Delhi High Court
Sanjay Dogra vs Union Of India (Uoi) And Ors. on 28 July, 2006
Equivalent citations: 2006CRILJ4113, 132(2006)DLT52
Author: Manmohan Sarin
Bench: Manmohan Sarin, Manju Goel
JUDGMENT Manmohan Sarin, J.
1. Petitioner Sanjay Dogra filed the above petition through his wife Smt. Poonam Dogra praying for quashing of impugned detention order bearing file No. 673/18/2004-Customs-8 dated 30.11.2004 passed under Section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (hereinafter referred to as the 'COFEPOSA' Act). Petitioner prayed for a writ of habeas corpus, to be set at liberty.
Petitioner claims to have been picked up by Officers of DRI from his residence, where after he was formally arrested and produced before the ACMM, New Delhi on 8.5.2004. Petitioner and his associate's statements under Section 108 of the Customs Act had been duly recorded. Following this, the petitioner had been placed under arrest under Section 104 of the Customs Act for fraudulent availment of export incentives. Petitioner was granted bail on 7.7.2004. Following the impugned order of detention on 30.11.2004, the appellant was arrested and kept in detention.
2. The period of detention is over. The petitioner and his counsel, however, seek quashing of the impugned detention order as the same may have ramifications under SAFEMA and other statutes.
3. Before considering the petitioner's challenge to the impugned detention order, the facts as they emerge from the grounds of detention are being set out:
(i) Information was received in November, 2003 that the petitioner was involved in fraudulent availment of duty drawback and DEPB incentives available to the exporters on the export of readymade garments, leather goods and woolen garments etc. Petitioner is alleged to have adopted an ingenious modus operandi for the fraudulent availment of export incentives. Petitioner set up 10 firms in the name of his brothers and associates as proprietors and exports were shown in the name of these firms. In fact, these firms belonged to and were owned by the petitioner himself.
(ii) Petitioner used to collect foreign currency from tourists upon their arrival in India and deposit it in the bank account of the above firms as advance payment from foreign buyers for export orders. Petitioner would give Indian currency to the foreign tourists, who used to buy the goods from the market and hand them over to the petitioner for shipment. Petitioner, in fact, was acting as a freight and forwarding agent.
In order to avail the duty drawback and DEPB benefit, petitioner was required to export the goods and realize foreign remittances. For this purpose, he would purchase foreign currency and currency declaration forms from tourists and to deposit them in the bank in the credit of the numerous firms showing them as foreign remittances/advance payment for exports etc. Petitioner through the said firms, over-invoiced the price of goods. The difference between the so-called advance payment and the declared over-invoice price would be met by the petitioner by purchasing foreign currency from local money changers and deposit the same in the banks as export proceeds realized.
(iii) Petitioner would submit over-invoiced bills and export documents to the Customs for claiming the export benefits. Letters were generated from the foreign buyers to the effect that foreign currency was being remitted in cash through their representatives, which were prepared by the petitioner in his own office. Petitioner would also generate letters in the name of his firms under his control and submit the same in the bank along with foreign buyers letters prepared in his office and the currency declaration forms obtained from tourists along with foreign currencies. In nut-shell, petitioner used to purchase the foreign currency from the tourists from Russia and other CIS countries, give them Indian currency in lieu. Tourists would make their own purchases in Indian currency and the petitioner through his firms, would over-invoice the goods purchased by the tourists and show advance payment and make up the difference between over-invoiced price and foreign currency deposited by purchases from money changers. CDF forms purchased from other tourists, who were at times presented as representatives of the foreign buyers, were also submitted. This would enable the petitioner to obtain DEPB and drawback benefits in respect of goods which in fact were simply being forwarded, as exports on which the incentives were available. The petitioner, it is claimed, fraudulently obtained and availed duty drawback and DEPB benefit to the tune of Rs.19,94,13,343/- (Rupees Nineteen Crores Ninety Four Lacs Thirteen Thousand Three Hundred and Forty Three only).
(iv) The grounds of detention attached to the detention order list out comprehensively the searches made in the offices, residence of the petitioner and his associates and the premises of firms for which the petitioner was paying rent. The grounds of detention also list out the numerous firms (10 to 11) in the names of which the petitioner purportedly exported the goods to fraudulently claim the DEPB and duty drawback benefits.
(v) It is significant that petitioner, his brother Arun Dogra and Ajay Dogra as also other associates made their voluntary statements under Section 108 of the Customs Act giving complete description of the manner and methodology of the transactions carried out through various firms. The associates also accepted that the firms were owned and controlled by petitioner and the persons being shown as proprietors of the respective firms were in fact employees or retainers of the petitioner. The statements under Section 108 of the Customs Act, which are descriptive and comprehensive even with regard to the manner of how the tourists were contacted and currency purchased. The grounds of detention set out the depositions made by the various persons of their respective roles in their statements under Section 108 of the Customs Act. As per the respondents, the scrutiny of documents from the Punjab National Bank and the Custom House Agents, who had cleared the shipments of the firms belonging to and controlled by the petitioner, revealed that during the financial years 2001-02, 2002-03 and 2003-04, petitioner had availed duty drawback and DEPB amounting to Rs. 19,94,13,342/- (Rupees Nineteen Crores Ninety Four Lacs Thirteen Thousand Three Hundred and Forty Three only). The break-up of the duty drawback and DEPB incentives being availed by the various 11 firms, are also given. It is significant that as per the respondents, the said 11 firms during the course of investigation, voluntarily deposited a sum of Rs. 1,79,00,800/- (Rupees One Crores Seventy Nine Lacs Eight Hundred only) as part payment of their liability to the Government on account of the duty drawback and DEPB claim. Additionally, as per the grounds of detention, R.D. Yadav of Yadav Global Traders and Ajay Dogra, proprietor of Shree Vaibhav Export deposited Rs. 10,90,000/- and Rs. 8,46,000/- towards part payment of their liability.
(vi) Respondents claim that the investigations revealed the following:
(a) Petitioner, a freight forwarder, floated a number of firms in the name of different persons at different addresses for the purpose of fraudulent exports and availment of export incentives.
(b) Petitioner used to take over the goods purchased by foreign tourists and after packing, export such goods in the name of firms controlled by him for availing benefits due only to exporter under the drawback and DEPB schemes.
(c) The goods so exported by the petitioner, for getting undue and ineligible amount of such exports were being over-invoiced by under fabricated invoices, fraudulently shown to have been issued by the firms controlled by him, even though the goods were actually purchased from the shops at Okhla, Kamla Nagar and Laxmi Nagar at much lesser prices.
(d) Petitioner with the assistance of his brother Arun Dogra and other associates, namely, Ram Dulare Yadav alias Gandhi, collected foreign currencies (along with CDF) from commercial tourists, mostly from CIS countries, and also from local money changers, at a premium over the prevailing official exchange rate. Petitioner also used to collect the photocopies of passports of foreign tourist, prepare/fabricate letters in your office, showing the foreign tourist as the representative of the overseas buyer and submit the fabricated letters, copies of passport and CDF collected from the commercial tourists along with the foreign currencies with the bank, mis-stating the foreign currency as advance payment for his exports.
(e) Petitioner had fraudulently claimed/availed DBK and DEPB amounting to several crores, declaring his firms as exporters of goods, whereas they were actually purchased by foreign tourists in commercial quantities. Petitioner also willfully over-invoiced value of such goods. While petitioner was essentially a freight forwarder, he fraudulently availed of the export incentives, due only to a bona-fide exporter. Petitioner created bogus documents (export invoice) to over-invoice the goods exported in the names of his firms with the malafide intention of claiming excessive export incentives, viz. duty drawback and DEPB credit.
4. Petitioner was duly supplied with the list of relied upon documents. In the relied upon documents from Sl. No. 86 to 96, respondents furnished the details of shipping bills in respect of the exports made by the various firms. It is furnishing of the details of these shipping bills with the requisite information which has become the bone of contention in the present writ petition and which is the main plank of challenge by the petitioners to the detention order.
5. Before adverting in detail to the submissions of the petitioner's in this regard, it would be worthwhile to recapitulate that initially, learned Counsel for the petitioner submitted that since the goods had already been exported, provisions of Section 113(i) of the Customs Act would not be attracted. He contended that the Section covered only goods which were illegally sought to be exported and were liable to confiscation and not goods that had been actually exported. Further that it would not come within the definition of smuggling as per the COFEPOSA Act, which has to take its colour as per the definition of 'export goods' under the provisions of the Customs Act.
In all fairness to learned Counsel for the petitioner, once the attention of the learned Counsel for the petitioner was drawn to the Full Bench decision of the High Court of Calcutta in Euresian Equipments & Chemicals Ltd. and Ors. v. The Collector of Customs and Ors. reported at covering the same issue, he did not press the contention. The Full Bench in the case held that the goods fall within the definition of 'export goods', as per Section 2(19) of the Customs Act and incur the liability to confiscation under Section 113 of the said Act. Further, it was of no consequence that the goods are actually exported and the accrued liability for confiscation is not extinguished or wiped out with the export.
6. The main plank of petitioner's submissions now is that copies of the shipping bills which are prime documents, were not supplied. He submits that instead, the respondent supplied extract of certain pages of the register, which were maintained and which have been seized, as also tabulated annexures, which gave the details of the shipping bills and other particulars on the basis of which DEPB and duty drawback and DEPB was illegally claimed. Mr. Trilok Kumar contends that despite demand, the essential and primary document shipping bills were not supplied on which the entire case for fraudulent claim of duty drawback and DEPB for the exports was based. This, according to him, vitiated the detention order as it disabled the petitioner from making an effective representation. Elaborating this further, Mr. Kumar referred to the figures given in para 26 of the grounds of detention. He submitted that the fraudulent amount of DEPB and duty drawback was given as Rs. 19,94,13,342/-. He submits that the figures given in respect of the firms Shree Vaibhav Exports, S.H. Enterprises and R.D.R. Overseas in the ground of detention and as per the computation of the P-1 register, the tabular compilation and the relied on document at page 396, all vary. The petitioner craves leave to refer to his rejoinder affidavit where in a tabular form, the petitioner has sought to bring forth the discrepancies in these figures.
FIRM TABLE IN P-1 REGISTERS P-II TABULAR P-III PAGE 396
PARA 26 G.O.D. COMPILATION OF RELIED ON
DOCUMENTS
Shree Vaibhav Exports 2.95 Crores 4.86 Crores 3.06 Crores 9.37 Crores
S.H. Enterprises 1.29 Crores 0.62 Crores 0.90 Crores 0.49 Crores
R.D.R. Overseas 2.59 Crores 0.65 Crores 1.55 Crores 0.84 Crores
7. Mr. Kumar submitted that the petitioner was left in a quandary and disabled from making any effective representation as he did not know as to what exactly was the amount of duty drawback or DEPB was, which he illegally claimed and for which, he was to tender an explanation. In support of his contention that the non-supply of shipping bills especially in the circumstances where the compilation registers and certificates contained figures having discrepancies, the petitioner's right to make an effective representation was prejudiced and hence, the detention order deserved to be quashed. He relied on Shalini Soni v. Union of India reported at 1981 SCC (Crl.) 38 to urge that if the documents which formed basis of the order of detention were not served with the grounds of detention in the eyes of law, there would be no service of grounds to the detenu. Reliance was also placed on M. Ahmed Kutty v. Union of India reported at by the petitioner as well as respondents. Mr. Trilok Kumar also relied on Suleman Ahmad v. Union of India and Ors. reported at 1989(2) Crimes 512 as also on Govind Ram v. Union of India and Ors. reported at 1985 (1) Crimes 779 and M.M. Yusuf v. Union of India and Ors. in Crl. Writ Nos. 324-25 of 1988. In the last judgment, it was held that the documents which are mentioned in the Panchnama and which are annexed to the grounds of detention, should be regarded as documents, which are referred to by the detaining authority. Based on Yusuf's case, he argued that if such a documents was asked for, the detaining authority was under an obligation to supply the same.
8. Learned Counsel for the petitioner also submitted that there was undue delay in passing of the detention order. He submitted that the petitioner had been arrested under Section 135 of the Customs Act on 8th May, 2004. He submitted that as per the DRI's own case, information was available with them as far back as in November, 2003, yet the arrest was made on 8th May, 2004 belatedly. The order of detention was passed after the petitioner had been granted bail and followed by his detention nearly five months later. He submits that from November, 2003 to May, 2004, exports were regularly made by the petitioner and nearly 900 consignments were exported after scrutiny by the customs. He says that the exports having ceased, there was no proximate link or cause left for the detention of the petitioner under the Act.
9. Learned Counsel for the respondents refuted the submissions made by the petitioner's counsel. She submitted that the gravamen of the allegations made against the petitioner was the fraudulent exports in the name of numerous benami firms controlled by him to claim illegally drawback and DEPB. It is the respondents' case that the same were in contravention of Section 113 of the Customs Act and fell within the definition of smuggling also. The transactions which were presented as exports and against which remittances were shown as having come from overseas buyers, were in fact, the foreign currency purchase from the tourists who, in turn, were supplied Indian currency and who, in fact, used to purchase the goods, which were then shipped by the petitioner through the benami companies after over-invoicing and claiming the DEPB and duty drawback benefits. As noticed earlier, the grounds of detention have set out in detail the activities of the petitioner and his associates coupled with the statements under Section 108 of the Customs Act of the petitioner and his associates fill up the gaps by describing the manner in which the transactions were carried out. The detaining authority had before it sufficient documents and enormous documentary and other evidence to satisfy itself of the necessity to detain the petitioner under COFEPOSA. It was to be the subjective satisfaction of the detaining authority to have reached the said conclusion.
10. Understandably, in these circumstances, the petitioner has confined the challenge to the detention order as having been vitiated by non-supply of shipping bills and on account of delay. As regards the non-supply of shipping bills, we find that shipping bill itself is not a relied on document. What is mentioned in 'relied on document' are details of shipping bills. The details of the shipping bills which were supplied, contained all the relevant material particulars such as shipping bill number, date, invoice number, invoice value, FOB value, port of lading, port of discharge, name of consignee, drawback/DEPB and the name of exporting firms. Thus, the entire details which a shipping bill contains, were captured, encapsulated and summarized in the details of shipping bills, which were included as a relied on document.
From the foregoing, it would be seen that firstly, the shipping bill itself was not a relied on document but a referred document at best. Besides, all the details and particulars in relation to the shipping bills had been duly provided.
11. Let us examine the legal position. Reference may usefully be made to a recent decision of the Supreme Court in Crl. Appeal No. 1074/2005 titled J. Abdul Hakim v. State of Tamil Nadu and Ors. decided on 24.8.2005. This was a case of detention under COFEPOSA. While passing the order of detention, the authorities referred to two seized passports of the appellant, copies of which had not been supplied to him. The appellant had contended that the said passports had not been supplied to him and these were relied upon documents and it tantamounted to denial of making an effective representation guaranteed under Article 22 of the Constitution of India. The appellant contended that he had not been supplied copies of the passport, entries of which had been relied upon by the detaining authority for passing the detention order. The Supreme Court observed that the grounds of detention recorded that the detenu in his statement in his own hand, had described how he had obtained the passport and how he had been traveling abroad several times and used to smuggle foreign goods in. It was also noted in the grounds that he had made 23 foreign trips under his old passport and four trips under the current passport and the said passports contained entries of foreign visits made by him. The appellant's counsel contended that the detaining authority had utilized the passport entries as would be apparent from the above and, therefore, the non-supply of these essential documents vitiated the detention. Supreme Court referred to the decisions in M. Ahmad Kutty v. Union of India and Anr. reported at and Badhrunnissa v. Union of India and Ors. reported at . In the latter decision, the Court while reaffirming the right of the detenu to receive the document which was taken into consideration by the detaining authority while formulating the grounds of detention held that the obligation was cast on the detaining authority to supply them in the language known to the appellant. The Court also put a rider that non-supply of each and every document do not provide a ground for setting aside the detention order. It is for the detenu to establish that the non-supply of copies of the documents has impaired his right to make an effective and purposeful representation. The demand made by the detenu of the document merely on the ground that there is a reference in the grounds of detention, cannot vitiate the otherwise legal detention order. No hard and fast rule can be laid down in this behalf. What was essential was that the detenue must show that the failure to supply the documents had impaired his right, however slight or insignificant it may be.
The Supreme Court further noticed its decision in Radhakrishnan Prabhakaran v. State of Tamil Nadu and Ors. reported at . It was held:
we make it clear that there is no legal requirement that a copy of every document mentioned in the order shall invariably be supplied to the detenu. What is important is that copies of only such of those documents as have been relied on by the detaining authority for reaching the satisfaction that preventive detention of the detenue is necessary shall be supplied to him.
The Court summed up the legal position in the cited case as:
from the aforesaid authorities it is clear that the detenu has a right to be supplied with the material documents on which the reliance is placed by the detaining authority for passing the detention order but the detention order will not be vitiated, if the document although referred to in the order is not supplied which is not relied upon by the detaining authority for forming of its opinion or was made basis for passing the order of detention. Crux of the matter lies in whether the detenu's right to make a representation against the order of detention, is hampered by non-supply of the particular document.
12. The Supreme Court, applying the above principles in the cited case, held that it was the statement of the appellant made before the authorities where he admitted his frequent travels, which was the basis for passing of the detention order and reference of the two passports containing entries of the foreign visits by the detenu was only a passing reference. It held that the passport entries are not made the basis of the detention order. The basis is the admission of the foreign visits by the detenu in his statements. The Supreme Court held:
We fail to understand as to how non-supply of copies of the passport of the appellant-detenu prejudicially affect his right to make proper representation against the order of detention. The non-supply of copies of the passports will not have the effect of vitiating the detention order.
13. Respondents in the present case are placed in far better circumstances. The shipping bills were not the relied on documents. All particulars and details which are contained in the shipping bills were furnished. The basis of the detention order originated from the numerous documents and evidence made available to the detenu with regard to the several transactions carried out by him through the benami firms. Above all, the statements under Section 108 of the Customs Act of the petitioner and his associates which alone provide sufficient material before the detaining authority to pass the detention order.
14. Coming to the discrepancies alleged, it may be noted that these were not specifically pointed out either in the representation or before the Advisory Board and not even in the writ petition except at the time of filing of the rejoinder. Assuming there were discrepancies which would point out that the fraudulent amount of drawback as computed by the department in several transactions was not 19.43 crores but a little less or more it would not erode the justifiability of the detention order. In view of the legal position as stated and in the present set of circumstances, the non-supply of shipping bills did not cause any prejudice to the petitioner or affect his right of effective representation. Respondents have explained that considering the number of searches carried out, the massive evidence required to be collected and collated as also the recording of statements of the petitioner and his various associates under Section 108 and collection of evidence from the Banks as also of the various exports made, the proposal for preventive detention could be made only on 20.9.2004. The statement of two of the associates of the petitioner was recorded on 27th October, 2004.
In these circumstances, it cannot be said that the passing of the detention order was unduly delayed which would affect the very purpose of preventive detention. In view of the foregoing reasons, the petition has no merit and is accordingly dismissed.