A.D. Koshal, J.
1. By this judgment, I shall dispose of two petitions under Article 226 of the Constitution of India, namely, Writ Petitions Nos. 1743 and 1773 of 1972, the facts leading to which may be stated at some length. On the basis of the information that one K.P. Hamsa had received about a lakh of rupees on account of what is generally known as 'compensatory payment' and was about to take the money to Mattool in Kerala State for disbursement, officers of the Madras Zonal Office of the Enforcement Directorate (Foreign Exchange Regulation Act), New Delhi (hereinafter referred to as the Enforcement Directorate) kept a watch for the suspect at the Madras Central Railway Station on the 7th of October, 1969. K.P. Hamsa, who is the petitioner in Writ Petition No. 1773 of 1972, was found boarding the West Coast Express train when he was intercepted and a search of his person and baggage yielded a sum of Rs. 84,000 in the form of Indian currency notes. On interrogation, he stated that he had received the amount from a friend of his, by name Sabakka Hamsa, in circumstances which may be described in his own words:
I requested Sabakka Hamsa to pay me a sum of Rs. 25 to meet my train fare. He at once paid me the amount. He said he was returning to his native place on 6th October, 1969 by the Mangalore Mail and asked me to travel by the West Coast Express on 7th October, 1969 and get down at Cannanore. He informed me that he would be waiting for me at Cannanore in Dayin Hajee's State Hotel. Before he boarded the train, he asked me to go to the abovesaid stationery shop and collect the packages kept in that shop in a bag and wanted me to hand oven the same to him at Cannanore. When I asked him about the contents of those packages, he replied that they contained money obtained from Madras as instructed by Sabakka Abu Hajee of Singapore intended for distribution among the various families and for the said purpose the same will have to be handed over to A.P. Mahmood. And that is why the money is kept packed in biscuit cartons. He boarded Mangalore Mail on 6th October, 1969 for Cannanore. As advised by Hamsa, I went to the said shop this morning. I met the people there to whom Hamsa introduced me earlier. Their names, as far as I know, are Assainar, Ebrahim and Mammoo. I do not know the door number of the shop. I can recognise the persons if I see them. One of these persons is the man who handed over the bag containing the things and which you have - to day seized. He asked me to carefully carry the bag. Then, at about 10 O'clock when I was waiting in the platform to board the train, Enforcement Officials made a search on my person as well as in the bag and seized the sum of Rs. 84,000 which was the a bag....
2. Action was initiated against K.P. Hamsa and Sabakka Hamsa by the Director of the Enforcement Directorate under the relevant provisions of the Foreign Exchange Regulation (hereinafter referred to as the Act). Proceedings against Sabakka Hamsa were ultimately dropped as the Director considered the evidence against him to be 'rather weak'. However, K.P. Hamsa's own statement extracted above was made the basis of the Director's Order, dated 21st of April, 1972 holding K.P. Hamsa to be guilty of the offence under Clause (aa) of Sub-section (1) of Section 5 of the Act and confiscating the currency notes recovered from him. The relevant observations made by the Director are:
Shri K.P. Hamsa has made a full and revealing statement which was corroborated in material particulars by the statement of Shri C. Hassan, the shopkeeper. The evidence regarding money having come from Singapore, which can be considered as hearsay, when used against Sabakka Hamsa, does not suffer from the same disability in the case of K.P. Hamsa.
3. Aggrieved by the order of the Director, K.P. Hamsa has filed Writ Petition No. 1773 of 1972 with a prayer that the same be quashed by a writ of certiorari. The other petition has been instituted by one K.P. Abdul Kareem Hajee who claims to be the owner of the money which, according to him, represents his income from agriculture, with a similar prayer.
4. The impugned order obviously suffers from the infirmity that it treats, the statement of K.P. Hamsa in regard to the source of the money as hearsay against Sabakka Hamsa and as not having that character when used against K.P. Hamsa. Really the legal position is the other way round. Assuming the statement made by K.P. Hamsa to be reliable, that part of it according to which Sabakka Hamsa told him that the money was to be disbursed in conformity with instructions received from Singapore is clearly hearsay because it was a statement about a fact which did not take place within the hearing or sight of K.P. Hamsa to whom it was merely conveyed by Sabakka Hamsa. If the fact used against K.P. Hamsa was that the money had been received under instructions from Singapore, it could be regarded as direct evidence only if it flowed from a source which had received such instructions. While making his statement, K.P. Hamsa did not say that to his personal knowledge instructions had been received from Singapore. In fact, he did not even say that the effect of the instructions having been received from Singapore was within the personal knowledge of Sabakka Hamsa. As it is, on this point there is no divergence between the counsel for the parties and all that the learned Advocate-General urged in support of the impugned order was that the Director, being a quasi-judicial authority and not a Court, was competent to act on hearsay evidence. With that contention, I do not find myself in agreement. It is true that quasi-judicial tribunals are not bound by technical rules of evidence but the principle shutting out hearsay evidence is not merely a technical rule coined by the Evidence Act but is a rule of natural justice which has to be followed even by a quasi-judicial authority. In this connection, I cannot do better than to quote the observations of their Lordships in State of Orissa v. Bidyabhushan : (1963)ILLJ239SC , which was a case arising from an enquiry under Article 311 of the Constitution of India:
The enquiry in its true nature is quasi-judicial.... Even though the Tribunal is not bound by formal rules relating to procedure and evidence, it cannot rely on evidence which is purely hearsay, because to do so in an enquiry of this nature would be contrary to rules of equity and natural justice....
5. And there is a good reason for this principle. For oral evidence to be of any value, it must ordinarily flow from a witness who can be held responsible for its truth (which can be sifted through cross-examination) so that in acting upon it the Tribunal concerned may not start with an initial hesitancy. When a piece of evidence is such that there is no prima facie assurance of its credibility, it would be most dangerous to act upon it. Hearsay evidence being evidence of that type, has therefore, to be excluded whether or not the case in which its use comes in for question is governed by the Evidence Act.
6. Admittedly, there is no other piece of evidence on which the impugned order rests. Finding it to be illegal for the reason that it is based merely on hearsay evidence, which could not be admitted, I quash it in acceptance of Writ Petition No. 1773 of 1972, leaving the parties to bear their own costs. The other petition becomes in fructuous and is dismissed on that account with no order as to costs. It is not necessary in these proceedings to arrive at any finding as to who of the two petitioners is the owner of the currency notes abovementioned, which shall be returned by the Director to K.P. Hamsa, the petitioner in Writ Petition No. 1773 of 1972, from whose possession the same were recovered.