2006 (4) TMI 265 - HC - Companies Law

Summary

Issues Involved:
1. Legality of passport impounding under FEMA and IT Act.
2. Violation of fundamental rights under Articles 19(1)(d), 19(1)(g), and 21.
3. Applicability of the Passports Act, 1967 as a complete code.
4. Adequacy of reasons for impounding the passport.
5. Authority and powers under FEMA and IT Act.

Detailed Analysis:

1. Legality of Passport Impounding under FEMA and IT Act:
The petitioner challenged the retention and impounding of his passport, arguing that the Directorate's actions under section 37 of FEMA and section 131 of the IT Act were unlawful. The court examined whether these provisions empowered the authorities to impound a passport. It concluded that the power to seize documents under section 37(3) of FEMA, read with section 131 of the IT Act, does extend to passports. The court noted that the Passports Act, 1967, while comprehensive, does not override other statutes that confer independent powers to impound passports.

2. Violation of Fundamental Rights under Articles 19(1)(d), 19(1)(g), and 21:
The petitioner claimed that the impounding of his passport violated his fundamental rights to move freely, practice any profession, and right to life, which includes the right to travel abroad. The court acknowledged that while these rights are protected, they are subject to reasonable restrictions. It found that the actions taken under FEMA and the IT Act were not arbitrary or unreasonable and thus did not violate the petitioner's constitutional rights.

3. Applicability of the Passports Act, 1967 as a Complete Code:
The petitioner argued that the Passports Act is a complete code for the issuance, impounding, and revocation of passports, and hence, any action regarding passports should only be under this Act. The court disagreed, stating that the Passports Act does not preclude other laws from conferring similar powers. It highlighted that section 23 of the Passports Act explicitly states that its provisions are in addition to, and not in derogation of, other enactments, including those related to foreign exchange.

4. Adequacy of Reasons for Impounding the Passport:
The court reviewed the reasons provided by the Directorate for impounding the passport, which included ongoing investigations, the need to collect evidence, and the requirement to ensure that evidence abroad is not tampered with. The court found these reasons to be adequate and justified, given the sensitive nature of the investigation into the Volcker Committee Report on the Oil-for-Food Programme.

5. Authority and Powers under FEMA and IT Act:
The court examined the scope of powers under section 37 of FEMA and section 131 of the IT Act. It clarified that these provisions do grant the authority to impound documents, including passports, during investigations. The court also noted that the power to impound is not limited to situations where formal proceedings are pending but extends to ongoing investigations and inquiries.

Conclusion:
The court concluded that the Directorate acted within its powers under section 37(3) of FEMA and section 131 of the IT Act in impounding the petitioner's passport. It dismissed the petition but directed the respondents to review the order within four months to ensure it does not indefinitely affect the petitioner's rights.