Mool Chand vs Union of India (UOI) and Others

M.B. Sharma, J.—The petitioner seeks a writ of mandamus directing the respondents to return to him the currency notes to the tune of Rs. 21,830/- seized from him by the officers of the Enforcement Directorate on September 17, 1985. The return of the currency notes to the tune as aforesaid is primarily claimed on the ground that their retention beyond a period of one year is in contravention of Section 41 of the Foreign Exchange Regulation Act, 1973 (for short hereinafter referred to as ''the Act''), more so when within the year of the seizure of the currency notes neither any proceedings u/s 51 of the Act had been commenced, nor proceedings u/s 56 of the Act had been commenced before a Court.

In exercise of the powers conferred u/s 37 of the Act the business premises of M/s. Govind Ram Sita Ram, Sarafa Bazar, Sikar and the residence of petitioner Mool Chand were searched by the officers of the Enforcement Directorate, New Delhi and as a result of which Foreign Exchange to wit U.S. $.200, Omani Riyals 70, K. Dinar 126, Indian currency Rupees 11,830/- and documents from business premises and U.S. $.402, Saudi Riyals 264, Quati Riyals 120, Omani Riyals 14, Omani Palea 100, Indian currency Rs. 10,000/- and documents from residential premises respectively were recovered and seized. The total amount of the Indian currency seized as aforesaid comes to Rs. 21,830/-. Because the officer of the Enforcement Directorate had reason to believe that Indian currency which had been seized, as aforesaid and in their opinion will be useful or relevant to the investigation of the proceedings under the Act, a search warrant as aforesaid was issued and in addition to the foreign currency. Indian currency was also seized. The present writ petition is confined to the return of the Indian currency to the tune of Rs. 21,830/-and not in respect of the other foreign exchange recovered as a result of the search from the business premises and residential premises as aforesaid. A notice dated September 15/23, 1986 u/s 51 of the Act to show cause was issued to the petitioner, which, according to the petitioner, was received by him on September 25, 1986. The petitioner under the aforesaid show cause notice was required to show cause as to why proceedings u/s 50 of the Act be not initiated against him. The petitioner through his counsel sent a notice on September 26, 1986 for return of the seized Indian currency, because the Enforcement Directorate had not initiated any proceedings within one year from the date of seizure of the currency.

It is not disputed in the return filed by non-petitioners that a show cause notice was issued on September 15, 1986 prior to one year with regard to the seizure of documents as required u/s 41 of the Act and by issue of notice proceedings u/s 51 of the Act have also commenced within one year of the seizure of the Indian currency and, therefore, even beyond a period of one year the Indian currency could be retained and the retention is legal. It is also the case of the non-petitioners that prosecution u/s 56 of the Act has already been filed against the petitioner in the Court of Chief Judicial Magistrate (Economic Offences), Jaipur on December 23, 1986 and those proceedings are still pending.

The first question is as to whether can it be said that the proceedings u/s 51 of the Act were initiated within one year of the seizure of the Indian currency? So far as Section 51 of the Act is concerned, no period of limitation has been prescribed for the purpose of commencing and holding adjudication proceedings. Even after pressing into service Section 41 of the Act it cannot be said that proceedings for adjudication u/s 51 of the Act must be commenced within one year. No doubt u/s 51 of the Act the adjudicating officer is to hold an enquiry in the prescribed manner after giving that person a reasonable opportunity for making a representation in the matter, but as said earlier no time limit for commencing adjudication proceedings has been prescribed. A preliminary notice under Rule 3(1) of the Adjudication Proceedings and Appeal Rules, 1974 is part of the adjudicatory machinery and, therefore, the moment it is given, it can be said that the adjudication proceedings u/s 51 of the Act have commenced. The question is as to whether by mere despatch of notice can it be said that it amounts to giving of a reasonable opportunity to a person who may like to make a representation. The word ''giving'' came up for consideration before the Supreme Court in the case of K. Narasimhiah Vs. H.C. Singri Gowda, and the Court in para 11 said:--

"Giving" of anything as ordinarily understood in the English language is not complete unless it has reached the hands of the person to whom it has to be given. In the eye of law however "giving" is complete in many matters where it has been offered to a person but not accepted by him. Tendering of a notice is in law therefore giving of a notice even though the person to whom it is tendered refuses to accept it. We can find however no authority or principle for the proposition that as soon as the person with a legal duty to give the notice despatches the notice to the address of the person to whom it has to be given, the giving is complete."

The above case of the Supreme Court came up for consideration in the case of Ambalal Morarji Soni Vs. Union of India and Others, and the Gujarat High Court dealing with the provisions of Section 79 of the Gold (Control) Act, 1968 and considering the words ''given a notice'' said that it means actual communication of the notice to the person concerned, and failure to give notice within the time prescribed from the date of seizure, entitles the person concerned to get back the goods seized.

In the case of 1985 ECR 2468 the Special Bench of C.E.G.A. Tribunal placing reliance on the aforesaid case and so many other cases also took a view that service of show cause notice and not issue of show cause notice is necessary.

The Orissa High Court in the case of Shri Nathulal Aggarwalla v. Deputy Collector of Central Excise, AIR 1982 Orissa 258 considered the provisions of the Gold (Control) Act, 1968 and more so its Section 79 and held that ''giving'' of notice is not complete unless and until the notice reaches the person concerned or is actually tendered to him. Mere despatch of the notice to the address of the petitioner is not enough.

In the case of Prem Nath Khanna Vs. Collector of Central Excise and Others, a similar view was taken while considering the term ''giving''. It will, therefore, be clear and we are of the opinion that though no limitation for initiation of adjudication proceedings u/s 51 of the Act is prescribed, but a reasonable opportunity to the person can only be said to have been afforded after the notice to show cause is served on that person and not by merely despatch of notice to show cause. u/s 41 of the Act a power is vested in any officer of the Enforcement Directorate if he has reason to believe that the document seized in pursuance of an order made under Sub-section (2) of Section 33 or of the provisions of Section 34 or Section 36 or Section 37 or of a requisition or summons u/s 39 or Section 40 would be evidence of the contravention of any of the provisions of the Act, to retain it for a period not exceeding one year. The document within the meaning of Section 41 as per the Explanation to Section 33 of the Act includes Indian currency also. The retention of the documents beyond a period of one year is also permissible, if before the expiry of period of one year as aforesaid any proceedings (i) u/s 51 of the Act have been commenced, until the disposal of those proceedings, including the proceedings, if any before the Appellate Board or the High Court, or (ii) u/s 56 of the Act have been commenced before a Court and documents have been filed in the Court. Under the Explanation to Section 41 in computing the period of one year during which a document may be retained, the period of injunction or order of any Court is to be excluded. We are not presently concerned with Explanation to Section 41 of the Act and the retention of the Indian currency seized as aforesaid is sought to be justified on the ground that adjudication proceedings u/s 51 of the Act as well as proceedings u/s 56 of the Act have commenced and are pending. There is no dispute that so far as the proceedings of Section 56 of the Act are concerned, they were commenced much after the expiry of period of one year, but dispute is in respect of the provisions of Section 51 of the Act. As already stated earlier the search as aforesaid took place on September 17, 1985 and even as per the case of non-petitioners a show cause notice u/s 51 of the Act was issued on September 15, 1986. It is not the case of the non-petitioners that it was served on September 15, 1986 or September 17, 1986 i.e. within one year of the seizure of the Indian currency. It is contended by Mr. Rathore, learned counsel for the petitioner that though the notice bear the date September 15, 1986, but it was actually despatched on September 25, 1986. It has also been stated in para 3 of the writ petition that the notice in fact was received by the petitioner on September 25, 1986. This fact has not been specifically denied and whatever stated is that it is the date of the notice which is relevant and not the service on the petitioner. We have already said earlier that the term ''giving'' means the service of the notice and not its despatch. Therefore, it can be said that the notice was given when it was served on the petitioner i.e. on September 25, 1986. Therefore, the adjudication proceedings cannot be said to have commenced; in this case within one year of the seizure of the currency notes (documents). Therefore, the currency notes could not be retained beyond a period of one year, because neither the proceedings u/s 51 of the Act, nor u/s 56 of the Act had commenced before the expiry of the period of one year.

It was contended by Mr. Sudhir Gupta on behalf of the non-petitioners that since now the proceedings u/s 51 of the Act as well as u/s 56 of the Act have commenced and are pending and though they might not have commenced within a period of one year, the currency notes will be required as evidence in the case and, therefore, they should be allowed to be retained till the conclusion of the adjudication proceedings u/s 51 of the Act as well as proceedings u/s 56 of the Act. A reference has also been made by Mr. Sudhir Gupta, learned counsel for the non-petitioners to some cases that even if the proceedings as aforesaid either u/s 51 or u/s 56 of the Act have not commenced within one year of the seizure of the documents, but have been commenced, the person from whom the documents were seized has no right to return of the documents, but we are of opinion that in view of the judgment of the Supreme Court the above submission has no force. The Supreme Court in S.O. Arjunan Chettiar v. Enforcement Officer (1977) 2 MLJ 5 (SC) said :

"..... we must express our disapproval of the action of the department in retaining the document beyond the period of one year specified in Section 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 u/s 51, the department must obey the law and return the document unless in the meantime it has commenced adjudication proceedings u/s 51. If it is found by the department that the period of one year, which is specified in Section 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."

The above case was relied upon by the Madras High Court in K.M. Amir Abdul Kader Vs. The Deputy Director, Enforcement Directorate, Madras, It was held that the authority was not entitled to retain the currency notes after the expiry of one year from their seizure. We are, therefore, of the opinion that the petitioner is entitled to the return of the Indian currency as the proceedings either u/s 51 or u/s 56 of the Act had not commenced within one year.

But since the proceedings have commenced and the adjudicating authority or the Court where the proceedings u/s 51 and u/s 56 of the Act are pending can summon the documents, we are of the opinion that so far as the adjudication proceedings u/s 51 of the Act are concerned, they must be completed within a period of four months and till then the concerned officer may retain the Indian currency notes, but after the expiry of aforesaid period of four months, the Indian currency shall be returned to the petitioner unless the Court before whom proceedings u/s 56 of the Act are pending orders production of the same in that Court.

Consequently, we partly allow the writ petition and hold that the Indian currency notes to the tune of the Rs. 21,830/- seized from the petitioner could not be retained beyond a period of one year and their retention is not in accordance with law. We order that they be returned to the petitioner. But as stated earlier as the adjudication proceedings are pending, they shall not be returned for a period of four months during which those proceedings be finalised. After expiry of period of four months they shall be returned unless there is an order from the Court where the proceedings u/s 56 of the Act are pending in respect of the currency notes. Costs made easy.