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1994 Supreme(Mad) 391
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE KANAKARAJ
K.M.A. Abdul Kabeer - Appellant
Versus
Enforcement Directorate - Respondents
W.P. Nos. 1279/94 and 1280/94
Decided On : 21 April 1994
The amended provisions of Section 41 of the FERA Act, which reduced the period of retention of documents from one year to six months, applied retrospectively, subject to the proviso allowing the Director of Enforcement to extend the period of retention in certain cases.
Headnote:
{'KEYWORD': 'FERA ACT', 'SUBJECT': 'Retention of Seized Currency', 'ACT SECTION LIST': 'Section 3, 4, 41 of the Foreign Exchange Regulation Act, 1973 (FERA Act)'}
Fact of the Case:
The petitioner's residential premises were searched by Enforcement Directorate officers under Section 34 of the FERA Act, and Indian Currency of Rs. 1, 65, 000/- was seized. A show cause notice was issued on 4-8-1993, and the petitioner challenged the retention of the currency beyond a particular period and the validity of the show cause notice.
Finding of the Court:
The court held that the amended provisions of Section 41 of the FERA Act, which reduced the period of retention of documents from one year to six months, applied retrospectively. However, the proviso to the amended section allowed the Director of Enforcement to extend the period of retention for a further period not exceeding six months, upon recording reasons in writing. The court also held that the delegation of powers to the Special Director of Enforcement to issue the show cause notice was valid and in accordance with Sections 3 and 4 of the FERA Act.
Issues: 1. Whether the amended provisions of Section 41 of the FERA Act, which reduced the period of retention of documents from one year to six months, applied retrospectively. 2. Whether the show cause notice issued by the Special Director of Enforcement was valid.
Ratio Decidendi: 1. The court held that the amended provisions of Section 41 of the FERA Act applied retrospectively, as they did not take away any vested right but only reduced the period of limitation for retaining documents. The court also noted that the proviso to the amended section allowed the Director of Enforcement to extend the period of retention in certain cases. 2. The court held that the delegation of powers to the Special Director of Enforcement to issue the show cause notice was valid, as it was specifically authorized by a notification issued under Section 4(1) read with Section 3(e) of the FERA Act.
Final Decision: The court allowed the writ petition challenging the retention of the seized currency and directed the respondents to return the currency to the petitioner within eight weeks. The court dismissed the writ petition challenging the validity of the show cause notice.
The petitioner in both the writ petitions are one and the same and the two reliefs sought for in the two petitions arise out of the same facts. I therefore, proceed to dispose of the writ petitions by a common order. The facts are as follows :-
The Officers of Enforcement Directorate searched the residential premises of the petitioner, in exercise of the powers conferred under Section 34 of the Foreign Exchange Regulation Act, 1973 (hereinafter called the FERA Act). They seized Indian Currency of Rs. 1, 65, 000/- which was kept in a wooden almirah under a Mahazar on 18-8-1992. A statement is said to have been recorded from the petitioner, by using force and exercising coercion, and the said statement was subsequently retracted by a letter dated 21-8-1992. It is not necessary for this Court to go into the question as to the character of possession of the currencies and whether the same was acquired in a lawful manner or not. While W.P. No. 1279 of 1994 relates to the power to retain the currency under Section 41 of the FERA Act beyond a particular period, W.P. No. 1280 of 1994 relates to the validity of the show cause notice issued on 4-8-1993. For the purpose of understanding the scope of the argument in W.P. No. 1279 of 1994, the following dates are materials.
(1) The date of seizure of the Currency 18-8-1992
(2) The date of Amendment to Section 41 of the FERA Act. 8-1-1993
(3) The date of the show-cause notice 4-8-1993
(4) The date of service of the show cause notice 24-8-1993
2.The argument is that after 8-1-1993 Section 41 of the FERA Act empowers the authorities to retain the currency only for a peried of six months, unless of course proceedings had been initiated as per sub-clauses (i) and (ii) of Section 41 of the FERA Act. Prior to the amendment the authorities had power to retain the documents for a period of one year. If a period of one year is available, the power to retain the documents can be unheld because within the period of one year from 18-8-1992, a show-cause notice was issued on 4-8-1993. If the amended provision of law applies, the respondent will have only six months from 18-8-1992 and the period of six months from 18-8-1992 and the period of six months had expired on 17-8-1993. Consequently, show-cause notice issued on 4-8-1993 will not enable the authorities to retain the documents being the currency notes after 17-2-1993. The prayer in W.P. No. 1279 of 1994 is for the issue of a writ of mandamus to direct the respondent to return the seized documents namely, currency notes to the tune of Rs. 1, 65, 000/- to the petitioners.
3.In W.P. No. 1280 of 1994, the argument is that the first respondent namely Special Director has no jurisdiction to issue the show cause notice under Section 51 of the FERA Act and the delegation of powers to the first respondent is illegal and contrary to Sections 3 and 4 of the FERA Act. Consequently, the prayer in W.P. No. 1280 of 1994 is to quash the show-cause notice date 4-8-1993 by the issue of awrit of certiorari.
4.Two separate counter affidavits have been filed by the respondents. While the facts are not disputed with reference to the sequence of events, it is contended that the amended provision of Section 41 of the FERA Act will not have any application to the present case and the show cause notice having been issued within a period of one year, they are entitled to retain the seized currency. In other words, the argument is that the amended provisions do not have a retrospective effect, and they can be applied only prospectively. It is also contended that the right of seizure and retention of documents is a substantive right, and therefore, the same cannot be taken away by reducing the period of retention. It is therefore, contended that the argument of the petitioner that the period of limitation is only procedural in nature, and therefore, the amended provisions alone should be applied cannot be accepted. In W.P. No. 1280 of 1994, the argument is that by a sp
