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2017 (1) TMI 1342 - HC - FEMAPurchase of agricultural lands in India in violation of Foreign Exchange Management Act (FEMA) - Detention of passport - Look Out Circular issued - Whether the passport of the petitioner can be impounded and the impugned notices issued by the respondents are sustainable? - Held that - As per the instructions issued by the respondents/ department, look out circular can be issued against (i) persons with terrorist or militant links (ii) beligerent foreigners (iii) foreigners previously noticed for violations of visa conditions (iv) persons required by court in criminal/civil cases who are absconding and (v) absconding offenders wanted by Police/CBI/Customs/Central Excise/Directorate of Revenue Intelligence and other competent investigation agencies. In the present cdase, no where it was mentioned in the impugned circular that the petitioner comes under any of the categories mentioned in the instructions given by the respondents themselves. In so far as impounding of passport is concerned, the Honourable Supreme Court in the case of Suresh Nanda vs. CBI mentioned 2008 (1) TMI 876 - SUPREME COURT , has held that the police may not have power under Section 102 (1) of Code of Civil Procedure to seize a passport or to impound the same. It was further held that impounding of a passport can only be done by the Passport Authority under Section 10 (3) of the Passports Act, 1967.as per Section 104 of Cr.P.C., a document does not include a passport. In the present case, it is not the case of the respondents that they have taken necessary steps under Section 10 of the Passports Act to impound the passport Act and therefore, the mere detention of the passport of the petitioner at the airpott without following the provisions contained under Section 10 of the Passport Act and issuing the look out circular without issuing prior notice are not legally sustainable. It is brought to the notice of this Court that after dismissal of writ petitions filed by petitioner before the Kerala High Court, the respondents themselves wanted the petitioner to appear for inquiry only at Delhi on the ground that cumulatively, investigation can be done in Delhi. At any rate, it is contended that the petitioner is cooperating with the enquiry. It is to be noted that the petitioner s passport, which has been impugned by the second respondent, is in the custody of the authorities concerned for the past 30 days. In the meantime, the petitioner has appeared before the authorities for inquiry on 15.01.2017 and 23.01.2017 and extended his cooperation for conducting the enquiry. Therefore, impounding of the petitioner s passport is not warranted. In this case, in the impugned notices, there is no reason has been mentioned for calling the petitioner an absconder. It is also to be noted that the impugned look out circular has been issued without any prior notice to the petitioner and without giving him a reasonable opportunity. It is also not the case of the respondents that they have taken necessary action as contemplated under Section 10 of the Passport Act, without doing so, the impugned orders are legally not sustainable. This Court direct the respondents to return the passport to the petitioner forthwith after cancelling the Look Out Circular with stringent conditions i the petitioner will appear before the authority concerned for the enquiry as and when he has been summoned when a notice is given to a reasonable time for his appearance; ii the petitioner will undertake before this Court that he will specifically cooperate with the inquiry and will not abscond from the proceedings; iii he will abide any other reasonable conditions which may be imposed by the authority concerned; and iv he may be entitled for the assistance of a lawyer but the lawyer will be only present in the office of the respondent at the time of enquiry.
Issues Involved:
1. Legality of the Look Out Circular (LOC) issued against the petitioner. 2. Right to legal counsel and auditor's assistance during personal hearings. 3. Legality of the impounding of the petitioner's passport. Detailed Analysis: 1. Legality of the Look Out Circular (LOC) issued against the petitioner: The petitioner, a Non-Resident Indian (NRI) and a promoter of various businesses in the UAE, was investigated for purchasing agricultural lands in India allegedly in violation of FEMA. The petitioner challenged the LOC issued without prior notice, asserting that he was not an absconding offender and was willing to cooperate with the investigation. The court referenced a previous case (E.V. Perumal Samy Reddy vs. State) where it was established that mere involvement in a criminal case does not strip a person of their fundamental rights, including the right to travel abroad. The court noted that the LOC should be issued only against specific categories of individuals, such as terrorists or absconding offenders, which did not apply to the petitioner. The court concluded that the LOC was issued without proper basis and in violation of the petitioner's fundamental rights. 2. Right to legal counsel and auditor's assistance during personal hearings: The petitioner sought permission to have his legal counsel and auditor present during personal hearings. The court allowed this request, emphasizing the petitioner's right to legal representation during the inquiry process. This decision aligns with the principles of natural justice, ensuring that the petitioner can adequately defend himself during the investigation. 3. Legality of the impounding of the petitioner's passport: The court examined the legality of impounding the petitioner's passport under Section 37 of FEMA and Section 131(3) of the Income Tax Act. The petitioner argued that impounding his passport without following the proper legal procedure was illegal. The court referenced the Supreme Court's decision in Suresh Nanda vs. CBI, which held that only the Passport Authority has the power to impound a passport under Section 10(3) of the Passports Act. The court concluded that the respondents did not follow the required legal procedure, making the impounding of the passport illegal. The court directed the respondents to return the petitioner's passport and cancel the LOC, subject to the petitioner complying with certain conditions, such as appearing for inquiries and cooperating with the investigation. Conclusion: The court allowed the writ petitions, quashing the orders impounding the petitioner's passport and directing the respondents to return the passport and withdraw the LOC. The petitioner was also granted the right to have legal counsel present during inquiries, ensuring compliance with principles of natural justice and protecting the petitioner's fundamental rights.
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