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TMI Blog1975 (10) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... bank accounts by the first and second respondents on the following grounds : (1)That either of the respondents Nos. 1 or 2 had no power under the provisions of the said Act to block the bank accounts. (2)Section 20(3) of the Exchange Regulation Act under which the second respondent has purported to act does not apply to the facts of this case and that, in any event, the said section does not empower the second respondent to block the accounts of the petitioner who is an independent citizen resident in India. (3)The second respondent is an authority separate and distinct from the directorate of enforcement and, therefore, it cannot merely block the petitioner's bank account on the instructions of the first respondent without applying its own mind. (4)Section 20(3) of the Regulation Act violates articles 14 and 19(1)(f) and (g) of the Constitution of India. According to the petitioner the sum of Rs. 50,000 and odd which was lying in deposit in the petitioner's savings bank account has been fully accounted for with reference to the Indian income and that if a notice had been given prior to the said blocking of the petitioner's bank account, she could have easily satisfied the sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t though he has no power to straightaway direct the third respondent to block the petitioner's bank account, the second respondent is empowered to issue suitable directions under section 20(3) of the Act to the third respondent blocking the bank account, that section 20(3) does not contemplate a prior notice before the directions are given under that section, that the said section is not unconstitutional as violating article 14 or article 19(1)(f) and (g) and that section 20(3) can also be invoked in respect of Indian citizen resident in India if the circumstances warrant the issue of a direction under that section by the second respondent. It is also stated that if the petitioner is in a position to fully account for the said sum of Rs. 52,072-09, she could as well file representation to the above show-cause notice issued and convince the authority who is adjudicating her case that no violation of the provisions of the Act has taken place. In these circum stances., the first respondent submits that the question of releasing the amount or confiscating the same will arise only at the time of the adjudication of the case and it is too premature on the part of the petitioner to seek f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount in the third respondent bank represented Indian monies made up of sale proceeds and rental income of Indian properties and that, therefore, the second respondent had no jurisdiction to block the amounts without notice or without proper enquiry. It is further stated by the petitioner in the reply affidavit that the first respondent has no right to adjudicate on the bank account in question. The direction given by the second respondent on July 6, 1973, is as follows : " Sub: Savings Bank Account No. 812inthe joint names of A.A. Hayum and Smt. A. Mohd. Aiysha Nachiar. Whereas the Reserve Bank of India considered it necessary and expedient for the purpose of securing compliance with the provisions of the Foreign Exchange Regulation Act to give the direction hereunder contained. 2. Now, therefore, in exercise of die powers conferred by sub section (3) of section 20 of the said Act, the Reserve Bank of India hereby directs that until and unless you are directed otherwise by the Reserve Bank of India, you shall secure that the balance in the above account is at no time reduced below Rs. 2,072'90 and that the said account is not .closed or transferred to any other office." From ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f foreign exchange including foreign bank notes. Section 21(1) of that Act empowers the Reserve Bank to determine the policy in relation to advances to be followed by banking companies generally or by any banking company in particular. Section 21(2) enables the Reserve Bank to give directions to banking companies either generally or to any particular company in particular in relation to the purposes for which the advances are to be made, the margin to be maintained in respect of secured advances, the rate of interest and other terms and conditions on which advances or other financial accommodation may be made or guarantee given. Section 35A also empowers the Reserve Bank for securing the proper management of any banking company generally. Section 3 of the Banking Regulation Act enables the Reserve Bank to authorise any person to deal in foreign exchange and the person so authorised is an authorised dealer in foreign exchange. Section 4 of the Act imposes certain restrictions on dealings in foreign exchange and it prohibits transactions in foreign exchange except with authorised dealers. This has been done with a view to ensure that control over all foreign exchange dealings may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir business. The construction of this provision in any other manner will result in violating the language used in the section. Therefore, the result is even though banking operations include their dealings in foreign exchange carried on by the bankers under the provisions of the Banking Regulation Act, the Reserve Bank is entitled to give directions to them under section 20(3) for the purpose of securing compliance with the provisions of the later Act. In this case, as already stated, proceedings have been initiated against the petitioner for adjudication for violation of the provisions of the Regulation Act and a notice has been issued to show cause against the confiscation of the goods for the alleged violation of the Foreign Exchange Regulations. Since the amounts involved were the subject-matter of confiscation proceedings before the first respondent, the first respondent had approached the second respondent for securing the amounts till the proceedings for adjudication and confiscation are over. The second respondent has, there fore, with a view to have the money secured till the proceedings before the first respondent are over, issued directions to the third respondent to se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be initiated against the petitioner's husband as he is no more. But, as already stated, proceedings have been initiated under section 20(3) against the petitioner and show-cause notice has also been issued to her. Whether the proceedings initiated against the petitioner is valid or not is not a question which this court has been called upon to decide. But so long as proceedings have been initiated against the petitioner and the possibility of the confiscation of the amount in the event of the petitioner being found to have contravened the provisions of the Act is there, the amount in deposit has to be secured till those proceedings are over. It is not, therefore, possible for me at this stage to accept the petitioner's contention that a vicarious liability is thrown on her and that she is going to be vicariously held liable for the foreign exchange violation committed by her husband. All those questions are to be gone into in the adjudication proceedings initiated against the petitioner. This new contention also, therefore, fails.
The result is, the writ petition fails and it is, therefore, dismissed. There will, however, be no order as to costs. X X X X Extracts X X X X X X X X Extracts X X X X
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