JUDGMENT
Suhas Chandra Sen, J.
1. On April 10, 1986, this writ petition was moved praying for, inter alia, quashing of a search warrant No. C-20/89 of 1986, dated March 11, 1986, issued under Section 37 of the Foreign Exchange Regulation Act, 1973, in respect of premises No. 3, National Tower, 13, Louden Street, Calcutta-700 017. The allegation in the writ petition was that the search warrant was used for the purpose of making a roving enquiry and not for the purpose of the Foreign Exchange Regulation Act. It was alleged that there was no ground for issuing the search warrant.
2. This writ petition was moved upon notice and Sri S.K. Kundu appeared for the petitioner. An order of status quo was passed. The flat in question was directed to be kept under seal. Directions were given for filing of the affidavits.
3. A point was taken on behalf of the respondent that the writ petition was unauthorised. The writ petitioner, Bishnu Krishna Shrestha, was not available in Calcutta and had not signed the petition or affirmed the affidavit. In fact, it was alleged that Sri Bishnu Krishna Shrestha was absconding and the writ petition was entirely unauthorised.
4. On behalf of the writ petitioner, an assurance was given that the petitioner will be personally present in court on the next date of hearing. The petitioner was afraid that he would be arrested as soon as he came to the court.
5. On behalf of the respondents, as assurance was also given that there was no intention of arresting the petitioner. It was stated that the respondents only wanted to search the flat. The statements made by the advocates appearing for the petitioner and the respondents were, however, not recorded.
6. On April 17, 1986, the matter again appeared in the list. The interim order dated April 10, 1986, was vacated and a direction was given for the matter to appear on the list on April 21, 1986. The petitioner personally appeared in the court.
7. On April 18, 1986, on behalf of the petitioner, it was mentioned in court at about 12.30 p.m. that the petitioner had been taken to the office of the Foreign Exchange Department on the 17th evening and had been kept detained in that office contrary to the assurance given in the court. The respondents were directed to produce the petitioner in court at 2 o’ clock. At 2 o’ clock, the court was informed that the petitioner had been allowed to leave the office of the Foreign Exchange Department at No. 8, Lindsey Street, Calcutta. On April 21, 1986, the matter was taken up for hearing once again. I took a serious view of the fact that even though the assurance given to the court on behalf of the petitioner had been kept, the respondents, in violation of the assurance given, had taken the petitioner to their office and kept him detained from 17th evening to 18th afternoon till the matter was mentioned in the court.
8. Significantly enough, Sri S.K. Kundu, who appeared for the petitioner on April 10, 1986, did not appear on April 21, 1986, when the matter was taken up for hearing.
9. It was seriously argued by the respondents that the petitioner voluntarily went to the office of the respondents after the search of the premises and wanted to spend the night at that office on his own and stayed till about 12.30 p.m. on the 18th without any compulsion. It was seriously stated on behalf of the respondents that the petitioner felt shy about answering questions relating to the search and seizure proceedings in the presence of his employees and, therefore, voluntarily went to the office of the respondents. Thereafter, he felt too tired to return home and preferred to spend the night at the office of the respondents. The story on the face of it was very difficult to believe and I directed the respondents who were responsible for carrying out the interrogation to be personally present in court. The respondents stuck to this highly improbable story. They were interrogated in court and the interrogation has revealed a number of inconsistencies in the statements. The petitioner, however, did not pray for any action to be taken against the respondents. I was also of the view that since the assurance given on
behalf of the respondents had not been recorded formally, no useful purpose will be served by initiating proceedings for contempt of court against the respondents.
10. But I make it clear that the story related by the respondents cannot bear scrutiny. It is difficult to accept the contention that the petitioner did not want to discuss his business affairs in the presence of his employees. The employees could not be asked to vacate the flat or to go to some other part of the flat. It is equally astonishing to hear that merely because the petitioner wanted to spend the night in the office of the Foreign Exchange Department, he was allowed to spend the night there. It is amazing that the Foreign Exchange Department allows strangers to spend nights in their office where their records and other important documents are kept. There is no-explanation why the petitioner was not allowed to leave the office premises till about 12.30 p.m. on the 18th and after the matter was mentioned in court. It also appears that an undertaking was obtained from the petitioner by the respondents before he was allowed to leave the office premises. If the petitioner had gone and stayed in the office of the Foreign Exchange Department voluntarily, why was this undertaking necessary ?
11. What has been narrated above illustrates the high-handed manner in which the entire operation of search and seizure has been carried out in this case. The petitioner has stated in the writ petition that he was born in Jobbani, in the District of Purnia, in the State of Bihar. The petitioner has further stated that he was brought up and educated in India and studied at Darjeeling and thereafter at Calcutta University. The petitioner has further stated that he lived continuously in India until the year 1950 and even thereafter.
12. The petitioner obtained an Indian passport for the first time in the year 1962 at New Delhi. After the period of validity of the passport had expired, the petitioner in 1972 obtained another passport from the Regional Passport Office at Calcutta. In the year 1982, this passport was surrendered and an application was made for a fresh passport.
13. The petitioner has stated that for the last few years, he has been residing in Nepal and his address is Tahachal, Kathmandu, Nepal. The petitioner has stated that he does not own any immovable property in India. The petitioner has, however, several business interests in India. When he comes to Calcutta, he generally resides at flat No. 3, National Tower, 13, Louden Street, Calcutta-17. M/s. Himal Enterprises Private Limited is the tenant of that flat. The petitioner came to Calcutta on April 6, 1986. Thereafter, he went to New Delhi and from New Delhi he proceeded to Alwar, Rajasthan, where he has business interests.
14. The petitioner has stated that he is associated with various companies in India, one of which is M/s. Sikkim Tobacco Private Limited. It is a joint sector project and 40% of the shares of this company are owned by the Sikkim Industrial Development and Investment Limited, Gangtok. This company was set up in collaboration with M/s. Golden Tobacco Company, hereinafter referred to as G.T.C. A series of disputes have cropped up between G.T.C. and several companies in Sikkim including Sikkim Tobacco Private Limited. Various legal proceedings are going on in connection with these disputes. Ultimately, the Supreme Court referred all these disputes to the arbitration of the Hon’ble Mr. Justice Alok Kumar Gupta, a retired judge of the Supreme Court, as the sole arbitrator. The arbitration proceedings are continuing. Sittings of the arbitrator are held regularly at Calcutta and New Delhi. The petitioner has further stated that the petitioner is assessed under the Income-tax Act, 1961, where his status has been shown as ” non-resident “.
15. On June 1, 1985, the Assistant Director, Enforcement Directorate, Government of India, Calcutta, sent a letter to the petitioner requiring the petitioner to furnish certain information and documents. The letter was wrongly addressed. But the petitioner has stated that he ultimately received that letter and sent a reply to that letter. The petitioner was required to furnish information as to his full name, present and permanent address, nationality, occupation, nature of business carried on by his company, Sikkim Tobacco Company, Gangtok, particulars of passport, if any, held by the petitioner, period of stay in India, particulars of his visits abroad, details of the immovable property held by him in and outside India, whether any permission of the Reserve Bank of India had been obtained by him for acquiring/holding immovable properties in and outside India and name and address of his bankers in and outside India. The petitioner in his reply dated July 15, 1985, informed the respondents about his correct address in Calcutta and requested that all communications be sent to that address. The petitioner wanted 15 days’ time to give all the requisite information. The petitioner, however, requested the respondents to inform him why was it necessary to obtain this information.
16. No reply to that letter was sent by the respondents, The respondents did not state for what purpose the information was required from the petitioner. On October 28, 1985, an order was issued by the Investigation Officer of the Enforcement Directorate from Calcutta calling upon the petitioner to furnish information arid the documents required in the earlier letter dated June 7, 1985. The petitioner was given 15 days’ time for giving the information. The petitioner was informed that if the
information was not given, action would be taken against him without any further reference to him. On December 24, 1985, the petitioner, wrote back stating that his letter dated July 15, 1985, had remained unanswered. The respondents had not informed him the purpose for which the information was required and the basis on which this enquiry was being made. The petitioner, however, gave the information wanted by the respondents as best as he could. The respondents, however, in spite of repeated requests did not inform the petitioner about the purpose for which the enquiry was being made. On April 7, 1986, a team of officers from the Enforcement Directorate, Calcutta, came to the petitioner’s residence in Calcutta and wanted to meet the petitioner. One of his employees, T.K. Viswanathan, who was present, informed the respondents that the petitioner had gone to New Delhi. Thereupon, the officers wanted to search the flat. They found that the door of the petitioner’s residence and the guest room adjacent to the office room were locked. As the keys could not be found, the Enforcement Officers put their seal on all the three doors and informed the petitioner that the search would be resumed on production of the keys. So far as the other rooms in the flat were concerned, a search was conducted and a search list was prepared on that very date.
17. It is at this stage that this writ petition was moved in this court on the allegation that the entire proceedings which had been initiated against the petitioner were speculative. The petitioner had not been informed of any complaint of any nature made against the petitioner. It has been stated by the petitioner that the petitioner apprehended and believed that some totally false complaints had been made against the petitioner by the persons in charge of the Golden Tobacco Company. Because of the pending litigation between the G.T.C. and the petitioner before the arbitrator, the business rivals of the petitioner wanted to embarrass the petitioner and for that purpose gave false information about the petitioner maliciously. The petitioner stated that his apprehension was that the enquiry had been started on the basis of complaints lodged by G.T.C. with ulterior motives for the purpose of gaining control of a cigarette manufacturing company. The enquiry at this stage by the Enforcement Branch could only prejudice the petitioner’s case that is now pending and it will be very difficult for the petitioner to appear in the case before the arbitrator and also to appear in the enquiry proceedings initiated by the Enforcement Branch. It has been alleged that Government machinery is being utilised with ulterior motives to benefit a particular group of businessmen.
18. An affidavit has been filed by Kalyan Kumar Majumdar, the Investigating Officer of the Enforcement Branch, in which he has stated :
“I being the Competent Officer under the Foreign Exchange Regulation Act, 1973, having reasons to believe that certain documents, including Indian currency, foreign exchange and books of account which, in my opinion, will be useful for, or relevant to, the investigation and proceeding under the Foreign Exchange Regulation Act, 1973, are secreted in the office and residence of Shri B.K. Sreshtha, the writ petitioner, situated at 3, National Tower, 13, Louden Street, Calcutta-17, issued a search warrant being No. C-20/89 of 1986 on March 11, 1986, authorising Shri S.K. Chakraborty, who is an officer of the Enforcement Directorate, respondent No. 4 herein, to enter the said premises with such assistance as may be required and to search for and to seize the said documents and produce them forthwith before me to deal with them in accordance with law.”
19. But the basis or the materials on the basis of which reason to believe that documents including Indian currency, foreign exchange and books of account were secreted by the petitioner at premises No. 3, National Tower, 13, Louden Street, Calcutta-17, has not been disclosed. It was also not explained why the petitioner could not lawfully possess Indian currency in Calcutta and a search was necessary to find out whether Indian currency had been secreted in the Calcutta residence. The Foreign Exchange Regulation Act does not contain any bar on acquisition of Indian currency by a foreigner while staying in India.
20. The Investigating Officer in his affidavit has denied the allegation that the petitioner had obtained an Indian passport on correct proof of his Indian citizenship. It has been stated in para. 15 of the affidavit that the residential status of the petitioner was still under investigation. It has also been stated that the petitioner had considerable financial interest in M/s. Sikkim Tobacco Private Limited which was a joint sector company. In paragraph 20 of the affidavit, it has been stated that ” the petitioner has no right to call for the reasons for making the subject enquiry made against him at the present stage “. In para. 33 of the affidavit, it has been stated that the investigation was being made on the basis of secret information.
21. Two questions have been raised about the manner in which the investigation has been carried on. The petitioner has been called upon to answer questions. Questionnaires have been sent to the petitioner for this purpose. The respondents have not disclosed for what purpose the investigation is going on. It has been argued that the respondents cannot go on putting questions to a person without disclosing the purpose for which the investigation is going on. The petitioner’s repeated requests in this regard have gone unanswered. It has been argued that
the respondents cannot, in law, compel a man to answer any number of questions without disclosing the purpose for which the investigation is going on. Otherwise, any citizen of India can be picked up at any time and subjected to interrogation. A person is entitled to know why he is being subjected to interrogation before he answers the questions put to him.
22. Although the question that has been raised is of importance, in the facts of this case, it is not necessary to go into that question. The petitioner ultimately answered the questions that were sent to him even though the respondents did not disclose the purpose for which the enquiries were being made.
23. It has next been argued that search and seizure proceedings can only be conducted on the basis of a valid warrant and strictly in terms of the provisions of Section 37 of the Foreign Exchange Regulation Act. Section 37(1) and Section 37(2) provide :
“37. Power to search premises.–(1) If any officer of Enforcement, not below the rank of an Assistant Director of Enforcement, has reason to believe that any documents which, in his opinion, will be useful for, or relevant to, any investigation or proceeding under this Act, are secreted in any place, he may authorise any officer of Enforcement to search for and seize or may himself search for and seize such documents.
(2) The provisions of the Code of Criminal Procedure, 1898, relating to searches, shall, so far as may be, apply to searches under this section subject to the modification that Sub-section (5) of Section 165 of the said Code shall have effect as if for the word ‘ Magistrate ‘, wherever it occurs, the words ‘ Director of Enforcement or other officer exercising his powers ‘ were substituted.”
24. It will appear from the section that a search can be made only for useful or relevant documents’ if the officer concerned has reason to believe that (1) the documents are secreted in any place, and (2) in his opinion, such documents will be useful for, or relevant to, any investigation or proceeding under this Act.
25. It is well-settled that the expression ” reason to believe ” cannot be entirely the subjective satisfaction of the officer concerned. There must be some material for the formation of the belief. Although the court cannot investigate about the sufficiency of the material, the court can certainly examine whether there was any material at all in the possession of the officer concerned and whether the material had any nexus with the formation of the belief.
26. In this case, the material in the possession of the Department was not disclosed in the affidavit. Copies of the documents on which the
proceedings have been started have not been given to the court or shown to the petitioner. A file, however, containing some correspondence between the Home Ministry, Government of India, and the Enforcement Directorate was shown to the court. Not one of those documents that were produced in court could be the basis for formation of the requisite belief in this case. The question was repeatedly put to counsel appearing on behalf of the respondents about the relevance of the material that was produced in the court. It appears that the Enforcement Directorate was directed to make an enquiry about the nationality of the petitioner. This could not possibly be a ” reason to believe ” that certain documents had been secreted in the office and residence of the petitioner at No. 3, National Tower, 13, Louden Street, Calcutta-17. It appears that the search warrant was issued on March 11, 1986, and kept in readiness. The warrant was not executed for nearly a month.
27. Section 37 of the Foreign Exchange Regulation Act has conferred powers upon some officers specified under the Act to enter and search any premises provided they have reason to believe that documents which will be useful for, or relevant to, a pending investigation are secreted in a place where the search is proposed to be made. The belief must be of the officer who has been given the power under the statute to conduct or authorise search and seizure proceedings. This power cannot be exercised mechanically merely because a direction has come from a superior officer to investigate into some allegations against the petitioner.
28. The records that were produced in court did not go to show that the Government of India had given any direction to carry out a search and seizure proceeding in the business premises and the residence of the petitioner. Merely because the respondents were directed to make some investigation about the nationality of the petitioner, they cannot immediately start a search and seizure proceeding. Search of a person’s residence and office cannot be part of a routine enquiry. Before the power of search and seizure is exercised, a belief must be formed honestly and reasonably on some material on the basis of which it can be inferred that documents useful for the purpose of investigation were being kept secreted. Powers under Section 3″ are wide but they are not plenary. The words of the section afe ” reason to believe ” and not ” reason to suspect ” and this phrase has been repeatedly interpreted by the Supreme Court under various statutes. When a phrase which has been interpreted judicially in a number of cases is employed by the Legislature in a new statute, it will be presumed that the Legislature has used the phrase with full knowledge of the judicial interpretation of the phrase. In other words, when in the Foreign Exchange Regulation Act of 1973, the
phrase ” reason to believe ” was used, the Legislature was well aware of the judicial interpretation of that phrase and had consciously used that, phrase in the well-understood judicial sense.
29. In this context, the scheme of the Foreign Exchange Regulation Act has to be borne in mind. I was referred to an English case by the respondents to show that similar powers have been conferred upon various statutory agencies even in England. But the scheme under the English Act is quite different. There are important safeguards under the statute in England which are absent in the Indian statute. The only safeguard of a citizen against arbitrary action of a Government Officer is the phrase “reason to believe” contained in Section 37. If this safeguard is not strictly adhered to, the statutory authority in India will have unlimited power to enter and search the residence and office of the citizens anywhere in India whenever he likes.
30. On behalf of the respondents, my attention was drawn to the judgment of the House of Lords in the case of IRC v. Rossminster Ltd., [1979] 52 TC 160; [1980] 1 All ER 80, 82 (HL). This judgment recognizes the fact that ” the integrity and privacy of a man’s home, and of his place of business, an important human right has, since the Second World War, been eroded by a number of statutes passed by Parliament in the belief, presumably, that this right of privacy ought in some cases to be overridden by the interest which the public has in preventing evasions of the law. Some of these powers of search are reflections of dirigisme and of heavy taxation, others of changes in mores. Examples of them are to be found in the Exchange Control Act, 1947, the Finance Act, 1972 (in relation to value added tax) and in statutes about gaming or the use of drugs. A formidable number of officials now have powers to enter people’s premises and to take property away, and these powers are frequently exercised, sometimes on a large scale. Many people, as well as the respondents, think that this process has gone too far ; that is an issue to be debated in Parliament and in the press.
31. The courts have the duty to supervise, I would say critically, even jealously, the legality of any purported exercise of these powers. They are the guardians of the citizens’ right to privacy. But they must do this in the context of the times, i. e., of increasing Parliamentary intervention, and of the modern power of judicial review. ”
32. Lord Wilberforce after prefacing his judgment in the above manner went on to state that Parliament had introduced substantial safeguards to protect the rights of the citizens. It was observed (p. 82 of 1 All ER) :
” (1) No action can be taken under Section 20C without the approval of the Board of Inland Revenue, viz., two members, at least, acting
personally. This Board consists of senior and responsible officials expert in the subject-matter, who must be expected to weigh carefully the issues of public interest involved.
(2) No warrant to enter can be issued except by a circuit judge, nor, as is usually the case, by a magistrate. There has to be laid before him information on oath, and on this he must be satisfied that there is reasonable ground for suspecting the commission of a ‘ tax fraud ‘ and that evidence of it is to be found in the premises sought to be searched. If the judge does his duty (and we must assume that the learned Common Serjeant did in the present case) he must carefully consider for himself the grounds put forward by the Revenue officer and judicially satisfy himself, in relation to e+ach of the premises concerned, that these amount to reasonable grounds for suspecting, etc. It would be quite wrong to suppose that he acts simply as a rubber stamp on the Revenue’s application.
(3) The courts retain their full powers of supervision of judicial and executive action. There is nothing in Section 20C which cuts these down; on the contrary, Parliament, by using such phrases as ‘ is satisfied ‘, and ‘has reasonable cause to believe ‘, must be taken to accept the restraints which courts in many cases have held to be inherent in them.
The courts are concerned, in this case, only with two matters bearing upon legality. First, were the warrants valid ? Secondly, can the actual action taken under Section 20C(3) be challenged on the ground that the officers did not have, or could not have had, reasonable cause to believe that the documents they seized might be required as evidence for the purposes of proceedings in respect of a ‘ tax fraud’ ? A third possible issue, namely, that there was not before the judge sufficient material on which to be satisfied as the section requires was not pursued, nor thought sustainable by the Court of Appeal. It is not an issue now.”
33. This judgment goes to show material difference in the statutory provisions of the Foreign Exchange Regulation Act and the English Act which was considered by the House of Lords in that case. It is not necessary to obtain the sanction of any judge or even a magistrate before search or seizure proceedings are conducted under the Foreign Exchange Regulation Act. Whether the officer concerned is acting on any information or not cannot be tested by an independent body before the action is taken. Lord Wilberforce observed that it would be wrong to assume that a Circuit Judge would simply act as a rubber stamp on the Revenue’s application. But under the Foreign Exchange Regulation Act, no sanction or warrant is required to be taken from an independent judicial authority before search and seizure is conducted.
34. Unlike the English Statute, it is not necessary to obtain the approval of two independent members of the Board of Revenue acting personally, before a warrant is issued.
35. The only thing that is similar is the phraseology ” has reason to believe” which as Lord Wilberforce observed must be taken to accept the restraints which courts in many cases have held to be inherent in them.
36. Lord Wilberforce in the case of Rossminster Ltd. [1979] 52 TC 160 ; [1980] I All ER 80, observed (p. 84 of 1 All ER):
” Like all statutory powers conferred on executive officers, it is subject to supervision by the courts exercising their classic and traditional powers of judicial review. It is undisputed that the words ‘ has reasonable cause to believe ‘ are open to examination in spite of their subjective form : see Nakkuda Ali v. Jayaratne, [1951] AC 66. The existence of this reasonable cause, and of the belief founded on it, is ultimately a question of fact to be tried on evidence. ”
37. Section 37 of the Foreign Exchange Regulation Act confers drastic powers of search and seizure on officers of the Enforcement Branch. Unlike the English statute which was under consideration before the House of Lords in the case of Rossminster Ltd., there is no requirement of taking prior approval of any other authority, there is no requirement of obtaining a warrant from a judge or any other judicial officer after placing the materials on the basis of which the search is proposed to be conducted. The only safeguard against abuse of power is the requirement of having ” reason to believe “. This requirement must be strictly enforced ; otherwise, the executive will have an unfettered right to break into any home or office at any time and carry out search and seizure proceedings.
38. In the case of Dr. Partap Singh v. Director of Enforcement, , it has been held by Desai J. that it was not obligatory to record reasons in writing before a search warrant is issued under Section 37 of the Foreign Exchange Regulation Act. Desai J. went on to observe at page 994 (p. 485 of 58 Comp Cas):
” Assuming that it was obligatory to record reasons in writing prior to directing the search, the file submitted to the court unmistakably shows that there was material enough before the officer to form a reasonable belief which prompted him to direct the search. That the documents seized during the search did not provide sufficient material to the officer for further action cannot be a ground for holding that the grounds which
induced the reasonable belief were either imaginary or fictitious or
mala fide conjured up.”
39. Therefore, when the question is raised about the justifiability of the issue of a search warrant, the Department must be in a position to produce its records to show that there was material in the possession of the officer concerned on the basis of which he had formed the reason to believe that any documents which will be useful for, or relevant to, any pending investigation were secreted in the place sought to be searched. The validity of the search warrant must be judged on the basis of facts and information in the possession of the officer concerned at the time the search warrant is issued. The result of the search and seizure proceeding is quite immaterial for the purpose of deciding whether the warrant was issued lawfully or not. In a case where there were good reasons for initiating search and seizure proceedings, the fact that nothing came out of the search and seizure proceedings will not vitiate the issue of a search warrant. But in a case where there was no justification for issuing a search warrant, the fact that incriminating documents were discovered as a result of the search will not lend validity or justification to the search and seizure proceeding which was even at its inception unlawful.
40. In this case, the recorded reasons were not produced in court. A file containing certain documents was produced. My attention was specially invited to a direction given by an official of the Home Ministry to make an investigation about the nationality of the petitioner. That apart, nothing has been shown on the basis of which the officer concerned claimed to have reason to believe that documents that might be useful for the investigation were secreted in the office or the residence where the search was conducted. Merely because a direction has come from the Ministry to investigate cannot be the reason for search and seizure proceedings. A direction to investigate cannot take the place of having “reason to believe ” which is the statutory requirement and which is the only safeguard that a citizen has against unlawful trespass by government officials into his home and office.
41. Moreover, when power is given by a statute to be exercised by an official named in the statute, then that power can be used only by the authorised official and if the power is hedged with a condition that it could be used only if he had ” reason to believe “, then he must form the requisite belief on the basis of the materials in his possession. The belief must be his belief and the decision must be his decision. Merely because a direction has come from the Ministry to investigate, the officers of the Enforcement Department cannot immediately enter and search the home and the office of the petitioner. Furthermore, it will appear from
the records that were produced in the court that there was no specific direction to search the home or the office of the petitioner. The Enforcement Branch was only directed to make an enquiry. It cannot be presumed that the direction was to make an enquiry contrary to law.
42. There is another aspect of this case. If a question is raised about the legality of the search and a challenge is thrown that there was no ground on the basis of which the requisite ” reason to believe ” could be formed, can the Enforcement Branch refuse to divulge the grounds for formation of the belief in open court ? If the respondents do not know the reasons, the respondents will not have any opportunity to demonstrate that the reasons were extraneous or irrelevant for the purpose of formation of the requisite belief. There may be a few cases where it will not be proper to divulge all the grounds. Disclosure of grounds may frustrate the enquiry altogether. But this privilege for not disclosing the reasons cannot be claimed as a matter of routine. I have seen the documents from the file that was produced in the court. I did not find any material of any confidential nature which could reasonably be withheld from disclosure by the Enforcement Branch. In the case that was decided by the Supreme Court, copies of the documents on which reliance was placed by the Department were given to the court. In this case, the respondents declined to give such copies.
43. After examining the documents that were produced in the court, I am of the view that there was no ground for the formation of the belief that any documents which would be useful for the search were kept secreted in the home or office of the petitioner. The search was really of a fishing nature. The respondents conducted the search hoping to find some incriminatory documents. The search, in my opinion, was quite contrary to the provisions of Section 37 of the Foreign Exchange Regulation Act and must be held to be unlawful.
44. It is not necessary to refer to the large number of cases that were cited to show the extent to which the court could examine the material in the possession of the officer concerned on the basis of which the search and seizure were commenced. It is not necessary to refer to all these cases.
45. The expression ” reason to believe ” can be found in a number of statutes and has been interpreted by the courts in a large number of cases. Some of these judgments were referred to by Desai J. in the case of Dr. Partap Singh v. Director of Enforcement, , where it was observed that this expression is to be found in various statutes. After referring to Section 34 of the Indian Income-tax Act, 1922, where the expression “reason to
believe ” also has been used, Desai J. cited the judgment of the Supreme Court in the case of S. Narayanappa v. CIT, , where, it was observed (headnote) (See at p. 482 of 58 Comp Cas):
“If there are in fact some reasonable grounds for the Income-tax Officer to believe that there had been any non-disclosure as regards any fact, which could have a material bearing on the question of underassessment, that would be sufficient to give jurisdiction to the Income-tax Officer to issue notice under Section 34. Whether these grounds are adequate or not is not a matter for the court to investigate.
The expression ‘reason to believe ‘ is not synonymous with subjective satisfaction of the officer. The belief must be held in good faith ; it cannot merely be a pretence. In the same case, it was held that it is open to the court to examine the question whether the reasons for the belief have a rational connection or a relevant bearing to the formation of the belief and are not extraneous or irrelevant to the purpose of the section. To this limited extent, the action of the Income-tax Officer in starting proceedings under Section 34 is open to challenge in a court of law. ”
46. It is to be seen that the Income-tax Act provides a safeguard, which is absent in Section 37, against arbitrary use of power. The Income-tax Officer before starting a proceeding under Section 34 had to seek the approval of the Commissioner of Income-tax by placing the materials that he had collected before the Commissioner of Income-tax. Under the Foreign Exchange Regulation Act, no such requirement is laid down.
47. On behalf of the petitioner, my attention was drawn to a notification issued by the Central Government on January 1, 1974. This notification has to be read with Section 5 of the Foreign Exchange Regulation Act by which the Central Government has been empowered to authorise any officer of Customs or any Central Excise Officer or any police or any other officer of the Central Government or a State Government to exercise such of the powers and discharge such of the duties of the Director of Enforcement or any other officer of the Enforcement as may be specified. The notification was issued on January 1, 1974, to the following effect (See 44 Comp Cas (St.) 202):
‘Ministry of Finance (Department of Economic Affairs) Order No. F. 1/72/EC/73-3, dated January 1, 1974.
G.S.R. No. 62.–In exercise of the powers conferred by Section 5 of the Foreign Exchange Regulation Act, 1973 (46 of 1973), and in supersession of the Order of the Government of India in the Cabinet Secretariat (Department of Personnel and Administrative Reforms) No. F. 9/1/73-AVD. IV(i) dated June 7, 1973, the Central Government hereby authorises every Investigating Officer and every Inspecting Officer
employed in the Special Unit of the Enforcement Directorate at Calcutta,
to exercise all the powers and discharge all the duties–
(a) of an officer of Enforcement under Sections 34, 35, 36, 38, 39, 40 and 41 of the said Act;
(b) of a Chief Enforcement Officer under Sub-section (2) of Section 33 of the said Act; and
(c) of an Assistant Director of Enforcement under Sections 37 and 44 of the said Act.”
48. It was argued that the power to conduct or authorise search and seizure is not limited to even a high officer of the Department. Every Investigating Officer and every Inspecting Officer of the Enforcement Directorate can now exercise this power. It has been argued and, in my opinion rightly, that there is enormous possibility of abuse of this power and the only way the abuse of the power can be prevented is to strictly enforce the adherence to the only statutory safeguard against abuse of such power that lies in the expression ” reason to believe “.
49. Having carefully considered the documents that were placed before the court, I find no material on the basis of which the officer concerned could have formed the belief that any documents which would be relevant for the purpose of the enquiry were secreted in the home or office of the petitioner before the search warrant was issued.
50. Faced with this situation, an attempt was made to justify the search by production of certain seized documents which, it was claimed, would be very useful in the investigation against the petitioner. It was argued that the finding of these documents would justify the search and seizure proceedings.
51. I am entirely unable to uphold this contention. The search and seizure proceedings must be justified by the formation of the requisite belief at the time when the decision was taken to conduct the search. Subsequent discovery of a relevant material will not validate a search which was initially invalid.
52. The next important question that has been raised is whether the documents that have been gathered as a result of the illegal search can be retained by the respondents because it would be useful in the investigation that is being carried on. A large number of authorities were also cited by both the sides. I shall refer to those authorities in detail later in the judgment.
53. In my view, if the search and seizure proceeding is initially bad in law, the Government cannot be allowed to enjoy the benefit of the illegal search and seizure proceedings. No one can be allowed by a court of law
to derive any benefit or advantage by taking recourse to any unlawful means. The fruit of a forbidden tree is also forbidden. To hold that the Government can retain documents gathered pursuant to an illegal search and seizure proceedings is to encourage illegal activity. The officers of the Government will feel encouraged to break into any home without any ground or even without any search warrant and carry out a search and seizure proceeding. This is a course which a court of law should not encourage.
54. It is very much in the public interest that any one who commits an economic offence should be brought to justice. It is equally important that individual liberty should be protected by the judges who have the duty to protect individuals from abuse of power by the executive. It is unlawful for an officer of the State as much for a private person to break into somebody’s home or office without his consent and search for and seize any documents. The officers of the State under various Acts have been empowered with the right, in public interest, to search for and seize documents and other materials in connection with investigation within certain safeguards. If the safeguards were not there, the unfettered power might have been struck down as unconstitutional. If the power is exercised in disregard of the safeguards, it must be held that the power has been exercised unlawfully. If it is established that a man has suffered from unlawful action of a Government Officer, then it is the duty of the court to redress the damage suffered by a citizen. Status quo ante must be restored and this can only be done by the return of the documents which were unlawfully seized. In my view, the usefulness of the unlawfully seized documents in the enquiry cannot be any justification for allowing the executive to retain its ill-gotten gains.
55. It was argued that the petitioner in this case is really not an Indian citizen. He has no right to acquire property in India and in acquiring shares, securities and Indian currency and also real property in India, the petitioner has committed gross violation of the Foreign Exchange Regulation Act.
56. On behalf of the petitioner, it was argued that the petitioner is an
Indian citizen, has lived in India for more than 40 years, had even held
an Indian passport. It was argued that the respondents were only acting
on suspicion and at the instigation of their business rivals. Moreover, it
was argued that there was a treaty between the Government of India
and the Government of Nepal which was entered into on July 31, 1950,
by which it was agreed ” each Government undertakes in token of the
neighbourly friendship between India and Nepal, to give to the nationals
or others, in its territory, national treatment, with regard to participation in industrial and economic development of such territory and to the grant of concessions and contracts relating to such development.” (Article 6) It was further agreed ” to grant on a reciprocal basis, to the nationals of one country in the territories of the others the same privileges in the matter of residence, ownership of property, participation in trade and commerce, movement and other privileges of a similar nature.” (Article 7), It has been argued that this treaty is in force. The argument of the petitioner, therefore, was that in view of this treaty, the petitioner, even if he is proved to be a citizen of Nepal, is entitled to own and hold properties in India just like an Indian citizen.
57. It will not be proper to express any opinion on the merits of this contention at this stage. But this much can be said that the Government must proceed in the investigation strictly in accordance with law. It is well-settled that if the Government does not follow the procedure laid down by law, it cannot expect the citizens or other persons resident in India to act lawfully. As was observed by Mr. Justice Clark in the celebrated case of Mapp v. Ohio, [1961] 367 US 643 ” nothing could destroy the Government more quickly than its failure to observe its own laws, or worse, its disregard of the charter of its own existence “. The observation of Mr. Justice Brandies in the case of Olmstead v. United States, [1927] 211 US 438, was quoted with approval:
” Our Government is the potent, the omnipresent teacher. For good or for ill, it teaches the whole people by its example……If the Government becomes a lawbreaker, it breeds contempt for law ; it invites every man to become a law unto himself; it invites anarchy.”
58. In the case of Mapp v. Ohio, [1961] 367 US 643, it was categorically held by the Supreme Court of the USA that all evidence obtained by searches and seizures in violation of law is inadmissible in a State court. This decision was reached on the basis of three principles. Firstly, it was held that the Fourth Amendment guaranteed the right of the people against unreasonable searches and seizures. The constitutional assurance against unreasonable searches and seizures would be merely ” a form of words”, valueless and undeserving of mention if the Government could use evidence obtained by unconstitutional search and seizure in a Federal Court.
59. It was also held that to allow the evidence obtained by an unlawful search and seizure to be used against a person will amount to denial of " the freedom from all brutish means of coercing evidence as not to merit this court's high regard as a freedom implicit in the concept of ordered liberty ". The Supreme Court observed :
” Indeed, we are aware of no restraint, similar to that rejected today, conditioning the endorsement of any other basic constitutional right. The right to privacy, no less important than any other right carefully and particularly reserved to the people, would stand in marked contrast to all other rights declared as ‘ basic to a free society ‘: Wolf v. Colorado, [1948] 338 US 25. This court has not hesitated to enforce as strictly against the States as it does against the Federal Government the rights of free speech and of a free press, the rights to notice and to a fair, public trial, including, as it does, the right not to be convicted by use of a coerced confession, however logically relevant it be, and without regard to its reliability : Rogers v. Richmond, [1961] 365 US 534. And nothing could be more certain than that when a coerced confession is involved, ‘ the relevant rules of evidence ‘, are overridden without regard to the incidence of such conduct by the police, slight or frequent. Why should not the same rule apply to what is tantamount to coerced testimony by way of unconstitutional seizure of goods, papers, effects, documents, etc. ? ”
60. The third principle which the American Supreme Court enunciated in that case was that the Government must act in accordance with law. Evidence secured by official lawlessness in flagrant abuse of the basic rights of a person cannot be used in evidence against that person. The only way to deter lawlessness by the Government is to remove the incentive to disregard it.
61. Unlike the American Constitution, the Indian Constitution does not contain any guarantee against unlawful search and seizure. Therefore, some of the observations of the American Supreme Court in the case of Mapp v. Ohio, [1961] 367 US 643, will not be of any relevance in this case. But the principles enunciated by the American Supreme Court about exclusion of coerced evidence and the obligation of the Government to act in accordance with law will be applicable to this case. A man cannot be compelled to be a witness against himself in a criminal trial. The American Supreme Court pointed out in the case of Mapp v. Ohio, [1961] 367 US 643, that if documents are unlawfully seized from a man’s residence and used in evidence against him, this will amount to user of coerced evidence.
62. On behalf of the respondents, it has been argued that if a document is relevant for the purpose of this case, it cannot be excluded from evidence. Therefore, irrespective of the source from which the documents have been gathered or the method by which the documents have been obtained, the State has a right to retain these documents if it is relevant for the purpose of the enquiry that was being conducted. The enquiry is in respect of some allegations of violation of the Foreign Exchange Regulation Act and in that enquiry, the seized documents would be relevant.
63. If this argument is to be accepted, it will have to beheld that a person has no remedy against unlawful entry and search of his residence by a government official. If the unlawful entry and search enable a government officer to find some material which will be useful for some investigation, that official will be entitled to retain it. If the unlawful search does not yield any useful material for the purpose of investigation, the matter will rest there. But a person who has suffered and whose rights have been violated by the unlawful entry and illegal search cannot seek any redress in a court of law. All that the court can do is to declare the entry and search by government official unlawful; but beyond that the court cannot direct the officer concerned to return the documents unlawfully seized to the aggrieved person. In other words, a government official can enter a private residence at will even without a search warrant and seize documents if he thinks that such a document will be useful for the purpose of some enquiry. He will be entitled to retain the document, however illegal his entry and search may be, if the document is useful for the purpose of any enquiry.
64. Lord Wilberforce, in the case of IRC v. Kossminster Ltd., [1980] 1 All ER 80 (HL); [1979] 52 TC 160, stated that in England, a formidable number of officials now had powers to enter people’s premises and take property away and those powers were frequently exercised, sometimes on a large scale. By virtue of a notification issued by the Central Government on January 1, 1974, under, inter alia, the Foreign Exchange Regulation Act, every Investigating Officer and every Inspecting Officer employed in the special unit of the Enforcement Directorate at Calcutta has been authorised to exercise all the powers and discharge all the duties of an Assistant Director of Enforcement under Sections 37 and 44 of the Foreign Exchange Regulation Act, 1973. This means that the power to enter and search the premises of a citizen is not confined only to an officer of a rank as high as that of an Assistant Director of Enforcement. Lord Wilberforce observed in the case of Rossminster Limited (p. 82 of [1980] 1 All ER):
“The courts have the duty to supervise, I would say critically, even jealously, the legality of any purported exercise of those powers. ”
65. Can it be said that the duty to supervise jealously the legality of a purported exercise of these powers of search and seizure by a court can be discharged merely by declaring the search as illegal and allowing the Government to retain the fruits of the illegal search ? In such an event, this declaration of illegality by a court of law would be merely ” a form of words, valueless and undeserving of mention” if the Government could use the evidence obtained by illegal search in a criminal or a quasi-criminal proceeding.
66. Mr. Das has, however, argued that whatever may be the view taken by the English or the American courts, the Supreme Court in India has held in a number of cases that documents seized in the course of illegal search and seizure proceedings can be retained by the Government if the documents would be relevant or useful in connection with any pending proceeding. In support of his contention, Mr. Das invited my attention to several judgments of the Supreme Court. I shall now refer to those judgments.
67. In the case of Radha Kishan v. State, of U.P., , the appellant was a postman. Certain undelivered postal articles were recovered from an almirah in his house, Radha Kishan was tried and convicted of an offence under Section 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, repelled this contention and held that even assuming that the search was illegal, the seizure of the articles was not vitiated. Because of the illegality of the search, the court may be inclined to examine carefully the evidence regarding the seizure. If the provisions of Sections 105 and 165 of the Cr. P.C. were contravened, the search could be resisted by the persons whose premises were sought to be searched. But beyond these two consequences, no further consequence ensued.
68. Pooran Mal v. Director of Inspection, was a case under the Income-tax Act. A large number of points were argued in that case on behalf of the appellant challenging the legality of several search and seizure proceedings. Palekar J., speaking for the court, held that the power to search and seize conferred upon the highest officers of the Department were not violative of the provisions of Article 19 of the Constitution, because the power could be exercised only by the highest officers of the Department. Secondly, the exercise of the power could only follow a reasonable belief entertained by such officer that any of the three conditions mentioned in Section 132(1)(a), (b) and (c) existed. The safeguards were adequate to render the provisions of search and seizure less onerous and restrictive as was possible under the circumstances.
69. In the facts of that case, it was held that the searches were lawfully conducted. It was, however, further observed that even assuming that the search and seizure were in contravention of the provisions of Section 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 persons from whose custody it was seized. It was observed that in India as in
England where the test of admissibility of evidence lay in relevancy unless there was an express or necessarily implied prohibition in the Constitution or other law, evidence obtained as a result of illegal search and seizure was not liable to be shut out.
70. The case of Dr. Partap Singh v. Director of Enforcement, , was decided under the provisions of the Foreign Exchange Regulation Act. There, it was held by the Supreme Court that (p. 482): ” When an officer of the Enforcement Department proposes to act under Section 37, undoubtedly he must have reason to believe that the documents useful for the investigation or proceeding under the Act are secreted. The material on which the belief is grounded may be secret, may be obtained through intelligence or occasionally may be conveyed orally by informants. ” It was further held that the expression ” reason to believe ” was not synonymous with the subjective satisfaction of the officers. The belief must be held in good faith. It cannot merely be a pretence. It is up to the court to examine the question whether the reasons for the belief had a rational connection with or a relevant bearing on the formation of the belief and were not extraneous or irrelevant for the purpose of the section.
71. In Partap Singh’s case [1985] 58 Comp Cas 477 (SC), the file containing the records of the case on the basis of which the search was conducted was produced before the court and Desai J. observed (p. 483):
“The officer issuing the search warrant had material which he rightly claimed to be adequate for forming a reasonable belief to issue the search warrant.”
72. Desai J. went on to observe at page 994 (of AIR); (at p. 829 of Cri. LJ) of the report (p. 485 of 58 Comp Cas):
” That the documents seized during the search did not provide sufficient material to the officer for further action cannot be a ground for holding that the grounds which induced the reasonable belief were either imaginary or fictitious or mala fide conjured up.”
73. This observation of Desai J. is important for the purpose of this case. One of the arguments advanced on behalf of the respondents to justify the search and seizure proceedings in the instant case is that materials have been obtained in the course of search and seizure proceedings which will go to show that the petitioner was not an Indian national. But when the question is whether the initiation of search was valid, the outcome of the search is quite irrelevant. The validity of the search has to be judged on the basis of facts and material in the possession of the officer concerned at the time when he commences the search and seizure proceedings. The nature of the documents that were seized
is quite immaterial for deciding the question whether the search was done lawfully or not.
74. Strong reliance was placed on the observation of Desai J., at page 994 (of AIR); (at p. 829 of Cri. LJ) of the report (p. 485 of 58 Comp Cas):
” Assuming that it is obligatory upon the officer proceeding to make a search or directing a search to record in writing the grounds of his belief and also to specify in such writing, so far as possible, the thing for which the search is to be made, is mandatory and that non-recording of his reasons would result in the search being condemned as illegal, what consequence it would have on the seizure of the documents during such illegal search…..in the course of a search, things or documents
are required to be seized and such things and documents when seized may furnish evidence. Illegality of the search does not vitiate the evidence collected during such illegal search. The only requirement is that the court or the authority before which such material or evidence seized during the search shown to be illegal is placed has to be cautious and circumspect in dealing with such evidence or material. ”
75. Mr. Kapoor has referred me to a decision of the Supreme Court in the case of Commissioner of Commercial Taxes v. Ramkishan Shrikishan Jhaver, . There, 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. If was observed by Wanchoo C.J., at page 67 of the report (p. 469 of 20 STC):
” 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 Section 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 Section 165 of the Code of Criminal Procedure were not followed, anything recovered on a defective search of this kind must be returned. ”
76. Mr. Kapoor argued that this case was decided by a Bench of five judges and, therefore, if the conflicting judgments of the Supreme Court could not be reconciled, the decision of the larger Bench must be followed.
77. In support of this contention, reliance was placed upon a judgment of the Supreme Court in the case of State of U.P. v. Ram Chandra Trivedi, , where it was held at page 2556, para. 22 :
” It is also to be borne in mind that even in cases where a High Court finds any conflict between the views expressed by larger and smaller Benches of this court, it cannot disregard or skirt the views expressed by the larger Benches. The proper course for a High Court in such a case, as observed by this court in Union of India v. K.S. Subramanian, (Civil Appeal No. 212 of 1975, decided on July 30, 1976–), to which one of us was a party, is to try to find out and follow the opinion expressed by larger Benches of this court in preference to those expressed by smaller Benches of the court which practice, hardened as it has into a rule of law, is followed by this court itself. ”
78. The principles that were enunciated by the Supreme Court in the case of Commissioner of Commercial Taxes v. Ramkishan Shrikishan Jhaver, , which were followed by this court in some cases, have not been overruled by the Supreme Court in any subsequent decision. In the case of Ramkishan Shrikishan Jhaver , it was argued that the power to search residential accommodation was unconstitutional under the Madras General Sales Tax Act, because it imposed unreasonable restriction on the right of the petitioner to hold property and to carry on trade. This power conferred by Section 41(2) and (3) of that Act had been struck down by the Madras High Court. The Madras High Court held that arbitrary powers had been conferred upon the State without any safeguard provided for search to be made under Sub-section (2) of Section 41. It was held by the Madras High Court that Section 165 of the Criminal Procedure Code did not apply to a search made under Section 41(2) and that the Government could empower an Assistant Commercial Tax Officer or a Revenue Inspector to make searches.
79. The Supreme Court held that Section 41(2) could not be struck down on the ground that the Government could empower any officer to make the search. The Supreme Court observed that the Government will see that officers of proper status were empowered. The Supreme Court further rejected the contention that an Assistant Commercial Tax Officer or an Inspector of Revenue Department or a Sub-Inspector of Police Department were not officers of proper status to make searches.
80. The Supreme Court also rejected the contention that no safeguard had been provided for search and seizure proceedings and, therefore, these provisions were unconstitutional in that arbitrary powers were conferred upon the State to make search and seizure. The Supreme Court pointed out that Section 41(2) itself did not provide any safeguard but there was a provision in the proviso to Sub-section (2) which laid down “all searches under this sub-section shall, so far as may be, be made in accordance with the provisions of the Code of Criminal Procedure, 1898 “. The Supreme Court held at page 66 of the report (p. 467 of 20 STC):
” The proviso clearly lays down that all searches made under this sub-section, so far as may be, shall be made in accordance with the provisions of the Code of Criminal Procedure. Thus, all the provisions contained in the Code of Criminal Procedure relating to searches would be applicable to searches under Sub-section (2) so far as may be. Some of these provisions are contained in Chapter VII but one such provision is contained in Section 165. It is true that that section specifically refers to an officer-in-charge of a police station or a police officer making an investigation. But when the proviso applies the provisions of the Code of Criminal Procedure to all searches made under this sub-section, as far as may be possible, we see no reason why Section 165 should not apply mutatis mutandis to searches made under Sub-section (2). We are, therefore, of opinion that safeguards provided in Section 165 also apply to searches made under Sub-section (2). These safeguards are–(i) the empowered officer must have reasonable grounds for believing that anything necessary for the purpose of recovery of tax may be found in any place within his jurisdiction, (ii) he must be of the opinion that such thing cannot be otherwise got without undue delay, (iii) he must record in writing the grounds of his belief, and (iv) he must specify in such writing so far as possible the thing for which search is to be made. After he has done these things, he can make the search. These safeguards, which in our opinion apply to searches under Sub-section (2) also, clearly show that the power to search under Sub-section (2) is not arbitrary. In view of these safeguards and other safeguards provided in Chapter VII of the Code of Criminal Procedure which also apply so far as may be to searches made under Sub-section (2), we can see no reason to hold that the restriction, if any, on the right to hold property and to carry on trade, by the search provided in Sub-section (2), is not a reasonable restriction keeping in view the object of the search, namely, prevention of evasion of tax. ”
81. Therefore, the Supreme Court was of the view that the safeguard
contained in Section 165(2) of the Code of Criminal Procedure will apply
mutatis mutandis to a search under Section 41(2) of the Madras General
Sales Tax Act under consideration in that case. I fail to see why the safeguards will not apply to a similarly worded section, Section 37 of the. Foreign Exchange Regulation Act. The empowered officer must have reasonable grounds for formation of the requisite belief. He must record, in writing, the grounds of his belief. He must specify in such writing so far as possible the things for which the search is to be made. In the instant case, the recorded reasons were not produced in court nor stated or annexed to the affidavit. When the grounds for having reason to believe are under challenge, that challenge can be repelled either by stating the reasons in the affidavit or by producing the recorded reasons in court, neither of which was done in this case. The documents produced in court merely contain directions to make enquiry.
82. Moreover, it appears that a warrant was issued long before the search was made. The search warrant was issued as early as on March 11, 1986, and the search was sought to be made on April 7, 1986, by the officers of the Enforcement Directorate. No reason has been given to explain this delay. In fact, this confirms the allegation that there was really no reason for the search. The respondents armed themselves with a search warrant without any reason and waited for nearly a month before deciding to conduct a search because they were unable to find any material in support of the allegation that the petitioner was not an Indian citizen.
83. Having failed to find any material or evidence to show that the petitioner was not an Indian citizen, the respondents decided to search the office and the residence of the petitioner to find out if any material could be unearthed in support of their case. No material has been produced in court on the basis of which the concerned officer could have reason to believe that the petitioner had secreted any document which would be useful for the investigation. It appears from the records produced in court that the investigation was otherwise fruitless. The search was conducted without any ground for having reason to believe that any document which will be useful for the investigation had been secreted by the petitioner in his business premises or in his residence.
84. There is no manner of doubt that the search was conducted in violation of the provisions of Section 37 of the Foreign Exchange Regulation Act. and also the provisions of the Code of Criminal Procedure relating to searches. The statutory safeguards were entirely ignored. The question now is what is the remedy of a person who has been subjected to unlawful search and seizure proceeding. The case of the respondents is that even if the search is unlawful, the documents that have been seized in the course of such unlawful search cannot be directed to be returned to the
petitioner, because the documents would be relevant for the purpose of
enquiry.
85. In my judgment, the question is not so much of the relevance of documents but as of the right of the respondents to retain the documents which have been obtained by unlawful means. If the search warrant was issued without the formation of the requisite belief, the entire proceeding becomes unlawful. It must be held that the officers who entered the office and the residence of the petitioner had really committed trespass. Section 78 of the Foreign Exchange Regulation Act gives immunity to any person exercising his power or discharging any function or performing any duties under the Act from any legal proceeding in respect of anything done in good faith or intended to be done under the Act. If the contention of the respondents is correct, the petitioner is entirely helpless in a case like this. The search may be entirely unlawful and the seizure may be in contravention of the Act, but the petitioner is not entitled to any legal remedy because of the fact that the documents which have been unlawfully seized will be useful for the purpose of an investigation against the petitioner.
86. I am entirely unable to uphold this contention. A court of law does not suffer a wrong to be without a remedy. If a legal wrong has been committed against the petitioner, why should not that be undone by passing an appropriate order. In the case of Commissioner of Commercial Taxes v. Ramkishan Shrikishan Jhaver, , this was precisely what was done by the Supreme Court. The documents that were unlawfully seized were directed to be returned to the petitioner in that case. I see no reason why such an order should not be passed in the instant case.
87. The argument that the relevant documents could not be excluded from evidence even though they were unlawfully seized also cannot be sustained in this case for several reasons. There is no case pending against the petitioner. The petitioner has not been informed of any charge or allegation. In fact, the petitioner has not been charged with any offence. The question of the document being relevant as evidence in a criminal or quasi-criminal case has not arisen as yet in this case. Moreover, the Government Officers cannot be permitted to break the law in the name of law enforcement. If a person is charged with a crime, it must be established in accordance with law. The entire procedure adopted by the State must be lawful. Otherwise, the statutory safeguards become meaningless. The argument, on behalf of the respondents, in effect, is that that the officers of the Enforcement Branch can at their will obey or disobey the statutory provisions. If some useful documents are secured
by official lawlessness, the State is entitled to retain what has been gathered in flagrant abuse of the statutory provisions and the court is helpless to undo the wrong suffered by the petitioner by ordering the return of the documents.
88. An attempt was made to show that the documents that were seized would go to show that the petitioner was not an Indian citizen. In my judgment, the result of the search cannot be a justification of the unlawful search.
89. It was argued that since the Supreme Court has held the judgment of the Calcutta High Court in the case of New Central Jute Mills Co. Ltd. v. T.N. Kaul, , as erroneous, no order should be made for return of the documents in this case.
90. But the judgment of the Calcutta High Court was in consonance with the decision of the Supreme Court in the case of Commissioner of Commercial Taxes v. Ramkishan Shrikishan Jhaver, . There, the Supreme Court not only held that the search was illegal but also directed the return of the seized articles which were seized in the course of the illegal search. That case was decided by five judges of the Supreme Court. That judgment has not been overruled by a larger Bench of the Supreme Court as yet.
91. It is also of interest to note that in the case of Ramkishan Shrikishan Jhaver, the Supreme Court came to the conclusion that the search was illegal. The question whether the Department can retain the documents which were illegally seized directly came up for consideration in that case. The other cases which were cited in the course of the hearing were cases where the searches conducted by the Department were held to be lawful. There are some incidental observations about the right to retain the documents that were seized in the course of such illegal searches. It was not really necessary to decide that question in those cases. Of all the cases which were cited, Ramkishan Shrikishan Jhaver’s case is the only case where the question of the consequence of an illegal search directly came to be considered by the Supreme Court. In all the other cases, it was not necessary for the Supreme Court to express any opinion on this issue. Therefore, I have no hesitation in this case in following the decision given by five judges of the Supreme Court in the case of Commissioner of Commercial Taxes, Board of Revenue v. Ramkishan Shrikishan Jhaver, , and hold that the documents which were illegally seized in the course of the search and seizure proceedings which were initiated unlawfully must be returned to the petitioner.
92. There is also another aspect of the case. Justice Mudholkar, speaking for the court, in the case of Radha Kishan v. State of U.P., , expressed the opinion that there were two safeguards against a search in contravention of the statute. The court would be inclined to examine carefully the evidence seized in the course of illegal search. Another remedy indicated in that judgment was that the search could be resisted by the persons whose premises were sought to be searched.
93. In this case, the petitioner resisted the search that was proposed to be made. In fact, he rushed to the court at the very outset. An order of injunction was passed which was later on vacated and the search was allowed to be conducted. But that will not give any validity to the search. The result of the search must abide by the result of the writ petition that was filed. The entire matter was sub judice when the search was conducted. Since the search was entirely unlawful, there will be an order directing the respondents to return the documents that were illegally seized to the petitioner forthwith.
94. The writ petition, therefore, succeeds. There will be a writ in the nature of prayer ” C “. There will be an order directing the respondents to forthwith return the documents that were seized in the course of the search carried out pursuant to the search warrant No. C-20/89 of 1986 dated March 11, 1986.
95. There will be no order as to costs.
96. Mr. R.N. Das, appearing for the respondents, has made an oral prayer for stay of operation of this order.
97. Operation of the order passed today is stayed for six weeks. But the respondents will not make any use of the seized documents and will keep the documents in a sealed cover for a period of six weeks.