2002 (1) TMI 1217 - HC - Companies Law

Summary

Issues Involved:
1. Legality of retention of documents, foreign currencies, and passport seized from the petitioner.
2. Compliance with the statutory time limits for adjudication proceedings under the Foreign Exchange Regulation Act, 1973 (FERA).
3. Validity of the show-cause notices issued beyond the prescribed period.
4. Petitioner's rights concerning the return of seized items.

Issue-wise Detailed Analysis:

1. Legality of Retention of Documents, Foreign Currencies, and Passport:
The petitioner, an exporter of readymade garments and an indenting agent, challenged the seizure of documents, foreign currencies, and his passport by enforcement officers on 14-3-1995. The petitioner argued that the retention and attempt to confiscate these items were illegal and against the law. He claimed that the seized foreign currencies were the balance amount released to him before his visit to foreign countries and were not related to any foreign exchange violations. He also alleged that the enforcement officers obtained false statements from him under duress.

2. Compliance with Statutory Time Limits for Adjudication Proceedings:
The petitioner contended that the authorities did not commence adjudication proceedings within the six-month period prescribed under Section 41 of FERA. The show-cause notices were issued on 12-10-1995 and 16-10-1995, beyond the six-month period from the date of seizure. The petitioner emphasized that no extension of the six-month period was obtained by the respondents, making the retention of documents beyond this period illegal.

3. Validity of Show-cause Notices Issued Beyond the Prescribed Period:
The petitioner's counsel argued that the show-cause notices issued beyond the six-month period were invalid. The respondents, in their defense, argued that the delay was due to the non-availability of a key individual, Govindarajan, who appeared only on 13-7-1995. However, the court found that the respondents did not obtain an extension for the additional six months as required by law and did not inform the petitioner about any such extension.

4. Petitioner's Rights Concerning the Return of Seized Items:
The court referred to several precedents, including the cases of S.O. Arjunan Chettiar v. Enforcement Officer and Directorate of Enforcement v. Deepak Mahajan, which emphasized strict compliance with statutory provisions regarding the retention of seized documents. The court noted that the respondents failed to commence proceedings within the prescribed period and did not obtain an extension. Consequently, the retention of the seized documents, foreign currencies, and passport beyond the six-month period was deemed illegal.

Conclusion:
The court concluded that the retention of the seized items beyond the statutory period was illegal and allowed the writ petition. The respondents were directed to return the seized documents, foreign currencies, and passport to the petitioner. The writ petition was allowed as prayed for, with no costs.