( 1 ) WE are called upon to resolve the controversy centering around three questions referred to us by the Division Bench of this Court. The questions which have been referred to us arose for consideration before the Division Bench in this two petitions challenging the legality and validity of detention of two persons under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act 1974 (COFEPOSAA for short ). The factual background in which these questions arise for our consideration is as under:

( 2 ) SPECIAL Criminal Application No. 240 of 1987 is filed by the son of one Bhanuprasad Parmanand Soni (hereinafter referred to as the detenu) who has been detained under sub-sec. (1) of Sec. 3 of the COFEPOSAA. The detention order dated 20/01/1987 was passed by the Additional Chief Secretary to the Government of Gujarat Home Department (detaining authority for short) on his being satisfied that with a view to preventing the detenu from engaging in keeping smuggled goods it was necessary to detain the detenu in exercise of the powers conferred under sub-sec. (1) of Sec. 3 of the COFEPOSAA. The order of detention was served on the detenu on 22/01/1987 when he was taken in detention. The detenu was also served with the grounds of detention and the documents on which the detaining authority relied for issuing the order of detention along with the order of detention on 22/01/1987

( 3 ) ON 17/09/1986 the Customs Officers stationed at Ahmedabad acting on information searched the business premises of the detenu situated on the mezanine floor of Laxmi Jewellers Manekchowk at Ahmedabad. The detenu was present in his business premises at the time of search. In the course of search one gold bar with marking indicating foreign origin weighing 187 grams and valued at Rs. 40,000 wrapped in a newspaper was found lying under a mattress in the said premises. The officers seized the gold bar under the reasonable belief that the same was smuggled and liable to confiscation under the provisions of the Customs Act 1962 and Gold Control Act 1968 The officers also seized four papers containing some accounts found lying in a drawer of desk in the said premises. The detenus statement was recorded by the Customs Officer on the same day that is 17/09/1986 In this statement the detenu gave details of the business carried on by him and stated that on 17/09/1986 at about 10 A. M. one Shivlal Mohanlal Soni of Ahmedabad who is also known as Shivakaka came to his business premises and gave him a packet containing the gold bar of 16 tolas with markings indicating foreign origin and told him that he would come with a customer. The detenu stated that he kept the said packet under the mattress and in the mean time the Officers searched his premises and recovered the said packet containing gold bar. The detenu also stated that in the last three months prior to the date of the search Shivakaka had brought packets containing gold bars with markings indicating foreign origin two to three times brought customers and sold the said gold bars. According to the detenu Shivakaka used to give him commission of about 50 to 100 rupees for keeping the gold bars. The detenu admitted recovery of four papers containing some accounts from the desk but stated that he did not know who had written the said accounts. In his further statement recorded on 18/09/1986 the detenu identified the photograph of the said Shivlal Mohanlal Soni as the photograph of the person who had been referred to by him in his statement dated 17/09/1986 and who bad delivered the gold bar recovered from his premises on 17/09/1986 The detenu stated that be was selling gold bars with marking indicating foreign origin in Manekchowk on commission basis. He stated that apart from Shivakaka he had sold goods on commission basis by purchasing from other persons also It was stated that the detenu had purchased three gold bars with markings indicating foreign origin from one Punamchand La