2017 (1) TMI 398 - SC - FEMA

Principle of segregation - Detention order - Section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 - High Court has come to the conclusion that there were various grounds which formed the basis of the detention order and even if the documents pertaining to one particular ground were not furnished, that ground could be ignored applying the principle of segregation and on remaining grounds the detention order was still sustainable - whether the principle of severability of grounds, which is enshrined in Section 5A of the Act, is not applicable to the case at hand as the detention order was passed on one ground only? - Held that - Each 'basic fact' would constitute a ground and particulars in support thereof or the details would be subsidiary facts or further particulars of the said basic facts which will be integral part of the 'grounds'. Section 3 of the Act does not use the term 'grounds'. No other provision in the Act defines 'grounds'. Different instances would be treated as different 'grounds' as they constitute basic facts making them essentially factual constituents of the 'grounds' and the further particulars which are given in respect of those instances are the subsidiary details. When we apply the aforesaid test to the facts of this case, we are inclined to agree with the conclusion of the High Court that the order of detention is based on multiple grounds inasmuch as various different acts, which form separate grounds, are mentioned on the basis of which the detaining authority formed the opinion that it was desirable to put the appellant under detention. We, thus, reject the contention of the appellant that, in the instant case, the detention order is based only on one ground. Once it is found that the detention order contains many grounds, even if one of them is to be rejected, principle of segregation contained in Section 5A gets attracted. In the instant case, the documents containing the statement of Pooran Chand Sharma were not given and for this very reason, the High Court rightly held that such a ground cannot be relied upon by the respondents in support of the order. However, that would not mean that if there are other grounds on which the detention order can be sustained, principle of severability would become inapplicable. If this is accepted, it would mean that provisions of Section 5A of the Act cannot be applied at all. While rejecting such a contention, it would be sufficient to point out that constitutional validity of Section 5A of the Act was challenged in this Court and repelled in the case of Attorney General for India Ors. v. Amratlal Prajivandas Ors. (1994 (5) TMI 235 - SUPREME COURT ) after discussing the provisions of Section 5A in the light of Article 22(5) of the Constitution. Therefore, this contention is not available to the appellant.

Issues Involved:
1. Validity of the Detention Order under Section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974.
2. Non-supply of certain relied upon documents to the appellant.
3. Applicability of the principle of severability under Section 5A of the Act.
4. Infringement of Article 22(5) of the Constitution of India.

Detailed Analysis:

1. Validity of the Detention Order under Section 3(1) of the Act:
The detention order dated 23.09.2009 was passed to prevent the appellant from acting in a manner prejudicial to the conservation and augmentation of foreign exchange. The grounds of detention detailed various activities involving Hawala payments and the seizure of Indian currency and incriminating documents from the appellant’s business and residential premises. The appellant's involvement in these activities was substantiated by statements from various individuals and the appellant himself, despite his subsequent retraction.

2. Non-supply of Certain Relied Upon Documents:
The appellant argued that not all documents relied upon by the respondents were supplied, specifically those related to the statement of Pooran Chand Sharma. The High Court acknowledged this failure but upheld the detention order by invoking the principle of segregation under Section 5A of the Act. The High Court observed that the documents not supplied were material and their non-supply deprived the appellant of his right to make an effective representation.

3. Applicability of the Principle of Severability under Section 5A of the Act:
The appellant contended that the principle of severability was inapplicable as the detention order was based on a single ground with multiple instances supporting it. However, the High Court and subsequently the Supreme Court found that the detention order was based on multiple grounds, each constituting a separate basis for detention. The Supreme Court referred to various judgments to elucidate the concept of 'grounds' and concluded that each act of the appellant mentioned in the detention order was a separate ground. Therefore, even if one ground failed, the detention order could still be sustained on the remaining grounds.

4. Infringement of Article 22(5) of the Constitution of India:
The appellant argued that the non-supply of documents violated Article 22(5) of the Constitution, which mandates the communication of grounds for detention and the opportunity to make a representation. The Supreme Court acknowledged this infringement but held that the principle of severability under Section 5A still applied. The Court noted that the constitutional validity of Section 5A had been upheld in previous judgments, and thus, the detention order could be sustained on other grounds despite the non-supply of certain documents.

Conclusion:
The Supreme Court dismissed the appeal, upholding the High Court's application of the principle of severability and finding that the detention order was based on multiple grounds. The Court also dismissed the writ petition challenging a similar detention order, adopting the same reasoning.

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