M.Z. Handicrafts and Others vs U.O.I. and Others

M/s. M.Z. Handicrafts, a private firm engaged in the activity of manufacturing, export and local supply of Brass Artwares and Abdul Rahman as its proprietor have filed this petition for quashing the order dated 5 June 2014 passed by the Directorate of Revenue Intelligence by which the Manager of ICICI Bank Limited has been directed not to allow any withdrawal from Account No. 019005500238 in the name of petitioner No. 1. It has also been stated in the aforesaid order petition that the said action taken by the Directorate of Revenue Intelligence may be treated as action under Section 110 of the Customs Act, 19621 and information/documents called for, and required to be submitted under Section 108 of the Act may be provided to the office by 18 June 2014. Further relief that has been sought in this petition is that the respondents may forthwith de-freeze the current account of the petitioner and permit the petitioner to operate it.

It is stated that summons dated 6 June 2014 was issued to the petitioner under Section 108 of the Act by the Directorate of Revenue Intelligence, mentioning therein that the attendance of petitioner No. 2 was required for giving evidence and producing the documents mentioned in the summons in respect of the enquires being conducted in connection with exports of petitioner No. 1. Petitioner No. 2 was directed to appear before the Senior Intelligence Officer on 26 June 2014. The said petitioner authorized one Seemab Qayyum to appear before the Senior Intelligence Officer on the date fixed and a short reply was also submitted. Thereafter, summons dated 26 June 2014 was issued by the Senior Intelligence Officer requiring petitioner No. 2 to appear on 15 July 2017 for giving evidence and producing documents in respect of the enquiry being conducted.

It is stated that the petitioners had on 27 August 2014 sent through speed post, the documents mentioned in the summons/notice dated 26 June 2014. An additional reply dated 27 August 2014 was sent. A prayer was made to issue directions to the Bank to allow the operation of the current account as the petitioner was suffering because of the order dated 5 June 2014 for keeping on hold any withdrawal from the account. The petitioners allege that in spite of repeated request made by them, no order has been passed for withdrawing the order dated 5 June 2014.

Learned counsel for the petitioners has submitted that the order dated 5 June 2014 issued by the Senior Intelligence Officer in the Directorate of Revenue Intelligence is without jurisdiction as Section 110 of the Act does not authorise the officer to put on hold withdrawal from the account of petitioners. It is further submitted that even if it is assumed that the officer had the jurisdiction to issue such an order under Section 110 of the Act, the order cannot last for a period of more than six months as contemplated under Section 110(2) of the Act.

In support of his submission, learned counsel for the petitioner has placed before the Court a Division Bench Judgment of Allahabad High Court rendered in Raghuram Grah Pvt. Ltd. Vs. Commissioner of C. Ex. and Service Tax, (2005) 103 ECC 150 : (2005) 125 ECR 345 : (2005) 186 ELT 50 ; a Division Bench Judge of Bombay High Court rendered in Veritas Exports a Sole Proprietory Concern Vs. Union of India (UOI) and Others, (2005) 102 ECC 91 : (2005) 184 ELT 341 ; a Division Bench Judgment of Gujarat High Court rendered in A.M. Overseas Vs. Union of India (UOI) and Others, (2006) 194 ELT 267 ; a Judgment of Karnataka High Court rendered in Multitek Engineers Vs. Union of India, (2013) 287 ELT 44 .

Sri Ashok Mehta, learned Additional Solicitor General of India assisted by Sri B.K. Singh Raghuvanshi has, however, referred the various paragraphs of the counter affidavit and has submitted that the Senior Intelligence Officer in the Department of Revenue Intelligence was justified in issuing directions under Section 110 of the Act and if a direction is issued for permitting the petitioners to operate the Bank Account, the petitioners should be asked to furnish adequate security.

Learned Senior Counsel for the respondent has placed before the Court a decision of a learned Judge of the Delhi High Court in Writ-C No. 7449 of 2012 rendered in Ravi Crop Science v. Union of India and others decided on 20 December 2013 and of a Division Bench of Bombay High Court in Writ Petition No. 6964 of 2010 rendered in M/s. Nayasa Exports Pvt. Ltd. v. Union of India and others decided on 6 October 2010.

Sri Manish Trivedi has appeared for the respondent-ICICI Bank.

We have considered submissions advanced by learned counsel for the parties.

It is not in dispute that the two summons dated 6 June 2014 and 26 June 2014 were issued to the petitioners under Section 108 of the Act for giving evidence and producing documents in respect of the enquires being conducted by the Senior Intelligence Officer in the Directorate of Revenue Intelligence. The petitioners have stated that their representatives had appeared on 26 June 2014 and had also submitted the required documents, though with respect to the summons dated 26 June 2014 a request had been made to fix another date because of Ramzan.

The dispute in this Writ Petition is regarding the communication dated 5 June 2014 issued by the Senior Intelligence Officer to the ICICI Bank Limited purportedly under Section 110 of the Act. The letter directs the Manager of the ICICI Bank Ltd. Allahabad to put on hold withdrawal from account of the petitioners because an investigation was being carried out by the office. The contention of learned counsel for the petitioners is that such directions could not have been issued under Section 110 of the Act which relates to seizure of goods, documents and things.

Section 110 of the Act is contained in Chapter 13 which deals with searches, seizure and arrest. It is submitted by learned counsel for the petitioners that Bank accounts will not be covered under Section 110 which deals Seizure of ''goods'', ''documents'' or ''things''.

A Division Bench of the Gujrat High Court in Am Overseas (Supra) had an occasion to examine this controversy. The Division Bench held that the provisions of Section 110 of the Act cannot restrict the petitioner from operating the Bank account and the relevant portion of the judgment is quoted below:--

"6. Coming to Section 110(3) of the Act, it permits the authority to exercise power on seizure of any document or thing which, in the opinion of the authority, will be useful for, or relevant to, any proceeding under the Act. Emphasizing the use of the term ''things'' in the provision, it was submitted that when the same is read with definition of ''goods'' under Section 2(22) of the Act, as also the definition of the term ''things'' from the Black''s Law Dictionary, it would also take within its sweep ''currency'', and in the circumstances, the action of the respondent authorities was required to be upheld. The said submission, though attractive at first blush, does not hold ground when the same is examined in light of the scheme of the Act. One cannot lose sight of the fact that the provision is part and parcel of a statute which deals with import and export of goods. In other words, permitting such transactions of goods in accordance with law. The term ''currency'' is used in the definition of the term ''goods'' in the context of either importing the currency or exporting the currency through legal channels or illegally. In violation of the requisite law in relation to such transactions of currencies, the authority would be empowered to take appropriate action under the Act. In the present case, it is not the case of respondent authorities that the petitioner is either dealing in currency or is charged with illegally transacting in currency by way of import or export. Therefore, even this provision cannot support the action of respondent authorities.

Though Mr. Oza has addressed the Court in relation to various facts narrated in the affidavit in reply, it is not necessary to deal with the same at this stage, for the simple reason that the investigation which is in progress should not be affected by any observation or finding which the Court may record in relation to the facts and evidence which is in the stage of being ascertained, collated and brought on record. Therefore, without entering into any discussion on merits of the facts and evidence, suffice it to state that the averments made in the affidavit in reply do not carry the case of revenue any further."

The Division Bench of the Karnataka High Court in Multitek Engineers (Supra) also observed that Section 110 of the Act does not enable an Investigating Officer to attach the Bank account.

Learned Senior Counsel for the respondents has, however, referred paragraph 14 of the counter affidavit and has pointed out the circumstances which compelled the Senior Intelligence Officer in the Department of Revenue Intelligence to impose the condition in the communication dated 5 June, 2014 sent to the ICICI Bank. The facts which may persuade the respondents to issue such a direction are not required to be examined and what has to be seen is whether such a power is conferred upon the Senior Intelligence Officer under Section 110 of the Act. As noted above the Senior Intelligence Officer does not have such a power.

The submission of learned Senior Counsel for the respondents that even if the account is permitted to be operated by the petitioners, a direction should be issued to provide the security for the amount in view of the judgments relied upon cannot also be accepted in view of the provisions of Section 110A of the Act. Section 110A of the Act provides that any goods, documents or things seized under Section 110 may pending order of the Adjudicating Authority be released to the owner on taking a bond from him in the proper form with such security and conditions as the Adjudicating Authority may require. Thus the precondition stipulated under Section 110A is that goods, documents or things must have been seized under section 110 of the Act. We have already held that the power under section 110 of the Act could not have been exercised for passing an order that the petitioners should not be permitted to make any withdrawal from the account. In such circumstances, the respondents cannot insist that the petitioners should furnish adequate security bond.

Thus for all the reasons stated above, the impugned order dated 5 June 2014 passed by Senior Intelligence in the Directorate of Revenue Intelligence cannot be sustained and is, accordingly, set aside. The respondent shall forthwith permit the petitioner to operate the Account No. 019005500238.

The writ petition is allowed to the extent indicate above.

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