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Issues Involved:
1. Maintainability of the petition at the pre-detention stage. 2. Territorial jurisdiction of the court. 3. Legality of the detention order under COFEPOSA. 4. Allegations of mala fide actions by DRI officials. 5. Compliance with the Duty Entitlement Passbook Scheme (DEPB). Issue-wise Detailed Analysis: 1. Maintainability of the Petition at the Pre-detention Stage: The primary objection raised by the respondents was regarding the maintainability of the petition at the pre-detention stage. The court referred to the precedent set in *Additional Secretary to Government of India v. Alka Subhash Gadia*, which established that courts should not interfere with detention orders at the pre-execution stage except under specific conditions. These conditions include situations where the detention order is not passed under the relevant act, is executed against the wrong person, is passed for a wrong purpose, is based on vague or irrelevant grounds, or is passed by an unauthorized authority. The court acknowledged these limitations but decided to examine the facts to determine if the petitioner's case fell within any of these exceptions. 2. Territorial Jurisdiction of the Court: The respondents argued that the offence was committed in Calicut (Kerala) and thus, the Punjab and Haryana High Court lacked jurisdiction. However, the petitioner contended that part of the cause of action arose within the jurisdiction of this court, as the petitioner was a resident of Ludhiana, and the premises in Ludhiana were searched by DRI officials. The court agreed with the petitioner, citing Article 226(2) of the Constitution of India, which allows High Courts to exercise jurisdiction if any part of the cause of action arises within their territorial limits. The court also referenced previous judgments supporting this view, concluding that it had the jurisdiction to entertain the petition. 3. Legality of the Detention Order under COFEPOSA: The court examined the grounds of detention, which alleged that the petitioner, through M/s Merchant Exports (India), had overvalued goods to fraudulently avail benefits under the DEPB scheme. The court scrutinized Section 3(1) of COFEPOSA, which permits detention to prevent activities prejudicial to foreign exchange conservation or smuggling. The court found no evidence that the petitioner's actions resulted in a loss of foreign exchange or amounted to smuggling as defined under Section 2(39) of the Customs Act. The court noted that the goods were not prohibited and had already been exported, thus not falling under Section 113(d) of the Customs Act. Consequently, the court held that the detention order was based on non-existent grounds and was not justified under COFEPOSA. 4. Allegations of Mala Fide Actions by DRI Officials: The petitioner alleged that the DRI officials acted with mala fide intentions, issuing summons and arresting him to harass and victimize him. The court noted these allegations but focused on the legal grounds of the detention order. It found that the actions of the DRI officials, even if questionable, did not justify the detention under COFEPOSA. 5. Compliance with the Duty Entitlement Passbook Scheme (DEPB): The petitioner argued that the DEPB scheme had an in-built mechanism for verifying the Present Market Value (PMV) of goods and that no penal action was provided for over-declaration of PMV. The court agreed, noting that any irregularities in PMV declarations should be addressed within the DEPB scheme's framework, not through detention under COFEPOSA. The court emphasized that the petitioner's actions, even if involving false declarations, did not amount to activities prejudicial to foreign exchange conservation or smuggling. Conclusion: The court concluded that the detention order was passed on non-existent grounds and was not justified under COFEPOSA. It found that the petitioner's case fell within the exceptions outlined in *Alka Subhash Gadia*, specifically that the order was passed for a wrong purpose and was not covered by the provisions of COFEPOSA. Consequently, the court quashed the detention order and the grounds of detention.
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