1967 Supreme(All) 71

Allahbad High Court
SATISHCHANDRA
The Bullion and Agricultural Produce Exchange Private Limited. - Appellant
Versus
The Forward Markets Commission, Bombay - Respondent
Decided On : 05/19/1967

Section 22-A of the Forward Contracts (Regulation) Act, 1952, which provides for the search and seizure of books and documents relating to forward contracts or options in goods, is mandatory in nature and its contravention renders the proceedings void.

Headnote:

FORWARD CONTRACTS (REGULATION) ACT - SEARCH AND SEIZURE - SECTION 22-A - SEARCH AND SEIZURE OF BOOKS AND DOCUMENTS RELATING TO FORWARD CONTRACTS OR OPTIONS IN GOODS - WARRANT REQUIRED - NON-COMPLIANCE WITH SECTION 22-A RENDERS PROCEEDINGS VOID.

Fact of the Case:

The petitioner, a private limited company, was engaged in forward trading in various goods. The Forward Contracts (Regulation) Act, 1952, was passed to regulate trading in forward contracts. The petitioner applied for and was granted a registration certificate under the Act. The Central Government later banned forward trading in many kinds of goods, including groundnut oil. The petitioner commenced business again in forward trading in non-transferable specific delivery contracts in groundnut oil. On a complaint that the petitioner was carrying on illegal forward trading business, the police conducted a raid on the petitioner's premises and seized a large number of books and documents. The petitioner challenged the search and seizure on the grounds that it violated the mandatory provisions of Sections 157 and 165, Cr.P.C., and that the proceedings contravened the provisions of Section 22-A of the Forward Contracts (Regulation) Act, 1952.

Finding of the Court:

The court held that the search and seizure were illegal and void because they were conducted without the requisite warrant from a Magistrate. The court found that Section 22-A of the Forward Contracts (Regulation) Act, 1952, which provides for the search and seizure of books and documents relating to forward contracts or options in goods, is mandatory in nature and its contravention renders the proceedings void. The court also held that the provisions of Section 165, Cr.P.C., which were relied upon by the respondents to validate the search, were not applicable because Section 22-A of the Forward Contracts (Regulation) Act, 1952, provides a specific procedure for search and seizure in cases of suspected contravention of the Act.

Issues: 1. Whether the search and seizure of the petitioner's premises was conducted in accordance with the mandatory provisions of Sections 157 and 165, Cr.P.C.? 2. Whether the proceedings contravened the provisions of Section 22-A of the Forward Contracts (Regulation) Act, 1952?

Ratio Decidendi: 1. The court held that the search and seizure were conducted in violation of the mandatory provisions of Sections 157 and 165, Cr.P.C., because the investigating officer did not record in writing the grounds of his belief that anything necessary for the purpose of an investigation may be found in any place and that such thing cannot in his opinion be otherwise obtained without undue delay, and did not send copies of the record to the nearest Magistrate empowered to take cognizance of the offence. 2. The court held that the proceedings contravened the provisions of Section 22-A of the Forward Contracts (Regulation) Act, 1952, because the search was conducted without the requisite warrant from a Magistrate. The court found that Section 22-A of the Act is mandatory in nature and its contravention renders the proceedings void.

Final Decision: The court quashed the proceedings consequent on the search and seizure of the petitioner's premises and directed the respondents to forthwith return the documents and the account books seized by them in the course of the search. The respondents were also directed not to launch any prosecution of the petitioner on the basis of the account books and documents seized during the course of the search.