1986 (6) TMI 4 - HC - Income Tax

Summary

Issues Involved:
1. Legality of the search warrant issued u/s 37 of the Foreign Exchange Regulation Act, 1973.
2. Allegations of unauthorized writ petition.
3. Detention of the petitioner by the respondents.
4. Relevance and admissibility of documents obtained through illegal search and seizure.

Summary:

1. Legality of the Search Warrant:
The writ petition sought to quash search warrant No. C-20/89 of 1986, dated March 11, 1986, issued u/s 37 of the Foreign Exchange Regulation Act, 1973, for premises No. 3, National Tower, 13, Louden Street, Calcutta. The petitioner alleged the search warrant was used for a roving enquiry without grounds. The court emphasized that the expression "reason to believe" must be based on some material and not merely subjective satisfaction. The material for the belief must have a rational connection to the formation of the belief. The respondents failed to disclose the basis for the belief that documents relevant to the investigation were secreted in the premises. The court found no material justifying the search and held the search and seizure proceedings unlawful.

2. Allegations of Unauthorized Writ Petition:
The respondents argued that the writ petition was unauthorized as the petitioner had not signed it and was absconding. The petitioner assured personal appearance in court, fearing arrest. The court noted that the respondents assured no intention of arresting the petitioner, focusing only on searching the flat.

3. Detention of the Petitioner:
The petitioner was allegedly detained by the respondents in violation of the assurance given to the court. The respondents claimed the petitioner voluntarily stayed at their office, which the court found highly improbable. The court directed the respondents responsible for the interrogation to be present in court, revealing inconsistencies in their statements. The court decided not to initiate contempt proceedings as the assurance was not formally recorded.

4. Relevance and Admissibility of Documents:
The court held that documents obtained through unlawful search and seizure cannot be retained by the government. The principle that the "fruit of a forbidden tree is also forbidden" was emphasized. The court ruled that the government cannot benefit from illegal actions, and the documents seized must be returned to the petitioner. The court referenced the Supreme Court's decision in Commissioner of Commercial Taxes v. Ramkishan Shrikishan Jhaver, which directed the return of documents seized in illegal searches.

Conclusion:
The court quashed the search warrant and directed the respondents to return the seized documents to the petitioner. The operation of the order was stayed for six weeks, during which the respondents were instructed to keep the documents in a sealed cover and not use them.