2004 (4) TMI 627 - HC - FEMA

Summary

Issues Involved:
1. Legality of the detention order dated 22/12/1975.
2. Validity of proceedings under Section 6(1) and Section 7 of SAFEMA.
3. Impact of revocation of the detention order on subsequent SAFEMA proceedings.
4. Procedural fairness and natural justice in SAFEMA proceedings.
5. Delay in challenging the SAFEMA proceedings.

Detailed Analysis:

1. Legality of the Detention Order Dated 22/12/1975:
The petitioners challenged the detention order dated 22/12/1975, issued under Section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA). The order was revoked on 21/03/1977 by the Government of Goa, Daman & Diu, under Section 11(1) of COFEPOSA. The court determined that the revocation of the detention order rendered it non-existent from 21/03/1977.

2. Validity of Proceedings under Section 6(1) and Section 7 of SAFEMA:
The court examined whether the proceedings under Section 6(1) and the order under Section 7 of SAFEMA, based on the revoked detention order, were valid. It was established that a valid detention order is a sine qua non for initiating proceedings under Section 6(1) of SAFEMA. Since the detention order was revoked in 1977, the subsequent notice issued under Section 6(1) on 10/02/1995 was deemed illegal and without jurisdiction.

3. Impact of Revocation of the Detention Order on Subsequent SAFEMA Proceedings:
The court emphasized that the revocation of the detention order under Section 11(1) of COFEPOSA had the same effect as a cancellation by a competent court. Therefore, the absence of a valid detention order at the time of initiating proceedings under Section 6(1) of SAFEMA invalidated the entire process. The court cited relevant case law, including the Division Bench decision in Niranjan Dahyabhai Choksi & Anr. v. Union of India & Anr., and the Supreme Court decision in Ibrahim Bachu Bafan v. State of Gujarat and Ors., to support this conclusion.

4. Procedural Fairness and Natural Justice in SAFEMA Proceedings:
The petitioners contended that they were not provided with the grounds for detention, violating the principles of natural justice and Article 22(5) of the Constitution of India. The court found merit in this argument, noting that the failure to supply these documents impeded the petitioners' ability to make an effective representation, rendering the proceedings under Section 7 of SAFEMA illegal.

5. Delay in Challenging the SAFEMA Proceedings:
The respondents argued that the petition should be dismissed due to delay. However, the court found that the petitioners acted within a reasonable timeframe, challenging the SAFEMA proceedings soon after the appellate tribunal's decision on 20/03/2001. The court concluded that the delay argument did not hold, given the chronology of events.

Conclusion:
The court allowed the petition, quashing the detention order dated 22/12/1975 and the subsequent proceedings under Section 6(1) and Section 7 of SAFEMA. The court ruled that the initiation of proceedings under SAFEMA without a valid detention order was illegal, and the entire process was set aside. The rule was made absolute with no orders as to costs, and direct service was permitted.