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TMI Blog1995 (9) TMI 397X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent under the Act, has filed W.P. No. 9354 of 1995, seeking for a writ of certiorari to call for and quash the said summons issued in T3/157/S2/95. In the affidavit filed in support of the writ petition, it was pleaded that he is not concerned in any way with the Super duper T.V. Private Limited, that with ulterior motives and sinister designs to achieve oblique objectives the impugned summons were issued since he happened to be the sister's son of Mrs. Sasikala stated to be the close friend of the Chief Minister of Tamil Nadu, that the political overtones of the action is too obvious and that even without any shred of evidence or material the appellants' personal liberties are being jeopardised. It has been further pleaded therein, that the impugned summons does not fulfil the basis requirement necessary for a valid issue of summons under Section 40 of the Act, that there is no indication in the summons of any investigation or proceedings under the Act or as to in respect of what investigation or proceedings under the Act, the appellant is sought to be summoned and that it is absolutely essential that a person summoned must be furnished information of the subject m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... three grounds urged in support of the challenge to the summons issued to the appellant merited the acceptance of the learned Judge who was also of the view that the mentioning of details regarding the nature or person with reference to whom the investigation or proceedings are pending in connection with a person is summoned would defeat the very purpose of investigation and there are no legal infirmities as alleged in the summons under challenge and, therefore, the appellant should comply with the same. Aggrieved, the above appeal has been filed. 4. In Writ Appeal No. 865 of 1995, the appellant is one P. Srinivasan, said to be the Managing Director of a Private Limited Company under the name and style of Emerald Promoters , carrying on business in Real Estate. Admittedly, the office and the residential premises were searched by the Officers of the Enforcement Directorate on 15-7-1995 and he was also subjected to interrogation, that after further examination on 17-7-1995 he was called upon to attend on 18-7-1995 once again and since he had no further material or information to be furnished, he did not appear on that day. In other respect, this appellant also repeats the similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned summons. In others respects, the various averments, claims and contentions raised on behalf of the appellant in his affidavits in the writ petition were meticulously traversed and denied. While contending that the summons issued is proper, legal and valid, that since the term investigation has been construed to mean 'search for material and facts' in order to find out whether or not any contravention has taken place and, therefore, if the nature or the subject-matter of the investigation and nexus between the investigation and the documents are disclosed to the persons to whom the summons has been issued it would become easy for him to manipulate the records and evidence and also tamper with the same stultifying the very purpose of investigation and rendering the effective enforcement of the provisions nugatory. It is also stated in the counter-affidavit that the officer who issues the summons or investigates and obtains statements is not a Police Officer and the persons to whom summons issued is also not in the position of an accused and the issue of summons contemplated under Section 40 is designed to facilitate the investigatory process by examination without any res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments and this appellant again undertook to appear on 18-7-1995 and produce further records. This appellant failed to appear as undertaken and issued a telegram seeking further time to appear and in the meantime filed a writ petition in this Court. The other claims and details made on the merits of the case and the other materials disclosed do not deserve or require at this stage of the proceedings, to be noticed. In this case also a rejoinder has been filed by this appellant reiterating his stand taken earlier. 7. Mr. Soli Sorabjee, learned Senior Counsel, appearing for the appellant in W.A. No. 853 of 1995, contended that the powers conferred under Section 10(40) of the Act are not either an unconditional or an untrammelled one, but instead conditioned upon the existence of the necessary satisfaction as the Act uses the expression considers necessary either to give evidence or to produce a document during the course of any investigation or proceedings under the Act and that, therefore, any or every person cannot be summoned at the whim and fancy of the Officer exercising such power. In substance, it was contended that the consideration of necessity contemplated as a conditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for which he is summoned and only such disclosure would protect the rights of a citizen and will ensure a proper, reasonable, fair and just exercise of powers under S. 40 of the Act. This submission of the learned Senior Counsel was made with a reservation that it was not meant to ask for the disclosure of the evidence that the department has or to give or disclose all the materials at their disposal. On a comparison of the scope of powers under Sections 33 and 40 of the Act, it was contended that the restriction on the exercise of powers conferred under Section 33 is less in rigour than the one under Section 40 on account of the alternative or expedient to obtain used therein. In order to apparently overcome the objection that the challenge now made is pre-mature having regard to the present stage of the proceedings the learned Senior Counsel also contended that the relevant question for consideration would be the manner of exercise of powers and not of the stage at which it can be questioned. In support of the said stand taken on behalf of the appellant, reliance has been placed on the decisions reported in [1967] 1 SCR 898 (The Barium Chemicals Ltd. v. The company Law Board, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be told of the purpose for which or in respect of which one is summoned without detriment to the investigatory process. The learned Additional Solicitor General also contended that the alleged violation of fundamental rights pleaded or the prejudice to which the appellant may be put to, proceed upon a thorough misconception of the scope, purpose and the nature of the proceedings at this stage. Reliance has been also placed upon some of the decisions to demonstrate that neither the authority undertaking the investigation could be said to be a Police Officer nor the process of investigation at this stage, can either be said to be of criminal or penal nature or the appellant an accused and that, therefore, there are no merits in the above writ appeal. It was also contended that the disclosure in summons of even the details or particulars to the extent desired by the appellant would not only be destructive of the very object of investigation but also defeat the very purpose for which the appellant has been summoned. 10. So far as the other appeal is concerned, Mr. N. Jothi, learned Counsel for the appellant, adopted the submissions of Mr. Soli Sorabjee. Mr. V. T. Gopalan, learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the clause permitted the Government to say that it has formed the opinion on circumstances which it thinks exist ....... Since the existence of circumstances is a condition fundamental to the making if an opinion, the existence of the circumstances if questioned, has to be proved at least prima facie. It is not sufficient to assert that the circumstances exist and give no clue to what they are because the circumstances must be such as to lead to conclusions of certain definiteness. The conclusions must relate to an intent to defraud, a fraudulent or unlawful purpose, fraud or misconduct or the withholding of information of a particular kind. We have to see whether the Chairman in his affidavit has shown the existence of circumstances leading to such tentative conclusions. If he has, his action cannot be questioned because the inference is to be drawn subjectively and even if this Court would not have drawn a similar inference that fact would be irrelevant. But if the circumstances pointed out are such that no inference of the kind stated in S. 237(b) can at all be drawn the action would be ultra vires the Act and void. It may be noticed even at this stage that the nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standing by themselves alone could not establish the jurisdiction of the officer, they could be used to corroborated to officer's contention that he had the requisite reason to believe. In this case, apart from the two documents, one of September, 1965 and another of June 1966, in which certain allegations had been made by City Trade and Industries Ltd. regarding transactions they had with the New Central Jute Mills Co. Ltd., there is no further document or materials indicated in the affidavit filed on behalf of the respondent. It may also be mentioned that the said allegations of the City Trade and Industries Ltd., as it appears, were not unknown to the respondent. The Reserve Bank authorities were kept informed about the said complaint. The complaint made by City Trade and Industries Ltd. was ultimately dismissed by the American Court asking the parties to go to arbitration according to arbitration clause and it appears from the statement made in the affidavit-in-reply that the arbitration was held in India and ex parte and award was made in favour of the new Central Jute Mills Co. Ltd., For information given in 1966 search in 1968 cannot be justified. For formation of belie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duce relevant evidence to sustain his belief. That apart, under S. 165(5) of the Code of Criminal Procedure, read with S. 105(2) of the Act, he has to send forthwith to the Collector of Customs a copy of any record made by him. The Collector would certainly give necessary directions if the Assistant Collector went wrong, or if his act was guided by mala fides. But the more effective control on him is found in S. 136(2) of the Act. 14. In [1952] 1 SCR 135 , the Apex Court held as follows (at p. 18 of AIR) :- (9). An attempt was made by referring to the Commissioner's affidavit to show that this was really an order of cancellation made by him and that the order was his order and not that of Government. We are clear that public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the acting's and conduct of those to whom they are addressed and must be construed objectively with reference to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned order were to show that there has been no careful thinking or proper application of the mind as to necessity of obtaining and examining the documents specified in the order, the essential requisite to the making of the order would be held to be non-existent. 16. The language of Section 19(2) of the Act points to the conclusion in while an order under it may be made with respect to 'any information; book or other document', it is essential that such information, book or other document should be specified in the order. This is apparent from the concluding part of the said sub-section wherein there is reference to 'such' information, book or other document'. The word 'such points to the necessity of specifying the information, book or other document in the order. It is, no doubt, true that the order can relate to a large number of books, documents or informations, it is all the same imperative that the same should be particularised in the order. According to sub-section (1A) of Section 23 of the Act, if any person contravenes any of the provisions of this Act or of any rule, direction or order made thereunder, for the contravention of which no p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also copies of letters addressed to the Chief Controller of Imports and Exports. Some sheets of papers contain chemical formulae relating to the preparation of certain barium compounds. A number of shares certificates of the appellant company in the name of the appellant, his wife and minor child are also in the custody of the Registrar. We are at a loss to understand as to how it was considered necessary for the purpose of the Act to obtain and examine any of the above mentioned documents. It cannot be gainsaid that there has to be some nexus between the documents sought to be obtained and the purpose of the Act. Where such a nexus is missing and the document has no relevance for the purpose of the Act, the condition precedent to the making of an order under S. 19(2) must be held to be non-existent. 19. The fact that an omnibus order was made in respect of all documents relating to the appellants, which were in the custody of the Registrar under the order of this Court, including some of the documents which have not even remotest bearing on the matter covered by the Act, goes to show that there was no due application of the mind by the authority concerned. As mentioned earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de in the statutory provisions to the opinion or belief to be formed or entertained that could make the powers exercisable under those various provisions similar or one and the same to those conferred under Section 40 of the Act. On the other hand a careful analysis of these provisions would go to show that they are totally dissimilar not only in regard to the nature of powers conferred under the relevant provisions but also with reference to the purpose and that the circumstances for which or under which they are ordained to be exercised also drastically differ from each other. 17. In [1995] 3 SCR 469 (supra), their Lordship of the Apex Court we concerned with the scope of Article 311(2) second proviso to clause (c). While holding that the opinion formed under Article 311, clause (c) 2nd proviso is subject to Judicial Review and its validity can be examined on the ground that the satisfaction of the President is vitiated by mala fides or is based upon wholly extraneous or irrelevant grounds it was further considered as to whether the Government is obligated to place all the materials before the Court and held as hereunder (at p. 1414 of AIR) :- It is no doubt true that unlik ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive scope and purport of S. 167(1) and (2) of the Code of Criminal Procedure, vis-a-vis S. 35(2) of the Foreign Exchange Regulation Act and Section 104(2) of the Customs Act, 1962, approved the decision of the Gujarat High Court in (1984) 15 ELT 353 holding that the expression 'investigation' means search for material and facts in order to find out whether or not an offence has been committed and it does not matter whether it is made by the Police Officer or a Customs Officer who intends to lodge a complaint and that it cannot be said that either the Officer of the Enforcement department or the Customs Officer is not empowered with the power of investigation though not with the power of filing a final report as in the case of a Police Officer. In 1992 CriLJ 2761 (Poolpandi v. Superintendent, Central Excise), the Apex Court while affirming the decision of the Madras High Court in W.P. Nos. 4690 and 4691 of 1987 dated 23-6-1987 reaffirmed the position that a person called for questioning during an investigation by the authorities under the Customs Act or Foreign Exchange Regulation Act are not in the position of an accused and refusal to allow the presence of a Lawyer in suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le the normal process of enquiry is facilitated by S. 108, investigatory emergencies are taken care of by S. 107 and that Section 107 was very wide enough, in terms and was designed to facilitate the investigatory progress by examination without restriction on person, place or time, inasmuch as the interrogation under S. 107 could be only of the potential delinquent or whether it must be confined only to witnesses who threw light on the delinquents' contravention of the law. The words 'any person' were considered by the Apex Court as every person including a suspect and a potential accused. In 1992 (58) ELT 480 (Madras) :: 1992 (58) ELT 480 (Mad) (Bheena Phara Japadar v. Union of India) a learned single Judge of this Court held, while repelling a challenge to the summons issued under Section 108 of the Customs Act, 1962, that this Court exercising jurisdiction under Article 226 of the Constitution of India should not interdict investigations in matters under the Act. In (1993) 65 ELT 25 (Madras) : 1993 (65) ELT 25 (Mad) (Union of India v. K. Siraj) yet another Division Bench of this Court held that merely because adjudication proceedings under Section 124 of the Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asons too, to justify the exercise of those powers or to command for or order the carrying out of certain things. The use of the words 'considers it necessary' in those cases were interpreted in that particular manner in those cases, with particular reference also to the nature of the powers, the further stipulations contained therein and far reaching impact or the serious consequences that ensued upon the persons against whom those powers were exercised for any of the specific purposes mentioned in those provisions. Merely because the provisions of Section 40 of the Act also contain the words 'he considers necessary' all the trappings of the other provisions could not be said to have been engrafted automatically into Section 40 of the Act also, making it obligatory for the Officer to make the required disclosure of materials or information or reasons which would show that there had been due deliberation or application of mind to all the relevant aspects before taking action. Countenancing such construction to be placed upon Section 40 of the Act would render the section itself otiose and superfluous inasmuch as Sections 33, 39 etc., are already there to meet such e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been committed and if so by whom and in what manner and with what result. It may be that the result of investigation disclose ultimately no offence or violation or that it might have provided a clue or turned out to be a hunch or a hoax. To read into Section 40 of the Act any limitations and restrictions on the exercise of powers by the concerned officer even at the stage of investigation would not only derail and demoralise the investigation and retard the effective enforcement of an important legislation having serious impact upon the economic viability and very development of the nation but also would help real culprits to escape from the clutches of the law with impunity. Disclosure of information or details relating to the investigation or the proceeding even at the stage of investigation or the person(s) with reference to whom such investigation or proceedings are pending would only have counter productive results defeating the very purpose or object of the investigation or the need for summoning a person to give evidence or produce documents. It may reasonably help those concerned to erase evidence, disrupt the tails or the lead towards the real culprit and even manipulate r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature of powers with totally distinct objects altogether conditioned upon different considerations. So far as Section 40 of the Act is concerned, we are of the view that the exercise of powers is not conditioned upon any precondition other that the fact that the summons could be issued only during the course of any investigation or proceeding under the Act by the officer concerned on his considering it necessary to summon the person to give evidence or produce documents. If the relevant files and records maintained contained the information relating to the investigation or proceedings, and the office could produce the same before the Court, when so called for, it is more than sufficient compliance with the provisions of Section 40 of the Act and there is no further necessity to disclose anything further than what has been stated in this case and in the summons challenged before us. Therefore, we are of the view that there is no justification to read into Section 40 any restrictions or the same manner of regulation of exercise of powers as contemplated under S. 33 or Section 39 or the provisions relating to search seizure of documents under Sections 34, 36, 37 and 38 of the Act. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ened or scissored evidence. Finally, it may give a handle to the person summoned to refuse to answer any further related questions or aspects or give information even on matters incidentally arising and adopt a confrontationist attitude that nothing other than the purpose or subject with reference to which he has been summoned can be asked of him. To allow such things to happen even at the stage of investigation in a matter relating to the enforcement of the provisions of an Act like the one under consideration would only amount to the Courts placing a veil or protective umbrella making it difficult or at times rendering it even impossible for the Enforcement Authorities to get at the truth or the real state of affairs in respect of a particular matter or aspect. A summons contemplated under Section 40 of the Act cannot also be equated to the position of a show cause notice and unless it is held to be so, there will be no justification in law for the claims of the Appellants that the object or purpose or person with reference to which the investigation or proceedings are pending must be disclosed on the summons itself. We, therefore, reject the plea in this regard. 23. The furth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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