Madras High Court
The Assistant Director, Directorate Of ... vs A.J. Kingsley Fernandes on 31 August, 1995
Equivalent citations: 1996(53)ECC23
JUDGMENT K.A. Swami, C.J.
1. When the writ appeal came up for hearing, we thought it necessary to hear the Writ Petition 3662 of 1995 along with the writ appeal, as the writ appeal arose out of the interim order passed in the said writ petition. Accordingly, both the matters are posted before us for hearing. We have heard both sides.
2. The writ appeal is preferred against the order dated 5th July, 1995 passed by the learned Single Judge in W.M.P. 6050 of 1995 filed in W.P. 3662 of 1995. Learned Single Judge has allowed W.M.P. 6050 of 1995 filed in W.P. 3662 of 1995 and directed the return of the documents in the following terms:
Following the above decision, I direct the respondents to return the documents to the petitioner within two weeks from this date since the arguments of the learned Advocate for the respondents have been met in the above referred decision. I am not inclined to order for furnishing security by the petitioner while handing over passport to him when the respondents have other remedy to compel the presence of the petitioner for enquiry in the adjudication proceedings. As far as other documents are concerned, since they are not incriminating documents necessary for future investigation the respondents can take xerox copies and retain those copies after obtaining the signatures of the petitioner on those copies and hand over the originals to the petitioner. The respondents also can take an undertaking from the petitioner to produce all the documents as and when they are required. They can also have the address of the petitioner in the foreign countries in case the petitioner goes abroad. Accordingly W.M.P. 6050 of 1995 is allowed on the above terms.
3. In the writ petition, the petitioner has sought for calling for the records and to quash the proceeding under Order No. T-3/14-M/94 dated 8.8.1994 and also Memorandum No. T.4/2-M/95 dated 8.2.1995 passed by the Assistant Director, Directorate of Enforcement and Special Director, Directorate of Enforcement respectively. The subject-matter of the writ petition relates to the seizure of certain documents from the office premises of the writ petitioner and also production of certain documents by the petitioner on 11.02.1994 and seizure of the same by the Authorities. According to the respondents, these documents are required in connection with the proceedings under the provisions of the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as the Act). Learned counsel for the writ petitioner submits that (i) as the proceedings have not commenced within a period of one year from the date of seizure as required by Section 41 of the Act, the respondents have no authority to retain the documents any more, (ii) that mere issuance of the show cause notice cannot be considered as commencement of the proceedings within the meaning of Section 41 of the Act and that (iii) the direction issued by the learned single Judge for the return of the documents is in conformity with a decision of this Court in Nagoor Meera v. Union of India reported in 1991 L.W. (Crl) 487 and therefore, it does not call for interference. The correctness of these contentions is refuted by learned senior standing, counsel appearing for the respondents.
4. It may be pointed out here that the show cause notice has been issued, within a period of one year from the date of seizure of the document. That it is so, is not in dispute. However, the contention of the Learned Counsel for the writ petitioner is that unless the said show-cause notice was served within a period of one year, it could not be said that the proceedings had commenced against the petitioner, within a period of one year. The contention is that the issuance of show-cause notice has no legal value, as long as it has not been served and therefore, issuance of the show-cause notice cannot provide a starting point of the commencement of the proceedings, unless it is served. In support of this contention, learned Counsel for the writ petitioner has placed reliance on the decisions reported in R. Sivarajan v. Deputy Director, Enforcement Directorate (Mad.) 1988 63 Comp Case 34, Arjunan Chettiar v. Enforcement Officer[1977 (II) MU 5 : CFC (SC) 294], Narasimhiah v. Singri Gowda , Bachhittar Singh v. State of Punjab , AM. Soni v. Union of India and Nathulal v. Deputy Collector of Central Excise .
5. We may point out at once that in all these decisions, Section 41 of the Act was not considered and that too in the context of one similar to the one before us. Further, the expression, "commencement of the proceeding" also has not been considered except in R. Sivarajan v. Deputy Director, Enforcement Directorate (Mad) (1988) 63 Com Case 34 . In that case, a learned single Judge of this Court on distinguishing a Division Bench decision has held that mere issuance of a show-cause notice does not amount to commencement of the proceedings. We find it very difficult to agree with the said view. In our view, there was no justification whatsoever for the learned single Judge in R. Sivarajan's case to distinguish an unreported Division Bench decision of this Court in W.A. 65 of 1976 dated 16.09.1976 (Deputy Director v. K.A. Abdul Kliader), which has been subsequently followed in Deputy Director v. Naina Maraicair . We, accordingly, overrule the decision in R. Sivarajan's case insofar as it touches upon the commencement of the proceeding as required by Section 41 of the Act. As already pointed out, the other decisions do not deal with the question as to when the proceeding under Section 41 of the Act can be considered to have commenced. In our view, a proceeding under Section 41 of the Act can be held to have commenced on issuance of the show-cause notice. It is not necessary that such show-cause notice should be served, within a period of one year. If the interpretation which is tried to be placed by the Learned Counsel for the writ petitioner is accepted, we would be simply handing over the law into the hands of those who will be interested in defeating the provisions of the Act and such an interpretation would also defeat the very object of the Act. As far as the direction issued by the learned single Judge to return the document is concerned, we are of the view that this is not the stage at which the learned single [Judge] should have embarked upon the question as to whether the documents are relevant, and whether they should be retained pending inquiry. Unless it is decided as to whether a document is required for the purpose of the inquiry, which can be done only on examining the entire ambit of the proceeding, it is not possible to hold that the documents seized should be directed to be returned, pending inquiry. Therefore, we find it difficult to agree with the view taken by the learned single Judge, even though the learned single Judge placed reliance on a Division Bench decision of this Court in Nagoor Meera v. Union of India (1991 LW (Crl) 487), but the said decision was rendered on the basis that the Enforcement Authority had an ulterior motive to retain the passport with a view to prevent the petitioner therein from going abroad. Here, in the instant case, there is no such ulterior motive alleged, nor it can be said at this stage that the documents which are directed to be returned, are not at all required for the purpose of the inquiry.
6. For the reasons stated above, the writ appeal is allowed. The order dated 5th July, 1995 passed in W.M.P. 6050 of 1995 is set aside. The W.M.P. is dismissed. The Writ Petition is also dismissed. The C.M.Ps. are also disposed of. The respondents are directed to complete the proceedings within a period of six months from today. No order as to costs.