1988 (4) TMI 148 - SC - FEMA

Order of detention made under Section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 challneged Held that - The learned Additional Solicitor General placed before us the grounds served on the petitioner, at some length, wherein it is inter alia stated that the petitioner was running a business firm under the name and style of M/s. B.N. Corporation in Hong Kong as also offices in other places including Singapore and got certain business firms in India detailed therein registered in Nagaland under farzi names and employed a number of persons who were acting at his behest. The role of the petitioner has been detailed in the grounds showing how he got illegally siphoned the foreign exchange to the tune of about 2 crores of rupees out of the country. The grounds also referred to the statements made by Sita Ram Aggarwal which indicated that the petitioner was travelling by air under assumed names and has been dodging the authorities when they attempted to contact him, before he was apprehended in a Calcutta hotel. It is further said that the petitioner s firm M/s. B.N. Corporation of Hong Kong received remittances through bank worth ₹ 85-90 lacs during the year 1986 but did not supply or ship any goods for which the invoices were supposed to have been issued. Some of the documents are alleged to bear his signatures. The learned counsel is not correct in interpreting the observation of this Court relied upon by him as laying down a principle for general application. The Bench while considering the merits of the case before it, made the remark in the background of the facts and circumstances of the case. Having regard to the circumstances arising in the case before us, no such inference is permissible to be drawn in favour of the petitioner. Besides, according to the respondents, the bail application was as a matter of fact opposed. In any view of the matter, this factor is not of much consequence in the facts of the present case. In the result, both the writ application and the Special Leave Petition are dismissed.

Summary

Issues:
Challenge to detention order under COFEPOSA - Compelling necessity for detention - Double detention - Purpose of detention - Bail application and opposition

Analysis:
The petitioner challenged the detention order made under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974. The petitioner filed applications before the Delhi High Court and directly before the Supreme Court under Article 226 and Article 32 of the Constitution, respectively. The petitioner was allegedly involved in illegal activities related to remittances of money to foreign countries through forged documents. The main person directing these activities was identified as the petitioner. The detention order was passed when the detaining authority apprehended that the petitioner, who was already in judicial custody, might be released on bail. The petitioner's representation against the detention order was rejected by the Delhi High Court, leading to the current judgment before the Supreme Court.

The main issue before the Supreme Court was whether there was a compelling necessity for passing the detention order when the petitioner was already in judicial custody. The petitioner argued that the order amounted to double detention and that the detaining authority should have been aware of the petitioner's custody status and the likelihood of bail. The detaining authority, however, contended that they were fully aware of these facts and satisfied the necessity for detention. The grounds of detention clearly indicated the authority's awareness of the petitioner's custody status and the apprehension regarding bail. The Court found that the detaining authority had considered these factors before passing the detention order, as evidenced by the detailed grounds provided.

Another issue addressed was whether the detention order was passed for a collateral purpose to frustrate the grant of bail and whether it was punitive in nature. The detaining authority must be satisfied about the compelling necessity for the detention, which should aim to prevent the detenu from engaging in activities prejudicial to foreign exchange conservation. The grounds of detention outlined the petitioner's involvement in siphoning foreign exchange illegally and detailed his associates and activities. The Court found that the detention order was justified based on the continuous and interlinked nature of the offenses attributed to the petitioner. The satisfaction of the detaining authority was evident from the grounds provided, supporting the legality of the detention order.

Regarding the bail application made on behalf of the petitioner, the petitioner argued that since the application was not opposed by the respondents, the detention was not warranted. However, the Court found that the opposition to the bail application was a factual matter and not determinative of the necessity for detention. The Court dismissed both the writ application and the Special Leave Petition, upholding the legality of the detention order under COFEPOSA.