1998 (1) TMI 529 - SC - FEMA

Summary

Issues involved:
The issues involved in this judgment are related to the grant of anticipatory bail to a businessman under the Foreign Exchange Regulation Act, 1973 (FERA), the imposition of conditions on the Directorate for interrogation, and the extension of the period for retaining seized documents for interrogation purposes.

Grant of Anticipatory Bail:
The businessman, referred to as the respondent, sought anticipatory bail citing health reasons. The Sessions Judge dismissed the application emphasizing the seriousness of the allegations of FERA violations and the need for effective investigation without hindrance. The High Court modified the order, allowing arrest subject to the opinion of cardiologists from AIIMS. The Supreme Court held that the respondent's health condition does not grant immunity from arrest, and imposing specific conditions on interrogation would impede the Directorate's efficiency in dealing with economic offences.

Imposition of Conditions on Interrogation:
The High Court's conditions on interrogation, including involving AIIMS cardiologists, were challenged by the Directorate. The Supreme Court emphasized that while the Directorate must consider the respondent's health, stipulating specific modalities for interrogation in advance would hinder their statutory functions. The Court ruled that such anticipatory stipulations interfere with the efficient exercise of statutory functions and should not be imposed by the judiciary.

Extension of Period for Retaining Seized Documents:
The Supreme Court noted the statutory limitation under Section 41 of FERA, which allows the retention of seized documents for a maximum of six months. The Directorate had extended this period, but it was set to expire. The Court extended the period for a further six months to ensure effective interrogation and prevent public interest from suffering due to non-utilization of the seized documents.

In conclusion, the Supreme Court allowed the appeal filed by the Directorate, dismissing the appeal by the respondent. The Court set aside the High Court's order and restored the Sessions Judge's decision, emphasizing the importance of effective investigation in cases involving serious economic offences under FERA.