Anil Kumar Chawla … vs The State Of Maharashtra, Shri … on 19 September, 2003

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Bombay High Court
Anil Kumar Chawla … vs The State Of Maharashtra, Shri … on 19 September, 2003
Author: Kanade
Bench: R Desai, V Kanade

JUDGMENT

Kanade, J.

1. The petitioner is challenging the order of detention which is passed by the detaining authority under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (“COFEPOSA ACT” for short) dated 29th November, 2002. A copy of grounds of detention, as also the copy of the list of documents were served on the detenu. This petition has been filed by the brother-in-law of the detenu.

2. The detenu Shri Tilak Raj Sharma was detained pursuant to the order dated 29th November, 2002 and the detention order states that this was done with a view to preventing him in future from smuggling goods.

3. Few facts relevant for the purpose of deciding the present petition are as follows:

The detenu is non-resident of India but he is also a national and citizen of India. In the grounds of detention which was served on the detenu it is mentioned by the detaining authority that on the night of 31st July, 2002 the detenu was at the Chatrapati Shivaji International Airport, Mumbai and one Shri Rajinder Nirula was handing over the foreign currency to the detenu at the transit lounge. Both of them were intercepted by the D.R.I. Officers on 1.8.2002 at 00.30 hrs. and Foreign Currency of U.S. dollar in denomination of 100 x 700 Notes which is of 70,000 US dollars equivalent to Indian currency being Rs. 35,000/-. Along with it, four mobile phones were recovered before the panchas. On the basis of this solitary incident the order of detention was passed against the detenu as also against co-accused Rajinder Nirula who had handed over the currency to the detenu.

4. It is an admitted position that the detenu as well as the said Rajinder Nirula were both non-residents of India, permanently residing at Dubai and the and the detenu in the present case was going back to Dubai whereas the other co-accused namely Shri Rajinder Nirula was going to a different city in India on the domestic airlines. Further it is an arrived in India and had declared the said amount of 70,000 US dollars of the same denominations namely 100 x 700 notes.

5. The learned counsel appearing on behalf of the detenu has submitted that the said order of detention passed under the provisions of the COFEPOSA Act is illegal. Firstly because the provisions of the Foreign Exchange Regulation Act, 1973 (“FERA Act” for short) have been repealed and the new Act has been replaced by the former Act which is known as The Foreign Exchange Management Act, 1999.

6. It is submitted by the learned counsel appearing on behalf of the detenu that under the old FERA Act, which has been repealed, Section 67 specifically empowers the Customs Authorities to try any cases of violation of provisions of FERA Act as per the procedure laid down under the Customs Act, 1962. It is submitted that by virtue of the repeal of the said provisions and because the said provision is expressly under the new FEMA Act the said offence is no longer punishable under the provisions of FEMA Act or under The Customs Act. It is, therefore, submitted that the detaining under Section 3 of the COFEPOSA Act and therefore, the order of detention was invalid. It was further submitted by the learned counsel appearing on behalf of the detenu that in the facts and circumstances of the present case the only thing which was recovered from the detenu was currency notes which had been validly brought inside the country by the co-detenu Shri Rajinder Nirula and, therefore, the order passed by the detaining authority that this amounted to smuggling of goods, was clearly illegal because the provisions of the FERA Act having been repealed, the said offence was not made out under the provisions of the new FERA Act.

7. The learned counsel appearing on behalf of the detenu further submitted that order of detention was based on a solitary incident and that too in a case where after the new Act has come into force it was not an offence punishable under the New Act, and as such the detaining authority had clearly not applied its mind while issuing the order of detention.

8. The learned counsel appearing on behalf of the detenue further submitted that in paragraph 3 of the order of detention it has been mentioned that assorted foreign currencies were taken over and seized from the detenu. It is submitted that the currencies which were seized were having the denominations of US dollars 10 x 700 notes and that being the admitted position there was no reason for the detaining authority to state that assorted currency notes were seized. It was submitted that this was a further instance of non-application of mind on the part of the detaining authority.

9. The learned counsel appearing on behalf of the detenu also relied on number of judgments of the Apex Court where Apex Court has laid down guidelines in respect of cases where there is a repeal of old statute and similar provisions is retained in two different statutes in respect of the same subject matter. He has submitted that there is an implied repeal in such circumstances.

10. Ms. Pai, The learned A.P.P. on behalf of the State has vehemently opposed the said averment made by the learned counsel appearing on behalf of the petitioner. She has relied on the judgment of Apex Court reported in Union of India and Anr. v. Venateshan and Anr., and also the judgment of the Apex Court in the case of Narendra Purushottam Umarao v. B.B. Gujral and Ors., .

11. We have heard the learned counsel appearing on behalf of the detenu as well as the learned A.P.P. at great length.

12. In the present case the order of detention has been passed under the COFEPOSA Act and detaining authority has exercised power which is vested in him under Section 3 of the said Act. In the grounds of detention it is mentioned that the detenu along with another co-detenu Rajinder Nirula were caught red handed when they were exchanging foreign currency at the Airport without taking a permission of the necessary Competent Authority. In order to appreciate and consider the rival submissions made by both the counsels, in our view, it is necessary to examine the relevant provisions under the said Act.

13. Section 3 of the COFEPOSA Act reads as follows:-

“Power to make orders detaining certain persons. – 1) The Central Government or the State Government or any officer of the Central Government, not below the rank of a Joint Secretary to that Government, specially empowered for the purposes of this section by that Government, or any officer of the State Government, not below the rank of a Secretary to that Government, specially empowered for the purposes of this section by that Government, may, if satisfied, with respect to any person (including a foreigner), that, with a view to preventing him from acting in any manner prejudicial to the conservation or augmentation of foreign exchange or with a view to preventing him from –

i) smuggling goods, or

ii) abetting the smuggling of goods, or

iii) engaging in transporting or concealing or keeping smuggled goods, or

iv) dealing in smuggled goods otherwise than by engaging in transporting or concealing or keeping smuggled goods, or

v) harbouring persons engaged in smuggling goods or in abetting the smuggling of goods,

it is necessary to do, make an order directing that such person be detained:

(Provided that no order of detention shall be made on any of the grounds specified in this sub-section on which an order of detention may be made under Section 3 of the Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act, 1988 or under Section 3 of the Jammu and Kashmir Prevention of Illicit Traffic in narcotic Drugs and Psychotropic Substances Ordinance, 1988 (J & K Ordinance 1 of 1988).

(2) When any order of detention is made by a State Government or by an officer empowered by a State Government, the State Government shall within ten days, forward to the Central Government a report in respect of the order.

(3) For the purpose of Clause (5) of Article 22 of the Constitution, the communication to a person detained in pursuance of a detention order of the grounds on which the order has been made shall be made as soon as may be after the detention, but ordinarily not later than five days, and in exceptional circumstances and for reasons to be recorded in writing, not later than fifteen days, from the date of detention.”

14. Section 67 of the Customs Act which is heavily relied upon by the earned counsel appearing on behalf of the detenu states as under:-

“67. Removal of goods from one warehouse to another.- The owner of any warehoused goods may, with the permission of the proper officer, remove them from one warehouse to another, (***) subject to such conditions as may be prescribed for the due arrival of the warehoused goods as the warehouse to which removal is permitted.”

Similarly Section 113 of the Customs Act, reads as under:

“113. Confiscation of goods attempted to be improperly exported, etc.-The following export goods shall be liable to confiscation:-

(a) any goods attempted to be exported by sea or air from any place other than a customs port or a customs airport appointed for the loading of such goods;

(b) any goods attempted or to be exported by land or inland water through any route other than a route specified in a notification issued under Clause (c) of Section 7 for the export of such goods;

(c) any (***) goods brought near land frontier or the coast of India or near any bay, gulf, cree or tidal river for the purpose of being exported from a place other than a land customs station or a customs port appointed for the loading of such goods;

(d) any goods attempted to be exported or brought within the limits of any customs area for the purpose of being exported,contrary to any prohibition imposed by or under this Act or any other law for the time being in force;

(e) any (***) goods found concealed in a package which is brought with the limits of a customs area for the purpose of exportation;

(f) any (***) goods which are loaded or attempted to be loaded in contravention of the provisions of Section 33 or Section 34;

(g) any (***) goods loaded or attempted to be loaded on any conveyance, or water-borne, or attempted to be water-borne for being loaded on any vessel, the eventual destination of which is a place outside India, without the permission of the proper officer;

(h) any (***) goods which are not included or are in excess of those included in the entry made under this Act, or in the case of baggage in the declaration made under Section 77.

(i) any goods entered for exportation which do not correspond in respect of value or in any material particular with the entry made under this Act or in the case of baggage with the declaration made under Section 77;

(ii) any goods entered for exportation under a claim for drawback which do not correspond in any material particular with any information furnished by the exporter or manufacturer under the Act in relation to the fixation of rate of drawback under Section 75;

(j) any goods on which import duty has not been paid and which are entered for exportation under a claim for drawback under Section 74;

(k) any goods cleared for exportation (***) which are not loaded for exportation on account of any willful act, negligence or default of the exporter; his agent or employee, or which after having been loaded for exportation are unloaded without the permission of the proper officer;

(l) any specified goods in relation to which any provisions of Chapter IVB or any rule made under this Act for carrying out the purposes of that Chapter have been contravened.”

15. From the perusal of the aforesaid provisions it is clear that sofar as detaining authority is concerned it has a power to issue order of detention if he is satisfied that it is necessary to prevent any person from acting in any manner prejudicial to the Conservation of Augmentation of Foreign Exchange or with a view to prevent act of smuggling goods or ….. harbouring persons ….. the order of detention is passed.

16. The detaining authority, therefore, irrespective of the fact whether any offence is punishable under any Act comes to the conclusion that it is necessary to prevent any person from doing any of the acts which are mentioned in two separate categories under Section 3 of the said Act, can pass an order of detention. In our view the judgment of the Apex Court relied upon by the learned APP appearing on behalf of the State namely the case of Union of India and Anr. v. Venkateshan S. and Anr. would be squarely applicable to the facts of the present case.

17. It would be profitable to consider the observations made by the Apex Court in the said judgment where the Apex Court in paragraph Nos. 9 and 10 has observed as follows:

“9. COFEPOSA Act contemplates two situations for exercise of power of preventive detention (a) to present violation of foreign exchange regulations; and (b) to prevent smuggling activities. Under Section 2(e) of COFEPOSA Act, smuggling is to be understood as defined under Clause (39) of Section 2 of the Customs Act, 1962 which provides that ‘smuggling’ in relation to any act or omission will render such goods liable to confiscation under Section 111 or Section 113. Section 111 contemplates confiscation of improper imported goods and Section 113 contemplates confiscation of goods attempted to be improperly exported. This has nothing to do with the penal provisions i.e. Sections 135 and 135A of the Customs Act which provide for punishment of an offence relating to smuggling activities. Hence, to contend that for exercising power under COFEPOSA Act for detaining a person, he must be involved in criminal offence, is not born out by the said provision.

10. Other important aspect is that COFEPOSA Act and the FEMA occupy different fields. COFEPOSA Act deals with preventive detention for violation of foreign exchange regulations and FEMA is for regulation and management of foreign exchange through authorized persons and provides for penalty for contravention of the said provisions. The object as stated above is for promoting orderly development and maintenance of foreign exchange market in India. Preventive detention law is for effectively keeping out of circulation the detenu during a prescribed period by means of preventive detention. (Re: Poonam Lata v. M.L. Wadhawanand and Ors. . the power of detention is clearly a preventive measure. It does not partake in any manner of the nature of punishment. It does not partake in any manner of the nature of punishment. It is taken by way of precaution to prevent mischief to the community. (Re: Khudiram Das v. The State of West Bengal and Ors. . The constitution bench while dealing with the constitutional validity of the Maintenance of Internal Security Act, 1971 (MISA), in Haradhan Saha v. The State of West Bengal and Ors. ((1975) 3 SCC 1988) held:

“32. The power of preventive detention is qualitatively different from punitive detention. The power of preventive detention is a precautionary power exercised in reasonable anticipation. It may or may not relate to an offence. It is not a parallel proceeding. It does not overlap with prosecution even if it relies on certain facts for which prosecution may be launched or may have been launched. An order of preventive detention may be made before or during prosecution. An order of preventive detention may be made with or without prosecution and in anticipation or after discharge or even acquittal. The pendency of prosecution is no bar to an order of preventive detention. An order of preventive detention is also not a bar to prosecution.

33. Article 14 is inapplicable because preventive detention and prosecution are not synonymous. The authorities are different, the nature of proceedings is different. In a prosecution, an accused is sought to be punished for a past act. In preventive detention, the past act is merely the material for inference about the future course of probable conduct on the part of the detenu.”

18. Thus the Apex Court has clearly upheld the power of the detaining authority while he is exercising the said power under Section 3 of the said Act, even in cases where the offences fall under the provisions of FEMA and the Apex Court has observed that the power of preventive detention is precautionary power which is exercised in reasonable anticipation which may or may not relate to an offence. The Apex Court has further made it clear that the pendency of a prosecution is no bar to an order of preventive detention.

19. In this view of the matter, the submission of the learned counsel appearing on behalf of the detenue that in view of the repeal of the provisions of the FERA Act the order of detention under Section 3 of the Act cannot be issued, (SIC) be accepted.

20. So far as the submissions of the learned counsel appearing on behalf of the petitioner is concerned that since the order of detention has been passed by stating that the detenue was smuggling goods and that in view of the repeal of the FERA Act the said action would not be an offence under the provisions of the Customs Act or the FEMA Act. The said submission in our view cannot be sustained.

21. The term “smuggling” is defined under Section 2(e) of the COFEPOSA Act and it has the same meaning as in Section 2(39) of the Customs Act. Thus further term “smuggled” goods also includes smuggling of currency notes. The Apex Court in the case of Narendra v. B.B. Gujral (supra) has discussed about the same in paragraphs 26 and 27 of the judgment;

“26. Section 3(1) of the Act, so far material, reads:

“The Central Government or the State Government or any officer of the Central Government, not below the rank of a Joint Secretary to that Government, specially empowered for the purposes of this section by that Government, or any officer of a State Government, not below the rank of a Secretary to that Government, specially empowered for the purposes of this section by that Government, may, if satisfied, with respect to any person (including a foreigner), that, with a view to preventing him from acting in any manner prejudicial to the conservation or augmentation of foreign exchange or with a view to preventing him from –

(i) smuggling goods, or

(ii) abetting the smuggling of goods, or”

27. There is no doubt, a distinction between an act of smuggling and abetting the smuggling of goods for purposes of preventive detention under Section 3(1) of the Act. Nonetheless, the term “smuggling” as defined in Section 2(e) of the Act of the Customs Act, 1962, which, when read with Section 111 of that Act, is wide enough to include and make liable not only the actual smuggler but also persons abetting the smuggling of contraband goods as well as all persons dealing in such goods etc. Though the provisions of Clauses (i) and (ii) of Sub-section (1) of Section 3 of the Act may operate on different fields, which may some-times, as here, overlap, still a wider meaning is given to the term ‘smuggling’ in Section 2(e) of the Act, with a view to broaden the scope of preventive detention. Sub-section (1) of Section 3 of the Act provides for the different grounds of detention. Clause (i) relates to smuggling of goods. Clause (ii) relates to abetting the smuggling of goods. Clause (iii) relates to engaging in transporting or concealing or keeping smuggled goods. Clause (v) relates to harbouring persons engaged in smuggling goods or in abetting the smuggling of goods. It must, therefore, be assumed that the intention of the legislature was to treat the smuggling of goods and abetting the smuggling of goods as grounds separate and distinct, and both are separate grounds for detention i.e. to take in all such activities which results in accomplishment of smuggling of contraband goods.”

22. In our view the ratio of the said judgment would be applicable in the present case and though the provisions of FERA Act have been repealed that would not take away the act of smuggling of currency from the purview of the term smuggled goods. Therefore, the submission of the learned counsel appearing on behalf of the detenu that by using the words “smuggled goods” in the detaining order, the detaining authority has not applied its mind and that the order of detention suffers from the vice of non-applications of mind (SIC) be accepted. In our view the apex court has also considered this aspect in the case of Union of India v. Venkateshan (supra).

23. Sofar as the detention of the learned counsel appearing for the detenu regarding the effect of the repeal of the FERA Act is concerned, in our view this aspect which does not fall for our consideration in the present case. It is open for the petitioner to make this submission before the appropriate forum regarding the overlapping of the powers of the enforcement authorities and the customs authority and the said question is left open.

24. We, however, feel that sofar as other two submissions which have been made by the learned counsel on behalf of the detenu, there is some substance in the said submissions. The learned counsel appearing on behalf of the detenu submitted that the detaining authority has issued this order of detention on the basis of a solitary instance and that material was not sufficient for the purpose of arriving at a subjective satisfaction for issuing an order of detention. The other submissions of the learned counsel is that in paragraph 3 of the order of detention the detaining authority has referred to assorted currency notes being seized which also is admittedly incorrect and though a specific ground regarding non-application of mind also has been raised in the petition. No reply has been given to the said ground in the reply which is filed and a bald statement is made that he said reply would be given at the time of arguments.

25. In our view looking to the facts and circumstances of the present case, the co-detenu Rajinder Nirula and the detenu in the present case are non-resident Indians who are permanently stationed in Dubai. The co-detenu Rajinder Nirula had brought into this country the US dollars worth Rs. 35 lakhs after he had solemnly declared the same while entering the country. The contention of the detenu is that he was asked to take back these currencies to Dubai since he was acquainted with the co-detenu. Apart from this solitary instance there are no other cases pending against the present detenu.

26. The Apex Court has deprecated the practice of the detaining authority in detaining detenus in cases where there is solitary instance. Coupled with this fact in paragraph 3 of the order of detention there appears to be a clear non-application of mind on the part of the detaining authority in stating that the currency which is seized from the detenu was assorted foreign currencies. From the said expression it appears that either the proper material was not placed before the detaining authority or that the detaining authority has not applied its mind specifically to the facts of the present case, especially where it is an admitted position that the currency which was seized was US dollars of the denomination of 100 and there were 70 such notes.

27. The detenu is detaining sine first week of December, 2002 and he has detained almost for 11 months and 10 days. In our view the order of detention will have to be quashed and set aside. Hence the order of detention is quashed and set aside. The detenu is directed to be released forthwith unless he is otherwise required in other case. Petition is allowed.

28. Issue of certified copy expedited.

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