitioner contended, relying upon the explanation to S. 33 of the Act, and S. 41 of the Act that Indian currency would fall within the expression 'document' and that under S. 41 of the Act the officers of the Enforcement Directorate can retain such currency for a period not exceeding one year and if the currency had to be retained for a period longer than one year then, the proceedings under S. 51 or S. 56 of the Act, should have been initiated before the expiry of one year, in which case, all the disposal of the proceedings before the Appellate Board or the High Court or till the filing of the document into Court, it would be open to the Enforcement Directorate to retain the seized currency and as in this case the proceedings commenced only on 3-12-1984 beyond one year by the issue of show cause notice to the petitioner the retention of the seized currency by the officers of the Enforcement Directorate was illegal and therefore, they should be directed to return the seized currency. Attention in this connection was also drawn by the learned counsel for the petitioner to S. 110 of the Customs Act and the decisions in the Asst. Collector of Customs and Superintendent, Preventive, Service Customs Calcutta v Charandas Malhotra : 1973ECR1(SC) and M/s Lokenath Tolaram etc. v. B. N. Rangwani, : 1975CriLJ540 . Strong reliance was also placed by the learned counsel for the petitioner upon the decision of the Supreme Court reported in S.O. Arjunan Chettiar v Enforcement Officer, 1977) 2 Mad 5 disapproving the decision of the Division Bench of this Court in the Enforcement Officer, Madras 6 v S. O. Arjunan Chettiar, W A 2.31 of : AIR1977Mad279 . In answer to this, the Additional Central Government Standing Counsel relied upon S. 53(1)(b) of the Act, as enabling the officers of the Enforcement Directorate to continue to retain the seized currency. It was also pointed out that there was no indication in S. 41 of the Act, that the currency seized should be returned and that such return should be to the person from whom it was seized,

4. Under S. 33 of the Act, the Central Government has the power to direct the owners of foreign exchange, foreign securities or immovable properties as may be specified, in the notification to submit a return or periodical returns to the Reserve Bank of India within such period and giving such particulars as may be specified. S. 33(2) enables the Central Government or the Reserve Bank or any officer of Enforcement not below the rank of a Chief Enforcement Officer to obtain and examine any information, book or other document in the possession of any person or which in the opinion of the Central Government or the Reserve Bank or such officer, it is possible for such person to obtain and furnish, such a person can be directed to furnish or obtain and furnish such information, book or other document as may be specified and thereupon such person shall -be bound to comply with such requisition. The explanation appended to S. 33 is important and it reads thus -

'For the purposes of this section, S. 34 and Ss. 36 to 41 (both inclusive) document includes Indian currency, foreign exchange and books of account.'

Under S. 34 of the Act the officers of the Enforcement Directorate are authorised to search a person and seize any document in his possession, ownership or control, which the -officer has reason to believe will be useful or relevant for any investigation or proceeding under the Act. It is in the exercise of this power under S. 34 of the Act, that the petitioner was searched on 2-& 1983 and Indian currency amounting to Rs.1.72 lakhs was seized from him. In the fight of the Explanation to S. 33 of the Act, referred to earlier, the seizure of the currency notes from the petitioner would amount to seizure of document. Under S. 41 of the Act, where there is a seizure of document pursuant to a search under S. 34 of the Act, which the officer of the Enforcement Directorate has reason to believe would be evidence of the contravention of any of the provisions of the Act or of any rule and that it would be necessary to retain the document in his custody, he may so retain the document for, a period not exceeding one year or if, before the expiry of the said period of one year, any proceedings -

(i) under S 51 have been commenced, until the disposal of those proceedings, including the proceedings, if any, before the Appellate Board or the High Court; or

(ii) under S. 56 have been commenced before a Court, until the document has been filed in the Court.'

The Explanation provides for the computation of the period of one year specified under S. 41 of the Act, after providing for exclusion of the time during which an injunction order in relation to the document seized or, other document reference to which would be necessary for examining or using the said document, was in force preventing a full examination of the document or the use of the document for commencing proceedings under S. 51 or S. 56 of the Act, or preventing the commencement of proceedings under S. 51 or S. 56 of the Act. It is not the case of the Enforcement Directorate that there was any operative order of injunction as to attract the applicability of the Explanation. Therefore, under S. 41 of the Act, the seized currency which Would be document for purposes of the Act can be retained for a period not exceeding one year i.e not beyond 2-6-1984. Alternatively, under S 41 of the Act the document seized could be retained till the disposal of the proceedings under S. 51 of the Act including the proceedings before the Appellate Board and the High Court, if before the expiry of the period of one year, the proceedings under S. 51 of the Act had been commenced. Similarly, it proceedings under S. 56 of the Act had been commenced before a Court before the expiry of one year then, the retention of the document can be done, till the document has been filed in the Court. In this case, apart from issuing a show cause notice on 3-12-1984, under S. 9(1)(b) of the Act, nothing further has been done in the sense that no proceedings under S. 51 or S. 56 of the Act have been commenced before 2-6-1984, i.e., the expiry of one year from the date of seizure, i.e., 2-6-1983. Plainly, therefore, the officers of the Enforcement Directorate are not entitled to retain the document (Indian currency seized in this case) under S. 41 of the Act.

5. It is seen from Para 4 of the counter affidavit that the retention is sought to be justified on the basis of a judgment of a Division. Bench of this Court dt. 21-9-1976 in the enforcement Officer Madras 6 v. S. O Arjunan Chettiar W. A. 237 of 1976 i.e., : AIR1977Mad279 . Though, that decision proceeded on the footing that if steps had been taken for initiating proceedings under the Act, whether within or beyond one year, it would be open to the officers of the Enforcement Directorate to retain the document seized, the Supreme Court in S. O Arjunan Chettiar v. Enforcement Officer 1977) 2 MLJ 5 disapproving such a view stated as under at p. o: -

' we must express our disapproval of the action of the department in retaining the document beyond the period of one, year specified in S. 41 of the Foreign Exchange Regulation Act 1973. When the statutory provision requires that the' document seized from a person should not be retained for a period exceeding one year unless before the expiration of the said period, adjudication proceedings are commenced under S. 51, the department must obey the law and return the document unless in the meantime it has commenced adjudication proceedings under S. 51 If it is found by the department that the period of one year, which is specified in S. 41, is not adequate, it would be for the Legislature to amend the section in order to provide for extension of time, but so long as, the section stands as it is, it must be complied with by the department.'

In view of this clear and categorical enunciation of the position under S. 41 of the Act by the Supreme Court, on the facts and in the circumstances of this case, the retention of the currency seized from the petitioner by' the officers of the Enforcement Directorate cannot, in any manner be justified.

6. No doubt, under S. 41 of the Act, there is no clear indication regarding the return of the document seized. Despite that, in my view, that section cannot be read as justifying retention of the seized document beyond one year without fulfilling the other requirements. The period of retention is limited to one not exceeding one year, unless, before the expiry of the period of one year, adjudication proceedings under S. 51 have been commenced or proceedings under S. 56 have been initiated, in which case, the benefit of extended time would be available for the retention of the seized document. Indeed there is no positive direction in S. 41 of the Act, that, the document should be returned to the person from whom they were seized. Even so when the retention of the seized document cannot, under law, be extended beyond the period of one year, unless certain conditions are satisfied, it follows that beyond the period of one year, in the absence of the fulfillment of the other requirements enabling the retention even beyond that period, whatever had been seized should be restored back and that could be only to the person from whom it was seized. Me decision of the Supreme Court in Nilratan Sircar v. Lakshmi Narayan Ram Nivas, : 1965CriLJ100 throws considerable light on this aspect. Though in that case, the question that arose was with reference to the propriety of the order of the Chief Presidency Magistrate directing the return of certain documents to the respondent before the Supreme Court, an argument was raised based on the language of S. 19(A) of the Act, to the effect, that there is no provision either under that section or other sections that documents be returned, to the party from whose custody they were seized without an order from the Magistrate and therefore, no order for their return can be made by any authorised. While dealing with that, the Supreme Court pointed out that no such express provision would-be necessary, that the documents seized have to be returned, if the law provides that they are not to be retained after certain period of time and such a direction under the statute is sufficient justification and authority for the person in possession of the documents to return them to the person from whose possession they had been seized. It was also further pointed out gut provisions would be necessary for the retention of the documents of others and not for returning them to the persons entitled to them. This decision would suffice to negative the contention of the learned counsel for the respondent that there is no positive direction regarding the return of the documents seized to the person from whom they have been seized and therefore, no relief could be granted to the petitioner.

7. Reliance placed by the learned counsel for the respondent upon S. 53(1)(b) of the Act does not in any manner assist him. S. 53 enumerates and sets out the powers of the adjudicating officer as well as the Appellate Board in the proceedings under the Act. The power requiring the discovery and the production of any document is available to the adjudicating officer as well as the Appellate Board under S. 53(1)(b) of the Act. This is a power to cause production of the documents and to require discovery with a view to facilitate the proceedings initiated under the Act, and cannot by any means be construed as enabling the officers of the Enforcement Directorate to retain documents seized for which provision is made under S. 41 of the Act. In other words. S. 53(1)(b) is one facet of the power of the adjudicating officer and the Appellate Board while dealing with.the proceedings initiated under the Act, whereas, S. 41 of the Act specifically confers the power to retain the seized documents only for a period of one year unless certain events justifying such retention beyond that period of one year, had taken place within the period of one year. S. 53(1)(b) of the Act cannot, therefore be pressed into service by the learned counsel for the respondent to support the continued retention of the currency seized from the petitioner by the officers of the Enforcement Directorate. Besides, there is one other aspect, which deserves to be noticed. Only by reason of the Explanation to S. 33 of the Act. 'document' would include Indian currency but that could only be for the purpose of S. D, and S. 34 and Ss. 36 to 41, and not for others. The Explanation would not be applicable to S. 53 of the Act and necessarily, therefore. it is difficult to read into S. 53(1)(b) of the Act, the power to require the production of the currency notes as falling within the definition of a 'document' for purposes of the Act as to justify the retention thereof for a period in excess of what has been prescribed under S. 41 of the Act.

8. On this aspect of the case, it only remains to consider the reliance placed by the learned counsel for the petitioner upon S. 110 of the Customs Act and the decision in the Assistant Collector of Customs and Superintendent Preventive Service Customs, Calcutta v. Cheran Das Malhotra, : 1973ECR1(SC) and M/s. Lokenath Tolaram v. B. N. Rangwani, : 1975CriLJ540 . Having regard to the difference in the language found in S. 41 of the Act and S. 110 of the Customs Act, it is really unnecessary to consider in detail the scope of S. 110 of the Customs Act and the decisions relied on by the learned counsel for the petitioner. It is seen that S. 110 of the Customs Act deals with se-arches, seizure and arrest and provides for seizure of goods. S. 110(1) of the Customs Act enables the officer, if he has reason to believe, that any goods are liable to confiscation under the Act, to seize such goods. Sub-sec (2) provides that if there is such a seizure but no notice in respect thereof is given under Cl. (a) of S. 124 within six months of the seizure, the goods shall be returned to the person from whose possession they were seized. It is thus seen that a duty is cast upon the officers seizing the goods- to return the same to the person who, however, is absent under S. 41 of the Act. This difference in the language employed and the positive declaration of a right to secure a return of the goods by a person from whom it was seized, would render a further examination of the scope of S. 110 of the Customs Act as well as the decisions of the Supreme Court referred, to earlier, unnecessary.

9. A faint attempt was made by the learned counsel for the respondent to contend that since proceedings have been initiated by the issue of a show cause notice to the petitioner on 3-12-1984, there cannot be any serious objection to the retention of the seized currency by the officers of the Enforcement Directorate. Precisely this was the basis upon which the decision of this Court in W. A. 237 of 1976 dt. 21-9-1976 reported in : AIR1977Mad279 proceeded, which was not approved by the Supreme Court in S. 0. Arjunan Chettiar v. Enforcement Officer, (1977) 2 MLJ 5 . Under these circumstances, it is not possible to accept the contention of the learned counsel for t e respondent that the belated initiation of t e proceedings on 3-12-1984 would justify the continued retention of the currency seized from the petitioner by the officers of the Enforcement Directorate.

10. The learned counsel for the respondent next submitted that the seized currency now retained by the officers of the Enforcement Directorate would be the only evidence available in respect of the proceedings taken or initiated under the Act and if that currency is parted with at this stage, that would render the conduct of the further proceedings impossible. The difficulty in securing back the learned counsel for the respondent, also relied upon the identical currency notes seized, if they are directed to be returned back to the petitioner at this stage. It is i1rue that in the case of documents other than currency, it would be easy for the officers of the Enforcement Directorate to take Xerox or Photostat copies of the documents and return the originals. However, in the case of seizure of the currency notes, as in this case, especially when a large amount is involved, it would be exceedingly difficult and even almost impossible to secure back the identical currency notes seized if they are now returned. Resort to copying methods like Xerox or Photostat would not also be of any avail. While, undoubtedly, the petitioner is entitled to a return of the seized currency, there cannot be an unconditional direction for its return to the petitioner, especially when the petitioner had already been issued a show cause notice. The difficulty in securing the production of the identical currency notes seized in the course of the enquiry in the proceedings under the Act, though brought about by the total inaction, of the officers of the Enforcement Directorate during the period of one year from the date of seizure, has also to be kept in view. The right of the petitioner, on the one hand to get back the return of the seized currency as, well as the difficulty that may be experienced by the officers of the Enforcement Directorate in favour of proceeding with the enquiry under tile Act, if the currency notes are parted with by them to the petitioner have to be balanced and suitable safeguards provided for. Considering all the facts and the circumstances and also taking into account the initiation of the proceedings by the Enforcement Directorate against the petitioner by the issue of a notice on 3-12-1984, the ends of justice would be met by directing the department to complete the proceedings already initiated by it under the provisions of the Act within four months from this date, and return the seized currency to the petitioner on or before 15th June, 1985.

11. In the result, a Writ of Mandamus will issue directing the respondent herein to complete the proceedings initiated against the petitioner by the issue of the notice dt. 3-12-1984, within four months from this date and to return the currency seized from the petitioner oil or before 12th June 1985. The rule nisi is made absolute in the above terms and the writ petition will stand allowed as indicated above. There will be, however, no order as to costs.

12. Petition allowed.


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