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Judgment
Somasundaram, J.—At the parties and the facts on the basis of which the reliefs are claimed in these three writ petitions are common, they
are disposed of by a common order.
The case of the petitioner as disclosed in the affidavit filed in support of the writ petitions is as follows :-
The petitioner is carrying on business in manufacturing and selling jewel boxes to jewellers in Madras and Kerala. On 28-8-1990 at about 10 a.m.
the officer of the first respondent entered into the petitioner''s premises, searched the same and seized various papers as well as a sum of Rs.
3,55,000/-. The petitioner was produced before the Additional Chief Metropolitan Magistrate (E.O. 1), Egmore, Madras on 2-9-1989 at 4 p.m.
The petitioner was released on bail on 10-10-1990. Immediately after release he sent a telegram on 10-10-1990 demanding the return of the
currency seized from his premises. The entire proceedings of the officers of the first respondent is illegal and the first respondent is illegally detaining
the currency seized from his premises for the past seven months under S. 41 of Foreign Exchange Regulation Act, 1973, hereinafter called the
FERA. Section 41 of the FERA imposes an unreasonable restriction on the freedom of an individual to carry on his trade, business or occupation
and, therefore, it is violative of Articles 19(1)(g) and 300-A of the Constitution. Since the documents seized from the petitioner''s premises are
liable to be returned for non-compliance of the requirements of Section 41 of the FERA, the second respondent has no power to use the same for
passing any order of detention under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act,
hereinafter called the COFEPOSA Act. The Indian currency of Rs. 3,55,000/- seized from the petitioner do not indicate any connection with the
foreign exchange or violation of the FERA in any manner and, therefore, Section 41 of the FERA does not apply to the case of the petitioner. No
show cause notice has been issued to the petitioner under the provisions of the FERA Act, but, however, an order of detention under
COFEPOSA Act has been issued by the second respondent against the petitioner. The petitioner has not committed any offence and the
proceedings initiated under the COFEPOSA Act is wholly unwarranted. Section 41 of the FERA is invalid and ultra vires of the Constitution. The
respondents cannot validly retain the currency notes seized from the petitioner on 28-8-1990 and, therefore, the respondents are liable to return
the same to the petitioner. On the basis of the averments referred to above the petitioner filed W.P. No. 5125 of 1991 praying for the issue of a
Writ of Mandamus for directing the first respondent to return the sum of Rs. 3,55,000/- and other documents seized by first respondent-officers on
28-8-1990, W.P. No. 5126 of 1991 for the issue of a writ of mandamus for directing an enquiry by a Magistrate or any other independent
authority with regard to the petitioner''s complaint of methods of beating etc., adopted by the officers of the first respondent for extracting the
statements of the petitioner and his assistant in connection with the search and seizures of the petitioner''s residential premises No. 13, Akbar Sahib
Street, III Floor Triplicane, Madras on 28-8-1990 by the Enforcement Officer, Enforcement Directorate, Madras and W.P. No. 5127 of 1991
for the issue of a writ of mandamus for directing respondents to forbear from arresting and detaining the petitioner under the provisions of the
COFEPOSA Act, in connection with the search and seizure of the petitioner''s residential premises on 28-8-1990 by the officers of the first
respondent.
The respondents filed a common counter affidavit contending as follows :- The writ petitions are liable to be dismissed in view of the judgment of
the Supreme Court dated 20-12-1990 in Criminal Appeal Nos. 440-441 of 1989 : (reported in Additional Secretary to the Government of India
and Others Vs. Smt. Alka Subhash Gadia and Another, , wherein the Supreme Court has held that at the pre-detention stage Courts can interfere
only when they are prima facie satisfied :-
(i) that the impugned order is not passed under the Act under which it is purported to have been passed;
(ii) that it is sought t be executed against the wrong person;
(iii) that it is passed for a wrong purpose;
(iv) that it is passed on vague, extraneous and irrelevant grounds or
(v) that the authority which passed it had no authority to do so.
Apart from the jewel business allegedly carried on by the petitioner, he has been receiving and making payments as per instructions of a person
residing outside India, in contravention of the provisions of the FERA. The Indian currency seized from the premises of the petitioner to the tune of
Rs. 3,55,000/- was not kept for his business purposes as alleged by the petitioner. The said sum of Rupees 3,55,000/- represents the balance of
the amount received by the petitioner as per the instructions of one Syed Ibrahim of Bahrain, a person who is residing outside India. The petitioner
has given detailed statement before the Enforcement Officers with reference to the seizure of the documents and Indian currency admitting the
receipt of the said amount and making payment from and out of the amounts so received under the instructions of the said Syed Ibrahim of
Bahrain. On 28-8-1990 the officers of the first respondent searched the residence of the petitioner and seized a sum of Rs. 3,55,000/- and other
incriminating documents a copy of the mahazar was given to the petitioner who has also acknowledged the receipt. A copy of the mahazar relating
to the search of the shop premises was given to one Imtikaf Meeran, an employee of the petitioner and the receipt of the mahazar has been
acknowledged by him. On the basis of the statement given by the petitioner summons u/s 40 of the FERA was issued to the petitioner directing him
to appear before the Enforcement Officers on 29-8-1990. On 29-8-1990 the petitioner appeared before the Enforcement Officers at 10.30 a.m.
and made further statements. The petitioner was thereafter arrested under S. 35 of the FERA at 12.30 p.m. on 29-8-1990 and produced before
the Additional Chief Metropolitan Magistrate, Egmore for judicial remand. The petitioner did not complain about any illtreatment by the officers of
the respondents before the Additional Chief Metropolitan Magistrate when he was produced before him for judicial remand. The Enforcement
Officer has power to retain the seized currency and documents in view of the power vested on him by the provisions of the FERA and the
provisions of the FERA have been strictly followed. The Indian currency of the Rs. 3,55,000/- and the documents were seized from the
petitioner''s premises on 28-8-1990 on the reasonable belief that they would be relevant for the further investigation/proceedings under the FERA.
The requisition whether such belief was sufficient or not would not be gone into in the proceedings under Art. 226 of the Constitution. The action
of the respondents-officers was strictly in accordance with the provisions of the FERA. The currency and documents seized from the petitioner are
in the custody of the respondent-department. Inasmuch as the FERA has been included in the IX Schedule to the Constitution of India by virtue of
39th Amendment Act, 1975 and is being given protection under Art. 31-B of the Constitution the Constitutional validity of Section 41 of the
FERA cannot be challenged in Court. There has been no failure to comply with the requirements of Section 41 of the FERA as alleged by the
petitioner. Section 41 of the FERA empowers the retention of currency and documents came into custody of the officer of Enforcement under the
other provisions of the FERA and the petitioner cannot demand the return of the currency and other documents before completion of one year
from the date of seizure particularly when in the instant case the currency notes and documents are required for the purpose of evidence
investigation proceedings under the FERA. It is always open to the second respondent to look into the documents seized from the premises of the
petitioner on 28-8-1990 for the purpose of carrying out its functions under the COFEPOSA Act. Section 41 of the FERA does not impose an
unreasonable restriction on the freedom of an individual to carry on a trade, profession or occupation attracting Art. 19(1)(g) and 300-A of the
Constitution. The petitioner is not entitled to the return of the seized moneys and the other documents as the same are required for the purpose of
evidence/investigation/proceedings under the FERA, and there has been sufficient compliance of Section 41 of the FERA. There has been no
violation of the provisions of the FERA including S. 41 as alleged by the petitioner in para 9(xviii) to 9(xx) of the affidavit. The petitioner in his
statement given the Enforcement Officer has admitted that the seized Indian currency of Rs. 3,55,000/- is the balance of the amount received from
unknown persons under the instructions of Syed Ibrahim of Bahrain, a person residing outside India. The said statement of the petitioner would go
to show that the amount of Rs. 3,55,000/- seized from the petitioner was involved in the contravention of Section 9(1)(b) of the FERA and,
therefore liable for confiscation under S. 63 of the FERA. The retention of the currency under S. 41 is legal as the same would be evidence to
prove the fact of receipt of money. The retention of currency until the adjudication or the appellant proceedings are over is also permitted under S.
41 of the FERA. Taking xerox copies as suggested by the petitioner in para 26 of the affidavit would not arise inasmuch as the original would be
needed if the said currency notes are used for the purpose of evidence. Further, the said seized currency is liable for confiscation under S. 63 of
the FERA and, therefore, the question of taking xerox copies and returning the currency would not arise. If the said currency is required for the
purpose of evidence, S. 41 of the FERA empowers the officer concerned to return the currency notices.
As regards the prayer in W.P. No. 5125 of 1991 for mandamus directing the returning of the currency of Rs. 3,55,000/- under other
documents, the case of the respondent is that the officers concerned are empowered under the FERA to retain the same and the retention thereof
has been done strictly in accordance with law. The said sum of Rs. 3,55,000/- is the balance of the amount received from the unknown persons
under the instructions from a non-resident and the currency would be required for evidence and it is also liable for confiscation under the FERA.
Therefore, the petitioner is not entitled to an order of (sic) at a stage when officers duly empowered under the FERA are discharging their functions
as directed by law.
As regards the prayer in W.P. No. 5127 of 1991 for mandamus of bearing the respondents from arresting or detaining the petitioner under the
COFEPOSA Act, the case of the respondents is that in view of the judgment of the Supreme Court in C.A. Nos. 440-441 of 1989 (reported in
Additional Secretary to the Government of India and Others Vs. Smt. Alka Subhash Gadia and Another, , this Court would not under Art. 226 of
the Constitution issue mandamus forbearing the respondents from detaining the petitioner under the COFEPOSA Act. As regards the prayer in
W.P. No. 5126 of 1991 for mandamus for a direction to hold an enquiry by a Magistrate or by an independent authority in regard to the
petitioner''s alleged compliance of illegal methods allegedly adopted by the officers of the first respondent, the case of the respondent is that no
case has been made out by the petitioner for holding such an enquiry and further such seriously disputed question of fact cannot be gone into by
this Court in the proceedings under Art. 226 of the Constitution. Further, this is not a case where an enquiry sought for by the petitioner is
warranted in facts or in law.
6-7. Mr. N. R. M. Abdul Kareem, learned senior counsel for the petitioner, in the first place contended that S. 41 of the FERA enables the officer
of the Enforcement to retain the documents furnished or sezied under sections 33(2), 34, 36, 37, 39 or 40 of the FERA, for an unreasonably long
period of one year without giving any show cause notice to the person and without hearing his representations either before or after seizure and,
therefore, S. 41 is invalid as it is violative of the principles of natural justice. Learned counsel for the petitioner also contended that S. 41 imposes
an unreasonable restriction upon the freedom of an individual like the petitioner to carry on a trade, occupation or profession and thereby infringes
Art. 19(1)(g) and 300-A of the Constitution and, therefore, S. 41 of the FERA is ultra vires of the Constitution and is invalid. Learned counsel for
the petitioner further contended that since S. 41 of the FERA is ultra vires of the Constitution and invalid, the respondents cannot validly retain the
currency notes seized from the petitioner on 28-8-1990 under S. 41 of the FERA and the respondents are liable to return the currency notes and
the other documents to the petitioner. In support of his contention the learned counsel for the petitioner relied on the decisions reported in
Basantibai Fakirchand Khetan and Others Vs. State of Maharashtra and Another, and Smt. G. Thankamal Ravi Nikethan Vs. State of Kerala, .
Before dealing with the constitutional validity of S. 41 of the FERA it is necessary to refer to the substance of the relevant Sections of the
FERA. Section 33(2) of the FERA empowers the Central Government or the Reserve Bank or any officer of Enforcement not below the rank of
Chief Enforcement Officer to call for information and documents. Explanation to S. 33 says that for the purpose of Sections 33, 34 and 36 to 41
(both inclusive), ''document'' includes Indian Currency; foreign exchange and books of account. Section 34 confers before it every officer of
Enforcement Directorate not below the rank of an Assistant Enforcement Officer to search suspected persons and to seize documents. Section 36
deals with the power of an officer of Enforcement to search a conveyance and to seize the documents which he has reason to believe that the
documents which will be useful for or relevant to any investigation or proceedings under this Act are secreted therein. Section 37 of the FERA
deals with the powers of the officers of Enforcement to search the premises and seize documents if he has reason to believe that the documents
which will be useful for or relevant to any investigation or proceeding under the Act are secreted in another place. Section 39 enables every officer
of Enforcement not below the rank of an Enforcement Officer during the course of any investigation or proceeding under the Act to require any
person to produce or deliver any document relevant to the investigation or proceedings. Section 40 empowers every Gazetted Officer of the
Directorate of Enforcement to summon any person whose attendance is necessary either to give evidence or to produce a document during the
course of any investigation or proceeding under the Act. The relevant portion of S. 41 of the FERA reads thus :
Where in pursuance of an order made under sub-section (2) of S. 33 or of the provisions of S. 34 or S. 36 or S. 37 or of a requisition or
summons under S. 39 or S. 40, any document is furnished or seized and any officer of Enforcement has reason to believe that the said document
would be evidence of the contravention of any of the provisions of this Act or of any rule, direction or order made thereunder, and that it would be
necessary to retain the document in his custody, he may so retain the said 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 and the
High Court or
(ii) under S. 56 have been commenced before a court until the document has been filed in the court.
Under section 41 the officers of Enforcement are authorised to keep in their custody the documents which was furnished or seized in pursuance of
an order made under S. 33(2) or the provisions of S. 34 or S. 36 or S. 37 or of a requisition or sumons under S. 39 or 40, for a period not
exceeding one year or until the disposal of the proceedings commenced before the expiry of the period of one year under S. 51 including the
proceedings before the Appellate Board and the High Court or the filing of the document in the court if any proceedings have been commenced
under S. 56, where such officer has reason to believe that the said documents would be evidence of the contravention of any of the provisions of
the Act or any rule direction or order made therein and that it would be necessary to retain the documents in his custody.
Art. 31-B of the Constitution provides that none of the Acts and regulations specified in the IX Schedule to the Constitution nor any of the
provisions thereof can be challenged on the ground that such act, regulation or provision is inconsistent with or takes away or abridges any of the
rights conferred by any provisions of part III of the Constitution. Art. 31-B of the Constitution provides a limitation on the fundamental rights
guaranteed under part III of the Constitution. Art. 31-B prohibits challenging any of Act or regulation which has been included in the IX schedule
of the Constitution, even if such Act or regulation contravenes any of the provisions of part III of the Constitution. In this context, it is relevant to
refer to para 38 of the judgment in Dattatraya Govind Mahajan and Others Vs. State of Maharashtra and Another, which reads as follows :-
Art. 31B categorically states that none of the Acts specified in the Ninth Schedule nor any of the provisions thereof, shall be deemed to be void
on any conceivable ground rooted in Part III. Even if such Act or provision is inconsistent with any provision of Part III it shall not be invalidated.
Even if such Act or provision takes away or abridges any of the rights conferred by any provisions of Part III it shall continue in force. In short, no
matter what the grounds are, if they are traceable to Part III in whatever form, they fail in the presence of Art. 31B. No master of English legal
diction could have used, so tersely, such protean words which in their potent totality bang, bar and bolt the door against every possible invalidatory
sally based on Part III. And Art. 31A(1) being Part III, Shri Tarkunde''s ''2nd proviso'' bullet cannot hit the target. Nor are we impressed with the
cute argument that the phraseology of Art. 31B must be correlated to Article 13 and read with a truncated connotation. Legal legerdemain is of no
avail where larger constitutional interests are at stake.
In State of Maharashtra and Others Vs. Man Singh Suraj Singh Padvi and Others, , Notification dated 24-2-1962 under the West Khandesh
Mehwassi Estate (Proprietary Rights Abolition etc.) Regulation (1961), issued by the Governor of Maharashtra was struck down by High Court
as being violative of Art. 19(1)(f) of the Constitution. Subsequent to the judgment of the High Court and whilst the appeal was pending in the
Supreme Court, the Ninth Schedule was amended by the Constitution (Fortieth Amendment) Act, 1976 by the inclusion of the West Khandesh
Mehwassi Estate (Proprietary Rights Abolition etc.) Regulation 1961. Dealing with effect of the inclusion of the West Khandesh Mehwassi Estate
(Proprietary Rights Abolition etc.) Regulation, 1961 in the Ninth Schedule to the Constitution the Supreme Court observed as follows (at p. 918 of
AIR) :-
The effect of the inclusion was that the West Khandesh Mehwassi Estate (Proprietary Rights) Abolition etc.), Regulation, 1961 was immunised
from challenge on the ground that it was inconsistent with or took away or abridged any of the rights conferred by Part III of the Constitution and
hence its constitutional validity could no longer be assailed on the ground that it violated Art. 19(1)(f). Article 31B and the Ninth Schedule cured
the defect, if any, in the West Khandesh Mehwassi Estate (Proprietary Rights Abolition etc.) Regulation, 1961 as regards any unconstitutionality
alleged on the ground of infringement of fundamental rights and by the express words of Art. 31B, such curing of the defect took place with
retrospective operation from the date on which this Regulation was enacted by the Governor. This Regulation, even if inoperative or void at the
time when it was issued by the Governor on account of infringement of Art. 19(1)(f) of the Constitution, assumed full force and vigour from the
date of its enactment by reason of its inclusion in the Ninth Schedule (vide Jagannath Vs. The Authorised Officer, Land Reforms and Ors, and it
must accordingly be held to be constitutionally valid.
In Minerva Mills Ltd. and Others Vs. Union of India (UOI) and Others, and Waman Rao and Others Vs. Union of India (UOI) and Others, the
Apex Court held that all the amendments to the Constitution which were made before Keshavananda Bharati''s decision (24th April 1973)
(reported in His Holiness Kesavananda Bharati Sripadagalvaru Vs. State of Kerala, ) and by which the 9th schedule to the constitution was
amended are valid and constitutional, while amendments made on or after 24th April, 1973 by which the 9th Schedule was amended from time to
time by the inclusion of various Acts and Regulations therein are open to challenge on the ground that they or any one of them are beyond the
constitutional power of the Parliament since they damage the essential feature of the Constitution or its basic structure.
In Ram Nath and Others Vs. Union of India (UOI), the Supreme Court reiterating the above position of law has held as follows (at p. 1180 of
AIR) :-
Once an act is placed in the Ninth Schedule Art. 31-B provides that either the act or, any provision thereon shall not be deemed to be void or
even to have become void on the ground that such act or any provision thereof is inconsistent with or takes away or abridges any of the rights
conferred by any provision of Part III of the Constitution. Once the act is brought under the umbrella of protection of Art. 31B by inserting it in the
Ninth Schedule, the act is not open to the challenge that it as a whole or any provision thereof violates or contravenes any of the fundamental rights
contained in part III of the Constitution.
Admittedly on 10-8-1975 by virtue of the 39the Constitution Amendment the FERA is included in the Ninth Schedule of the Constitution and,
therefore applying the ratio of the decisions of the Supreme Court referred above it has to be held that from 10-8-1975 the provisions of the
FERA including S. 41 cannot be challenged on the ground that it takes away or abridges any of the rights conferred by the provisions of Part III of
the Constitution. Further the petitioner in this case has not challenged the 39th Constitution Amendment on the ground that the said amendment
damaged the essential feature of the Constitution or its basic structure. Only when the petitioner successfully challenges the Constitution
Amendment, he can get the FERA out of the protective wing of Art. 31B of the Constitution and he can proceed with the challenge against the
Constitutional validity of S. 41 of the FERA. Even during arguments, learned counsel for the petitioner has not shown how the 39th Constitution
Amendment is beyond the Constitutional power of the Parliament and how it damaged the essential feature of the Constitution or its basic
structure, and how the 30th Amendment is invalid. In these circumstances once when the FERA is brought under the protective umbrella of Art.
31B of the Constitution by inserting it in the Ninth Schedule by virtue of the Constitution 39th Amendment any provisions of the FERA including S.
41 is not open to challenge on the ground that it violates any of the fundamental rights guaranteed in part III of the Constitution.
Even otherwise, as rightly contended by Mr. C. A. Sundaram learned Additional Central Government Standing Counsel, it cannot be said that
S. 41 of the FERA is violative of Art. 19(1)(g) and 300-A of the Constitution. Section 41 of the FERA contains the following in-built safeguards
against arbitrary and improper exercise of power by the Enforcement Officer :-
Firstly it must be noted that the power to retain the documents is vested with the responsible officer of enforcement.
Secondly the exercise of the power under S. 41 followed a reasonable belief entertained by such officer that such documents would be evidence of
contravention of any of the provisions of the Act or of any rule, direction or order made thereunder and that it would be necessary to retain the
documents in his custody :-
Thirdly the officer of Enforcement cannot retain all the documents in his custody but he can retain only such documents which would be evidence of
the contravention of any of the provisions of the Act or of any rule, direction or order made thereunder and that would be necessary to retain the
document in his custody :-
Fourthly a time limit is also prescribed in S. 41 during which period alone the officer of Enforcement can retain the documents. In our opinion, the
safeguards referred above are sufficient safeguards against arbitrary and improper exercise of power conferred under S. 41 of the FERA and they
are also adequate to render the provision as less onerous and restrictive as possible under the circumstances. Therefore, S. 41 of the FERA cannot
be regarded as violative of Art. 19(1)(g) and 300-A of the Constitution. As already pointed out S. 41 contains a beneficial provision in the sense
that the officer of Enforcement cannot indefinitely retian the documents which came into his possession under the provisions referred to in S. 41 of
the FERA and it prescribed a time limit of one year during which period alone the officer can retain the document if he has reason to believe that
such document would be evidenced of the contravention of any of the provisions of the Act, etc., and that would be necessary to retain the
document in his custody. On a careful analysis of S. 41 of the FERA we are inclined to hold that the power conferred under S. 41 is not unfettered
or uncanalised. It is a power which is hedged by several conditions and safeguards and it is exercisable only in certain specified circumstances and
subject to certain definite conditions. Further the time limit of one year fixed in S. 41 of the FERA cannot be considered as unreasonably a long
period rendering S. 41 violative of Art. 19(1)(g) and 300-A of the Constitution. Again it has to be held that there is absolutely no merit in the
contention of the learned counsel for the petitioner that S. 41 is invalid and ultra vires of the Constitution because it does not contain any provision
for issue of show cause notices and for hearing the representation of the party from whom the document is seized before enabling the officer of
enforcement to retain the document under S. 41. It must be remembered that a show cause notice will be issued to the party and he will be given
an opportunity to state his case under S. 51 of the FERA before adjudging the case under S. 50. We have carefully gone through the various
decisions relied on by the learned counsel for the petitioner. The principles laid down in the above decisions do not in any way advance the case of
the petitioner. For all the reasons stated above, the challenge of the Constitutional validity of S. 41 of the FERA on the ground that it violates Art.
19(1)(g) and 300-A of the Constitution is unfounded and cannot be sustained.
The second contention of the learned counsel for the petitioner is that even assuming S. 41 of the Act is constitutionally valid, the respondents
have not satisfied the conditions prescribed by S. 41 of the act for retaining the currency seized from the petitioners'' house and therefore, the
petitioner is entitled to the return of the currency and other documents seized from his house on 28-8-1990. Learned Counsel further contended
that the respondents can retain the currency exercising the power under S. 41 of the Act only when the officer of the Enforcement had reason to
believe that the currency would be evidence of the contravention of any of the provisions of the act or of any Rule, direction or order made under
the act and that it would be necessary to retain the currency in his custody and in this case except the averments in the counter-affidavit filed by the
respondents they have not produced any material to show that the officer of Enforcement had reason to believe that the currency would be
evidence of contravention of the provisions of the Act and that it would be necessary to retain the currency in his custody. Learned counsel for the
petitioner also contended that as the requirements of S. 41 of the Act are not satisfied the respondents are not entitled to retain the currency under
S. 41 of the Act and consequently they are liable to return the same to the petitioner. On the other hand, Mr. C. A. Sundaram learned counsel for
the respondents submitted that on 26-2-1991 an order of detention was passed against the petitioner under the provisions of the Conservation of
Foreign Exchange and Prevention of Smuggling Activities Act. The order of detention passed against the petitioner could not be served on the
petitioner and that he could not be detained pursuant to the order of detention dated 26-2-1991. Even if the petitioner has filed a writ petition
challenging the order of detention dated 26-2-1991 he cannot get the grounds of detention or documents relied on in the said order of detention in
a pre-detention writ petition. If the petitioner cannot know the grounds of detention directly by filing a writ petition challenging the re-detention
order he cannot indirectly know the grounds of detention and the documents relied thereon by filing the present writ petition. In the above
circumstances, according to the learned counsel for the respondents, the respondents cannot be called upon to produce the file to show that the
requirement of S. 41 of the Act are satisfied. The learned counsel for the respondents further contended that there are sufficient materials on record
to show that the officer of Enforcement had reason to believe that the currency in question would be evidence of contravention of the provisions of
the Act and that it would be necessary to retain the same in his custody. In the counter-affidavit the respondents have stated that the action of the
respondents'' officer is, strictly in accordance with the provisions of the Act and that the requirements of S. 41 of the Act are complied with by the
respondents'' officer. Though the learned counsel for the respondents contended that in a predetention writ petition like this, the respondents
cannot be called upon to produce the file to show that the requirements of S. 41 are satisfied, when we directed the learned counsel for the
respondents to produce the file, the learned counsel produced the file for our perusal. We have carefully gone through the file and we are fully
satisfied that there are sufficient materials in this case to show that the concerned officer of Enforcement had reason to believe that the currency and
other documents seized form the premises of the petitioner would be evidence of contravention of the provisions of the Act and it would be
necessary to retain them in his custody. The following materials available in the file will go to show that the officer of Enforcement had reason to
believe that the currency seized from the house of the petitioner could be evidence of contravention of the provisions of the act and that it would be
necessary to retain the same in his custody :
(a) Under the cover of a Mahazar dated 28-8-1990 the Enforcement Officer seized Rs. 3,55,000/- along with several documents from the
petitioner''s premises. A perusal of the mazahar dated 28-8-1990 goes to show that the concerned officer had reason to believe that the currency
and other documents seized under the mahazar are useful for taking further action under the provisions of the Act.
(b) The petitioner in his statement dated 28-8-1990 admitted before the Enforcement Officer that the Indian currency Rs. 3,55,000/- seized on
28-8-90 from the petitioner''s house under the mahazar represents the balance of the amount received from unknown persons under the
instructions of Syed Ibrahim of Bahrain, a person residing outside India. The above admission of the petitioner will go to show that the currency of
Rs. 3,55,000/- seized from his premises was involved in the contravention of S. 9(1)(b) of the Act and it would be liable for confiscation under S.
63 of the Act and therefore, it would be necessary for the Enforcement Officer to retain the currency in his custody.
As a matter of fact on 20-8-1991 a show cause notice has been issued to the petitioner by the Enforcement Directorate (Foreign Exchange
Regulation Act of Government of India) asking the petitioner to show cause why the amount of Rs. 3,55,000/- seized from his residence, being the
amount involved in the contravention of the provisions of the Act should not be confiscated under S. 63 of the Act. Further, it is also stated in the
show cause notice dated 20-8-1991 that reliance is inter alia placed on the documents listed in Annexure A appended to the show cause notice.
Item 2 in the Annexure A to the show cause notice is the documents seized from the residence of the petitioner on 28-8-1990 which includes the
currency worth Rs. 3,55,000/-.
It must be remembered that S. 41 of the Act does not contemplate the recording of reasons in writing before retaining the document under that
section and informing the petitioner as to the reason and the decision to retain the documents including the currency under the said section.
Mr. M. R. M. Abdul Kareem, learned Senior counsel for the petitioner further contended that S. 41 of the Act will not apply to the case of
Indian Currency and it cannot be retained under S. 41, because Indian currency by itself cannot be evidence of contravention of any of the
provisions of the Act as contemplated under S. 41 and in support of the above contention the learned counsel relied on the decision reported in C.
Venkata Reddy and Another Vs. Income Tax Officer (Central) I, Banglore and Others, . We are unable to accept this contention of the learned
counsel for the petitioner. According to explanation to S. 33 of the Act, ''documents'' includes Indian currency. Further, a reading of S. 9(1)(b) and
explanation to S. 63 of the act shows that Indian currency itself can be evidence of contravention of the provisions of the Act. In Union of India
(UOI) and Another Vs. Vijay Chand Jain, the Apex court has held that Indian currency which constituted the sale proceeds of foreign exchange
seized from a person is currency in respect of which the contravention has taken place and can be confiscated. The principles laid down in C.
Venkata Reddy and Another Vs. Income Tax Officer (Central) I, Banglore and Others, relied on by the learned counsel for the petitioner do not
apply to the facts of the present case. As rightly contended by the learned counsel for the respondents the currency seized from the residence of
the petitioner would be evidence of contravention of S. 9(1)(b) of the act and its retention under S. 41 is necessary for the purpose of showing that
there were violations enumerated in S. 9(1) of the Act. The further contention of the learned counsel for the petitioner that the currency seized from
the house of the petitioner cannot be evidence of contravention of any of the provisions of the Act because the currency seized in this case is not
kept in tact and the serial numbers of the currency notes are not noted cannot be countenanced. The materials available in the file go to show that
the currency seized from the petitioner''s house on 28-8-1990 is handed over to the Chief Enforcement Officer (City Madras) for safe custody and
the currency is in the safe custody and the currency is in the safe custody of the said officer.
In these circumstances, we have no hesitation in holding that the respondents have satisfied the conditions prescribed in S. 41 of the Act and
they are entitled to retain the currency in exercise of the power conferred on them by that section. In any event, inasmuch as by the issue of the
show cause notice dated 20-8-1991 proceedings have been initiated against the petitioners are entitled to retain the currency until the diposal of
the proceedings including the proceedings if any before the Appellant Board and the High Court.
Thirdly, the learned counsel for the petitioner contended that the search of the petitioner''s house and the seizure of the currency and other
documents in this case is illegal because, the respondents have not produced any material to show that the concerned officer of the Enforcement
had reason to believe that any documents, which in his opinion will be useful for or relevant to any investigation or proceedings under the Act are
secreted in the house of the petitioner and as the search and seizure are illegal, the currency and other documents seized from the petitioner''s
house are liable to be returned to the petitioner. In support of his contention the learned counsel for the petitioner relies on the decisions in The
Commissioner of Commercial Taxes and Others etc. Vs. R.S. Jhaver and Others etc., and Bishnu Krishna Sheresta v. Union of India (1987) 11
SCC 385 : (1987) Cri LJ 60. In the counter-affidavit the respondents have stated that the search in the present case is conducted under S. 37 of
the Act and that the Indian currency and the documents were seized with the reasonable belief that they would be useful for and relevant to the
further investigation or proceedings under the Act. We have carefully perused the file relating to this case produced by the learned counsel for the
respondents. A perusal of the file shows that the concerned officer of Enforcement on 28-8-1990 after being satisfied with the intelligence gathered
through reliable source that the petitioner had received some payment under instructions from a person from Dubai, decided to take action under
S. 37 of the Act and accordingly issued the search warrant which led to the search and seizure of the currency and other documents from the
residential premises of the petitioner. We are fully satisfied that there are sufficient materials in the file to show that the concerned officer who
issued the search warrant had reason to believe that the documents which will be useful for or relevant to any investigation or proceeding under the
Act are secreted in the premises of the petitioner and that the officer of the Enforcement was fully justified in issuing the search warrant. Under
these circumstances, we have to hold that the search of the petitioner''s premises and the seizure of the currency and other documents from the
petitioner''s premises on 28-8-1990 is in accordance with S. 37 of the act and hence legal.
Even assuming that the search of the petitioner''s premises and seizure of the currency and other documents are illegal, still such currency and
the other documents seized can be used as evidence of contravention of the provisions of the Act and, therefore, the respondents are entitled to
retain the currency in exercise of the powers under S. 41 of the Act and the petitioner is not entitled to the return of the same in view of the
principles laid down by the Supreme Court in Pooran Mal Vs. The Director of Inspection (Investigation), New Delhi and Others, and Radhakishan
Vs. State of U.P., .
In Pooran Mal Vs. The Director of Inspection (Investigation), New Delhi and Others, the Supreme Court while dealing with the question, if the
search and seizure made in contravention of S. 132 of the Income Tax Act is illegal, whether the information gathered from the documents seized in
the course of such illegal search and seizure can be excluded from evidence held as follows (at p. 363 of AIR) :-
It would thus be seen that in India as in England, where the test of admissibility of evidence lies in relevancy, unless there is an express or
necessarily implied prohibition in the Constitution or other law, evidence obtained as a result of illegal search or seizure is not liable to be shut out.
In that view, even assuming as was done by the High Court, that the search and seizure were in contravention of the provisions of S. 132 of the
Income Tax Act, still the material seized was liable to be used subject to law before the Income Tax authorities against the person from whose
custody it was seized and therefore no writ of prohibition in restraint of such use could be granted.
The Apex court in the above decision referred to the following observations of the learned Chief Justice Sir Lawrence Jenkins in Barindra Kumar
Ghose v. Emperor I.L.R (1910) Cal 467 :
Mr. Das has attacked the searches and has urged that, even if there was jurisdiction to direct the issue of search warrants, as I hold there was, still
the provisions of the Criminal Procedure Code have been completely disregarded. On this assumption he has contended that the evidence
discovered by the searches is not admissible but to this view, I cannot accede. For, without in any way countenancing disregard of the provisions
prescribed by the Code, I hold that what would otherwise be relevant does not become irrelevant because it was discovered in the course of a
search in which those provisions were disregarded. As Jimutavahana with his shrewd common sense observes - ""a fact cannot be altered by 100
texts"", and as his commentator quaintly remarks : ""If a Brahmana be slaim, the precept ''slay not a Brahmana'' does not annual the murder"". But the
absence of the precautions designed by the legislature lends support to the argument that the alleged discovery should be carefully scrutinized"".
In Radhakishan Vs. State of U.P., the appellant was a postman. Certain undelivered postal articles were recovered from an almirah in his house.
The appellant was tried and convicted for an offence under S. 52 of the Post Office Act for secreting postal articles. One of the contentions raised
on behalf of the appellant was that the search and seizure were illegal. Mudholkar, J., speaking for the court, while repelling this contention, held as
follows (Para 5) :-
So far as the alleged illegality of the search is concerned it is sufficient to say that even assuming that the search was illegal the seizure of the
articles is not vitiated. It may be that where the provisions of Sections 103 and 165, Code of Criminal Procedure are contravened the search could
be resisted by the person whose premises are sought to be searched.
Then we have to refer to the following two decisions heavily relied on by the learned counsel for the petitioner.
(1) The Commissioner of Commercial Taxes and Others etc. Vs. R.S. Jhaver and Others etc., and
(2) Bishnu Krishna Shrestha v. Union of India (1987) II ECC 385 : 1987 Cri LJ 60 .
In The Commissioner of Commercial Taxes and Others etc. Vs. R.S. Jhaver and Others etc., the question before the Supreme Court was the
validity of a search of the residential premises of the writ petitioner under the provisions of the Madras General Sales Tax Act. The Supreme Court
pointed out that the order of the High Court in so far as it had held that the warrant issued by the Magistrate for search of the residential
accommodation of the writ petitioner was bad had not been challenged before the Supreme Court. It was observed by Wanchoo, C.J. as follows
(at p. 67 of AIR) :-
It follows therefore that anything recovered from the search of the residential accommodation on the basis of this defective warrant must be
returned. It also follows that anything confiscated must also be returned as we have held that sub-section (4) must fall. As to the accounts, etc. said
to have been seized it appears to us that the safeguards provided under S. 165 of the Code of Criminal Procedure do not appear to have been
followed when the search was made for the simple reason that everybody thought that that provision was not applicable to a search under sub-
section (2). Therefore, as the safeguards provided in S. 165 of the Code of Criminal Procedure were not followed anything recovered on a
defective search of this kind must be returned.
Both the decisions of the Apex court in Pooran Mal Vs. The Director of Inspection (Investigation), New Delhi and Others, and The
Commissioner of Commercial Taxes and Others etc. Vs. R.S. Jhaver and Others etc., expressing different views, are rendered by a Bench of five
judges and in such cases we are bound to follow the principles laid down by the Apex Court in Pooran Mal Vs. The Director of Inspection
(Investigation), New Delhi and Others, , which is a later decision and therefore the decision of the Apex Court reported in The Commissioner of
Commercial Taxes and Others etc. Vs. R.S. Jhaver and Others etc., is not helpful to the petitioner.
In Bishnu Krishna Shrestha v. Union of India (1987) 11 ECC 385 : (1987 Cri LJ 60) a single Judge of the Calcutta High Court on the facts of
that case found that the search and seizure effected under S. 37 of the Act were illegal. Following the principle laid down in The Commissioner of
Commercial Taxes and Others etc. Vs. R.S. Jhaver and Others etc., the learned single Judge of the Calcutta High Court held that the documents
seized during unlawful search must be returned to the petitioner in that case. Since the decision in Bishnu Krishna Shrestha v. Union of India (1987)
11 ECC 385 : 1987 Cri LJ 60 is against the ratio of the later decision of the Supreme Court in Pooran Mal Vs. The Director of Inspection
(Investigation), New Delhi and Others, which decision we are bound to follow. We are not inclined to follow the decision in (1987) 11 ECC 385 :
1987 Cri LJ 60 .
Applying the ratio of the decision in Pooran Mal Vs. The Director of Inspection (Investigation), New Delhi and Others, to the facts of the
present case it has to be held that even assuming that the search of the petitioner''s premises and the seizure of the currency and other documents
are illegal, still, the currency and the seized documents can be used as evidence of contravention of the provisions of the Act and therefore the
respondents are entitled to retain the same under S. 41 of the Act.
The next contention of the learned counsel for the petitioner is that explanation to S. 33 of the Act says that for the purposes of S. 33, 34 and
36 to 41 ''document'' includes Indian currency, since explanation to S. 33 of the Act does not cover S. 44 of the Act, ''document'' referred to in S.
44 will not include Indian currency and, therefore, the officer of Enforcement cannot disclose such currency seized from the petitioner''s premises
or disclose any information regarding the currency to any other officer authorised by or under any other law such as COFEPOSA Act etc. There is
no merit in this contention of the learned counsel for the petitioner. Section 44 of the Acts says that if the Director of Enforcement or any other
officer of Enforcement not below the rank of an Assistant Director of Enforcement is of opinion that any documents which have come to his
possession or control during the course of any investigation or proceeding under the Act would be useful for or relevant to any proceeding which is
in progress or may be started under any other law for the time being in force, he may disclose such document or any information contained therein
as he thinks fit to an officer duly authorised by or under such other law. ''Document'' mentioned in S. 44 will include all documents which the officer
of Enforcement comes into possession or control during the course of any proceeding under the Act viz., proceedings under sections 33, 34 and
36 to 41 of the Act. In view of explanation to S. 33 of the Act, the expression ''document'' which comes into possession of the officer of
Enforcement in the course of any proceeding under sections 33, 34 and 36 to 41 of the Act will include Indian Currency also. Section 44 of the
Act may be read along with Sections 33, 34 and 36 to 41 of the Act. If so read, there is no difficulty in holding that ''document'' referred to in S.
44 will include Indian currency and it is open to the competent officer of Enforcement to disclose any information regarding the currency seized
from the petitioner''s premises on 28-8-1990 to any other officer duly authorised by or under any other law, if such officer of Enforcement is of
opinion that the information regarding the currency seized from the petitioner''s premises would be useful for or relevant to any proceeding which is
in progress or may be started under such other law.
In view of our conclusion that the respondents are entitled to retain the currency and other documents seized from the petitioner''s premises on
28-8-1990 in exercise of the power under S. 41 of the Act, the petitioner is not entitled to the issue of a writ of mandamus for directing the first
respondent to return the amount of Rs. 3,55,000/- and other documents and, therefore, the petitioner is not entitled to any relief in W.P. No. 5125
of 1991 and the same is liable to be dismissed. However, it is open to the petitioner to establish before the appropriate authority at the appropriate
time in the departmental proceedings pursuant to the show cause notice issued to the petitioner on 20-8-1991 that the currency was not involved in
any contravention of the provisions of the Act and that is not liable for confiscation.
W.P. No. 5126 of 1991 :
The prayer in this writ petition is as follows :-
For the reasons stated in the accompanying affidavit, the petitioner humbly prays that this Honourable Court may be pleased to issue a writ of
mandamus or any other appropriate writ or order or direction to hold an enquiry by a Magistrate or an independent authority with regard to the
petitioner''s complaint of illegal methods of beating etc., adopted by the officers of the 1st respondent for extracting the statements of the petitioner
and his assistant in connection with the search and seizure of the petitioner''s residential premises No. 13, Akbar Sahib Street, III Floor, Triplicane,
Madras on 28-8-1990 by the Enforcement Directorate, Madras.
In the common counter-affidavit, the respondents have categorically denied the allegations of illegal methods adopted by the officers of the first
respondent for obtaining statements from the petitioner and his assistant on 28-8-1990 and on subsequent dates. As rightly pointed out by the
learned counsel for the respondents the petitioner has never made any complaint of ill-treatment or beating by the officers of the first respondent
before the Magistrate before whom the petitioner was produced for remand. In the present proceedings under Art. 226 of the Constitution of
India, the disputed questions of fact as to whether the officers of the first respondent adopted illegal methods against the petitioner for obtaining
statements from him cannot be decided on the basis of averments in the affidavit filed by the petitioner, and the counter-affidavit of the
respondents. We are satisfied that on facts, the petitioner has not made out a case for directing an enquiry by a Magistrate or by an independent
authority with regard to the petitioner''s complaint of illegal methods of beating etc., alleged to have been adopted by the officers of the first
respondent for obtaining statements of the petitioner and his assistant in connection with the search and seizure of the petitioner''s premises on 28-
8-1990. Therefore, there is no merit W.P. No. 5126 of 1991 and the same is liable to be dismissed. However, it is open to the petitioner to raise
all the objections raised in this writ petition in appropriate proceedings, where the statements alleged to have been obtained from the petitioner by
the officers of the first respondent by alleged illegal methods of beating are sought to be used by the respondents against the petitioner.
W.P. No. 5127 of 1991 :- The prayer in the writ petition is as follows :-
For the reasons set out in the accompanying affidavit, the petitioner humbly prays that this Hon''ble Court may be pleased to issue a writ of
Mandamus or any other appropriate writ or order or direction in the nature of any other writ directing the respondents or their men or agent or any
other officer acting under them or on behalf of them to forbear from arresting and detaining the petitioner under the Conservation of Foreign
Exchange and Prevention of Smuggling Activities Act, 1974 as amended in connection with the search and seizure of the petitioner''s residential
premises No. 13, Akbar Sahib Street, III Floor, Triplicane, Madras-5 on 28-8-90 by the Enforcement Officers, Enforcement Directorate,
Shashtri Bhavan, Madras-6"".
Admittedly on 26-2-1991 an order of detention under the COFEPOSA Act was passed against the petitioner detaining the petitioner under the
provisions of the COFEPOSA Act. According to the learned counsel for the respondents, the said order of detention dated 26-2-1991 could not
be served on the petitioner. It is significant to note that the petitioner neither challenged the order of detention dated 26-2-1991 detaining him
under COFEPOSA Act nor has he suffered the period of detention. The Supreme Court by the judgment dated 20-12-1990 in C.A. Nos. 440
and 441 of 1989 (Reported in Additional Secretary to the Government of India and Others Vs. Smt. Alka Subhash Gadia and Another, . has held
that at the pre-detention stage, the courts can interfere only when they are prima facie satisfied;
(i) that the impugned order is not passed under the Act under which it is purported to have been passed.
(ii) that it is sought to be executed against the wrong person;
(iii) that it is passed for a wrong purpose;
(iv) that it is passed on vague, extraneous and irrelevant grounds; or
(v) that the authority which passed it had no authority to do so.
None of the five situations referred to above are attracted to the facts of the present case. In view of the principles laid down in the judgment of the
Supreme Court referred to above the present writ petition 5127/91 filed prior to the execution of the detention order issued under the
COFEPOSA Act is liable to be dismissed. In these circumstances, the petitioner is not entitled to the issue of writ of mandamus from this court
directing the respondents to forbear from detaining the petitioner under the COFEPOSA Act particularly when the order of detention dated 26-2-
1991 passed under the COFEPOSA Act is not even challenged in the manner known to law. There is absolutely no merit in this writ petition also
and the same is liable to be dismissed.
In these circumstances, all the three writ petitions are dismissed as devoid of merits with costs. Counsel''s fee Rs. 1,500/-.
W.P. Nos. 5125 to 5127 of 1991 :
At this stage, Mr. M. Abdul Nazeer, learned counsel for the petitioner makes an oral application for leave to file appeal before the Supreme
Court. We have only followed the decision of the Supreme Court in arriving at our conclusions. No substantial question of law of general
importance is involved in this case and this is not a fit case for granting leave to file appeal before the Supreme court. Hence the oral application for
leave is refused.
Petitions dismissed.