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TMI Blog2018 (2) TMI 588X X X X Extracts X X X X X X X X Extracts X X X X ..... the proceedings have been secreted. A mere reason to suspect would not be sufficient for authorizing search of any premises. Section 102(1) of CrPC permits any police officer to “seize any property which may be alleged or suspected to have been stolen, or which may be found under circumstances which create suspicion of the commission of any offence”. Apart from the reason that the investigations are being conducted under the Customs Act and the provisions of Section 102 of CrPC are not available; the impugned communication is also not sustainable under the provisions of Section 102 of CrPC for several reasons. The power is available only to any “police officer” and as held by the Supreme Court in Surjeet Singh Chhabra v Union of India & Ors [1996 (10) TMI 106 - SUPREME COURT OF INDIA] - the DRI officials are not police officers. Also, in terms of Section 102(3) of CrPC, it is necessary for the police officers to report seizure to a Magistrate. Plainly, no such procedure was followed. Whether the operations on bank accounts could be interdicted? - Held that: - There is no provision under the Customs Act which permits the proper officer to direct freezing of bank accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessary to address the aforesaid controversy are as under:- 5.1 The petitioner states that certain officers of the DRI conducted a search in the godown/warehouse of the petitioner on 09.11.2017. He states that the search was conducted in accordance with the provisions of the Customs Act and a Panchnama was drawn. The petitioner further states that the office premises of the petitioner was also searched in the presence of witnesses after complying with the provisions of Section 105 of the Customs Act; however, nothing incriminating was found during the said search. 5.2 On 14.11.2017, respondent no.1 sent the impugned communication to Axis Bank for freezing the petitioner s account with that bank. 5.3 The Senior Intelligence Officer (SIO), DRI issued summons dated 27.11.2017 under Section 108 of the Customs Act calling upon the petitioner (Shri Premji Bhanushali) to appear before him on 28.11.2017, inter alia, to tender his statement. He was also called upon to produce the bank statements of his proprietorship concern (S. B. International) for the period 2014-15 till date as well as the sales/purchase bills for the said period. The opening paragraph of the aforesaid sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re apprehended from the factory premises of S.B. International. He has also mentioned that a petition seeking writ of Habeas Corpus was filed in this Court. However, given the limited scope of the present petition, it is not necessary to advert to other assertions made in the petition. 7. The respondents have not chosen to file any response to this petition; however, a brief note of submissions made on their behalf, was filed by the counsel. 8. Mr Aditya Singla, the learned Senior Standing Counsel appearing for the DRI contended that the officers of the DRI have been appointed as officers of Customs/proper officers and, therefore, are empowered to carry on investigation under the Customs Act. He submitted that in terms of Section 110 of the Customs Act, officers of the DRI (being proper officers ) are empowered to seize goods and documents. 9. He submitted that the powers of investigation granted to proper officers have to be considered along with the provisions of Section 4(2) of Code of Criminal Procedure (hereafter CrPC ). He referred to the decision of the Supreme Court in Directorate of Enforcement v. Deepak Mahajan Anr: (1994) 3 SCC 440 in support of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss an order for freezing the petitioner s bank account. 14. Admittedly, Chapter XIII of the Customs Act contains provisions regarding search, seizure and arrest. In terms of Section 105(1) of the Customs Act, if the specified officer has reason to believe that any goods are liable to confiscation or any documents or things, which in his opinion will be useful for or relevant to the proceedings under the Act, are secreted in any place, he may authorize any officer of Customs to search or may himself search for such goods, documents or things. Section 105(1) of the Customs Act is set out below:- 105. Power to search premises.-( 1) If the [Assistant Commissioner of Customs or Deputy Commissioner of Customs], or in any area adjoining the land frontier of the coast of India an officer of customs specially empowered by name in this behalf by the Board, has reason to believe that any goods liable to confiscation, or any documents or things which in his opinion will be useful for or relevant to any proceeding under this Act, are secreted in any place, he may authorize any officer of customs to search or may himself search for such goods, documents or things. 15. It is clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder this Act and shall make an application to a Magistrate for the purpose of- (a) certifying the correctness of the inventory so prepared; or (b) taking, in the presence of the Magistrate, photographs of such goods, and certifying such photographs as true; or (c) allowing to draw representative samples of such goods, in the presence of the Magistrate, and certifying the correctness of any list of samples so drawn. (1C) Where an application is made under sub-section (1B), the Magistrate shall, as soon as may be, allow the application. (2) Where any goods are seized under sub-section (1) and no notice in respect thereof is given under clause (a) of section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized: Provided that the aforesaid period of six months may, on sufficient cause being shown, be extended by the Principal Commissioner of Customs or Commissioner of Customs for a period not exceeding six months. (3) The proper officer may seize any documents or things which, in his opinion, will be useful for, or relevant to, any proceeding under this Act. (4) The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds. 22. In the aforesaid context, the first and foremost question to be addressed is whether it would be open for the DRI officials to take recourse to Section 102 of CrPC for seizing any property. Section 102 of CrPC reads as under:- 102. Power of police officer to seize certain property .-(1) Any police officer may seize any property which may be alleged or suspected to have been stolen, or which may be found under circumstances which create suspicion of the commission of any offence. (2) Such police officer, if subordinate to the officer in charge of a police station, shall forthwith report the seizure to that officer. (3) Every police officer acting under sub-section (1) shall forthwith report the seizure to the Magistrate having jurisdiction and where the property seized is such that it cannot be conveniently transported to the Court or where there is difficulty in securing proper accommodation for the custody of such property, or where the continued retention of the property in police custody may not be considered necessary for the purpose of investigation, he may give custody thereof to any person on his executing a bond undertaking to produce the proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h may be found under circumstances which create suspicion of the commission of any offence . Apart from the reason that the investigations are being conducted under the Customs Act and the provisions of Section 102 of CrPC are not available as discussed above; the impugned communication is also not sustainable under the provisions of Section 102 of CrPC for several reasons. 26. First of all, the power is available only to any police officer and as held by the Supreme Court in Surjeet Singh Chhabra v Union of India Ors: (1997) 1 SCC 508 , the DRI officials are not police officers (Also see: State of Punjab v. Barkat Ram: AIR 1962 SC 273). In Directorate of Enforcement v. Deepak Mahajan (supra), which was relied upon by Mr Singhla, the Supreme Court had noted that there are series of decisions holding that Officers of Enforcement or Customs Officers are not police officers although they are vested with powers of arrest and other analogous powers. Paragraph nos. 109 110 of the said decision are relevant and are quoted below:- 109. No doubt, it is true that there are a series of decisions holding the view that an Officer of Enforcement or a Customs Officer is not a pol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suspected commission of the offence of smuggling of goods and during the course of investigation issued orders freezing the petitioner s bank account. 29. Lastly, in terms of Section 102(3) of CrPC, it is necessary for the police officers to report seizure to a Magistrate. Plainly, no such procedure was followed. Mr. Singhla contended that no such procedure is required to be followed by virtue of Section 110(3) of the Customs Act. This contention clearly brings into focus the fallacy in the contentions advanced on behalf of the DRI. It is conceded that powers under section 110(1) of the Customs Act cannot be exercised as the necessary precondition of the proper officer having reason to believe that the goods are liable for confiscation, is absent. There is also no formation of any opinion as required under Section 110(3) of the Customs Act. Therefore, it is claimed that the officers have a recourse to Section 102 of CrPC. But, the procedure of Section 102 CrPC is also not complied with because the DRI officers are not police officers and are acting under the Customs Act. Plainly, it would not be permissible for the DRI to justify its actions by partly reading one provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essly provide that every person arrested under the said Acts would be produced without unnecessary delay before a Magistrate; however, the provisions of the said Acts (Customs Act and FERA) are silent as to the powers of the Magistrate. There are no provisions as to what the Magistrate is required to do once the person arrested is produced before the Magistrate. It is in this context, the Court held that where the provisions of the special Acts (Customs Act FERA) are silent, the provisions of CrPC could be applied by virtue of Section 4(2) of CrPC. In the present case, the provisions of the Customs Act are not silent as to the manner in which seizure is to be carried out; on the contrary, the Customs Act expressly provides the circumstances in which such powers can be exercised. The decision in the case of Deepak Mahajan (supra) cannot be read as an authority for the proposition that all provisions of CrPC are applicable for the purposes of investigating, inquiring into, trying or otherwise dealing with offences under any other law, notwithstanding the provisions enacted for the said purpose under those laws. 34. There is yet another issue, which needs to be addressed and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount is not the same as seizing an asset; it interdicts operation of a bank account and it deprives the account holder of banking facilities. Indisputably, there is no sanction in the Customs Act for such action. 40. In Shakuntala Singh v. Addl. DRI, Kolkata Zonal Unit (supra) , the Calcutta High Court considered a case where the DRI had directed the bank with which the petitioner was maintaining its account not to permit any debts. The Court held that the DRI was undoubtedly entitled to proceed with the investigation and take appropriate action against the petitioner in accordance with law; however, there was no provision where the DRI could prevent banking operations pending investigations. The Court referred to Section 121 of the Customs Act and observed that the Section can only be invoked on a specific finding that smuggled goods have been sold. Operations can only be prevented in respect of the sale proceeds of smuggled goods . And, since in the said case, no specific order under Section 121 of the Customs Act had been passed, the Court directed that the petitioner be allowed to operate its accounts. 41. In Raghuram Grah Pvt. Ltd. (supra), a Division Bench of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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