1967 (11) TMI 116 - HC - Indian Laws

Summary

Issues Involved:
1. Legality of the application under Section 19(2) of the Foreign Exchange Regulation Act, 1947.
2. Authority of the Assistant Director to pass the order under Section 19(2).
3. Legality of the seizure of currency notes by the police.
4. Entitlement of the Enforcement Directorate to the custody of the seized currency notes.
5. Applicability of Section 523 of the Criminal Procedure Code.

Detailed Analysis:

1. Legality of the Application under Section 19(2) of the Foreign Exchange Regulation Act, 1947:
The application made by the respondent for handing over the currency notes was purportedly under Section 19(2) of the Act. The court found that Section 19(2) has no application to this case, and at any rate, currency notes do not come within its ambit. Section 19(2) allows the Central Government or the Reserve Bank to obtain and examine any information, book, or other document in the possession of any person. However, the Sub-Inspector of Police was not in possession of the currency notes or documents when the order was passed, as they had already been produced in court. Therefore, the application under Section 19(2) was invalid.

2. Authority of the Assistant Director to Pass the Order under Section 19(2):
The court noted that only the Reserve Bank of India or the Central Government is entitled to pass any order under Section 19(2) of the Act. In this case, the order was passed by an Assistant Director of the Enforcement Directorate, which is not authorized under the Act. The order did not state it was passed by virtue of any delegation of power, nor did it purport to be one passed on behalf of the Reserve Bank or the Central Government. Consequently, the order was invalid on its face.

3. Legality of the Seizure of Currency Notes by the Police:
The petitioner argued that the police had no power to seize the currency notes for any offence under the Act, making the seizure illegal. The court, however, found that the seizure was lawful. Offences under the Act are to be investigated by the officers of Enforcement, but the police are empowered to assist in the enforcement of the Act under Section 25A. Section 550 of the Criminal Procedure Code also allows a police officer to seize any property suspected to be involved in the commission of any offence. Therefore, the seizure of the currency notes by the Sub-Inspector was lawful.

4. Entitlement of the Enforcement Directorate to the Custody of the Seized Currency Notes:
The court considered whether the respondent (Enforcement Directorate) was entitled to the custody of the currency notes. Although the respondent's application was clumsily drawn and did not specify the legal provision under which it was made, the court found that under Section 523 of the Criminal Procedure Code, the Magistrate has the authority to make orders respecting the disposal of property seized by the police. The court held that the Enforcement Directorate was entitled to the currency notes for investigation purposes, as the notes were not required for any purpose in the court.

5. Applicability of Section 523 of the Criminal Procedure Code:
The court rejected the petitioner's contention that Section 523 of the Criminal Procedure Code does not apply to this case. The section applies to property seized by a police officer under circumstances creating suspicion of the commission of any offence. The court cited previous judgments to support this interpretation and concluded that the Magistrate's order to hand over the currency notes to the respondent was valid under Section 523.

Conclusion:
The court dismissed the revision petition, upholding the Magistrate's order to hand over the currency notes to the Enforcement Directorate. The court found that the application under Section 19(2) of the Act was invalid, the Assistant Director lacked authority to pass the order, the seizure by the police was lawful, and the Enforcement Directorate was entitled to the custody of the currency notes under Section 523 of the Criminal Procedure Code.