2021 (10) TMI 1129 - HC - FEMA

Search and seizure operation carried out by the officers of FEMA - search and specific seizure of certain gold jewellery which, according to him, was part of the stock-in-trade - Jurisdiction of High court - HELD THAT - As cause of action has arisen within the State of West Bengal, that is, the search and seizure has taken place in West Bengal and the petitioner company is situated at West Bengal, in my view, there is no impediment in entertaining this writ petition before this High Court. Clause (2) of Article 226 of the Constitution of India clearly allows this High Court to have jurisdiction in such cases wherein the cause of action has partly arisen notwithstanding the fact that the seat of the authority dealing with the issue is outside the jurisdiction. Search and seizure of the excess jewellery that has been seized by the Enforcement Directorate - As it is to be noted that in the writ petition, the petitioner has relied on several documents to indicate that this excess jewellery was duly accounted for and had been sent for job work. In my view, the Enforcement Directorate should look into the documents filed in the writ petition and pass a reasoned order on whether these goods are stock-in-trade or not. Enforcement Directorate finds that the same are duly accounted for, the same should be released in favour of the petitioner in accordance with law. The above enquiry and the reasoned order should be passed within a period of eight weeks from date.The authorities are also directed to allow the authorized representative of the petitioner-company to have a lawyer of his choice to be present during the summons at an inaudible distance as per the guidelines laid down by the Supreme Court.

Summary

Issues:
Challenge to search and seizure operation under FEMA, seizure of gold jewellery as part of stock-in-trade, jurisdiction of High Court for writ petition, maintainability of writ petition, excess jewellery seized by Enforcement Directorate, cooperation of petitioner with authorities, presence of lawyer during summons, release of goods if accounted for, authority to pass reasoned order, time limit for enquiry, cooperation of petitioner, disposal of writ petition.

Analysis:

1. Challenge to Search and Seizure Operation under FEMA:
The petitioner challenged a search and seizure operation conducted by the Enforcement Directorate under FEMA. The Counsel for the petitioner argued against the specific seizure of gold jewellery, claiming it was part of the stock-in-trade.

2. Seizure of Gold Jewellery as Stock-in-Trade:
The petitioner's Counsel relied on relevant sections of FEMA and the Income-tax Act to argue that bullion or jewellery as stock-in-trade cannot be seized by authorities. The petitioner claimed harassment during the operation and requested the presence of a lawyer during the enquiry.

3. Jurisdiction of High Court for Writ Petition:
The Additional Solicitor General raised a point on the maintainability of the writ petition, questioning the jurisdiction of the High Court as the central authority coordinating the search and seizure was in Jaipur. However, the High Court found no impediment in entertaining the petition as part of the cause of action arose in West Bengal.

4. Excess Jewellery Seized by Enforcement Directorate:
The Enforcement Directorate defended the search and seizure, stating it was based on information about smuggled goods. They claimed the seized stock exceeded the recorded stock-in-trade of the petitioner. The High Court directed the authorities to examine the documents provided by the petitioner and make a reasoned decision on the status of the seized goods.

5. Cooperation of Petitioner with Authorities:
The Enforcement Directorate alleged non-cooperation from the petitioner, citing missed summon dates. The High Court emphasized the need for cooperation from the petitioner while also directing the authorities to allow the presence of a lawyer during summons.

6. Release of Goods if Accounted For:
The High Court instructed the Enforcement Directorate to release the goods if found to be duly accounted for, within a specified time frame. The authorities were directed to pass a reasoned order on the status of the seized goods within eight weeks.

7. Disposal of Writ Petition:
The High Court disposed of the writ petition with directions for the release of goods if accounted for, presence of a lawyer during summons, and cooperation from the petitioner. The Court clarified that it did not delve into the merits of the case and no costs were awarded.

This comprehensive analysis covers the various issues addressed in the judgment, providing a detailed understanding of the legal proceedings and decisions made by the High Court.