Citanjali Ravi Sambhwani vs Union of India

Kurdukar, J.—This is a petition for a writ of habeas corpus filed under Article 226 of the constitution of India, challenging the legality and correctness of the order of detention dated 15th May, 1990, issued by the 2nd Respondent - Joint Secretary to the Government of India, in exercise of powers u/s 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 as amended, (hereinafter referred to as ''the Act''). Petitioner, in this writ petition, claims to be sister-in-law of one Ashok Sambhwani, who has been detained pursuant to the aforesaid order of detention.

The 2nd Respondent, on being subjectively satisfied that the activities of the detenu are prejudicial under the Act and with a view to preventing him from acting in any manner prejudicial to the augmentation of the foreign exchange, it is necessary to issue the order of detention.

No dispute is raised before us as regards the service of the order of detention, grounds of detention and the material relied upon by the Detaining Authority on the detenu. The grounds of detention are Annexure B. It is stated inter alia in the grounds of detention that on the basis of the information received by the Enforcement Directorate, Bombay, that the detenu has been arranging import of cars from abroad through non-resident Indians returning to India on Transfer of Residence basis and for the purpose of purchasing the cars the detenu has been acquiring huge amount of foreign exchange abroad and that after importing the cars the detenu has been selling the same in India on huge profits. The residential as well as business premises of the detenu were searched on 4-12-1989 u/s 37 of the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as the ''FERA''). The said search resulted in seizure of documents and foreign exchange 550 U.S. Dollars. The detenu''s statements came to be recorded u/s 40 of the FERA on 4-12-1989 and 5-12-1989. The Detaining Authority, in the grounds of detention in para 3.1 has incorporated the statement of the detenu as under :

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that you have been in the business of import of cars for about six seven months; that you used to purchase cars abroad in the name of Non-Resident Indians (NRIs) returning to India on transfer of residence basis; that foreign exchange for purchase of cars abroad was being arranged by you abroad; that all the custom clearance permit (CCP) facilities and other misc. work would be done by you on behalf of NRIs coming on transfer of residence basis and later on you would sell the car in India at a premium and that you used to pay Rs. 60,000/- to Rs. 1,50,000/- to those NRIs in whose names cars were imported."

In the grounds of detention, the Detaining Authority has referred to certain transactions which the detenu had undertaken in respect of sale of imported cars like ''Mercedez Benz'', "Honda Accord" and "Honda" to Indians. Statements of various persons came to be recorded during investigation. Certain documents which are listed in the grounds of detention as Bench A, B, C, D, and J were also seized during investigation. On the basis of the material placed before the Detaining Authority in para 10 it reached the following conclusion :

"In view of the foregoing, I have no hesitation in arriving at the conclusion that you been indulging in various unauthorised monetary transactions which are not only in violation of provisions of Foreign Exchange Regulation Act, 1973 but also are prejudicial to the augmentation of country''s foreign exchange resources. Even though adjudication and prosecution proceedings under the Foreign Exchange Regulation Act, 1973 are likely to be initiated against you, I am satisfied that in view of the facts stated hereinabove, it is necessary to detain you under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 with a view to preventing you from indulging in activities prejudicial to the augmentation of country''s foreign exchange resources."

Mr. Karmali, learned Counsel appearing in support of this writ petition firstly urged that on 27-2-1990, import export policy for the period from April, 1988 to March, 1991 in regard to import of cars and vehicles contained in Chapter IX has undergone a change and the said changed policy was notified by a public notice dated 27-2-1990. As a result of this amended policy, para 125(i) of Chapter IX relating to import of cars and vehicles, was substituted. Learned Counsel urged that crucial changes effected by the amended policy brought into force on 27-2-1990 were not at all considered by the Detaining Authority. It was incumbent upon the sponsoring authority to have apprised the Detaining Authority ought to have brought to the notice of said authority the vital change in the law relating to import of cars. Alternatively, it was urged that it was enjoined upon the Detaining Authority to have on his own borne in mind, the said vital change effected in the new policy and having not considered the new policy at the time of clamping down the detention order upon the detenu, subjective satisfaction of the detaining authority is vitiated. Counsel further urged that it was enjoined upon the Detaining Authority to consider the alleged prejudicial activities of similar nature in the light of amended policy. Since the amended policy was not placed before the Detaining Authority the Detaining Authority has thus misdirected himself in law and on this ground alone, the impugned order of detention is liable to be quashed and set aside.

In order to appreciate this contention, it would be necessary to refer to un-amended provisions as also the amended provisions contained in Chapter IX relating to ''import of cars and vehicles'' which read as under :

Unamended Policy Para 125(1)

"Import of cars, station wagons, jeeps, motor cycles, scooters, autocycles mini cars and mopeds may be allowed to Indian Nationals returning to India for permanent settlement provided (i) the applicant has stayed abroad continuously for at least one year and (ii) the vehicle has been purchased out of his own earnings abroad. The vehicle should have been in the possession of the applicant or at least the payment for the same must have been made before return of the applicant to India."

Amended Policy, Para 125(1)

"Import of cars, station wagons, jeeps, motor cycles, scooters, autocycles, mini cars and mopeds may be allowed to Indian Nationals returning to India for permanent settlement provided -

(i) the applicant has stayed abroad continuously at least for a period of two years and

(ii) and the vehicle has been in the use of the applicant at least for a period of one year prior to the return to India."

If unamended and amended provisions noted above are compared it is needless to emphasise that certain changes have been brought about by the amended policy enforced on 27-2-1990. The impugned order of detention was made on 15th May, 1990. Thus, admittedly, the impugned order came to be passed after coming into force of amended para 125(1) of Chapter IX.

Under the new provisions, therefore, two conditions are vital viz. (i) that the applicant (NRI) has stayed abroad continuously at least for a period of two years and (ii) that the vehicle has been in use of the applicant (NRI) at least for a period of one year prior to return to India. So far as Clause (ii) of para 125(1) is concerned, this is a new condition which has been inserted in the said paragraph. In the light of this new provision, we have to consider the conclusion culled out from the statement of the detenu in para 3.1 of the grounds of detention. In inter alia recites that the detenu has been in the business of import of cars for about six months; that he used to purchase cars abroad in the name of Non-Resident Indians (NRIs) returning to India on transfer of residence basis; that the detenu used to provide foreign exchange for purchase of cars abroad and detenu used to do the work of custom clearance permit facilities and other miscellaneous works in India on behalf of NRIs coming to India on transfer basis and later on would sell cars in India on premium and thereby used to pay substantial amount to the NRIs and also make huge profits for himself out of the sale transactions of so imported cars.

The Detaining Authority has filed the return in reply to the contention raised by the petitioner in paras 4(iv) and (v) of the petition.

It is stated as under :

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that the change of policy regarding the import of cars was not a vital and relevant information and it was not necessary for the sponsoring authority to bring to my notice the said change. The vital factor was the indulgence of the detenu in violation of FERA, 1973 and the material pertaining to the same was placed before me, properly considered by me, and the detention order was passed bona fide.

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It is clear from the above return that the Detaining Authority has shown no awareness whatsoever as regards change in the policy brought about on 27-2-1990. If one peruses the old and the new provisions, it is quite clear that some changes have been brought about under the amended provisions and, therefore, it has got a bearing one way or the other on the subjective satisfaction of the Detaining Authority. The basic material, the form of statements of the detenu and other material ought to have been considered in the light of the amended provisions. Mr. Patwardhan, learned Counsel appearing for the Detaining Authority urged that the amended provisions, in fact, do not introduce any substantial change and, therefore, minor changes in the provisions of law having to bearing on the facts of the present case, would not vitiate the subjective satisfaction. This submission again does not appeal to us for the simple reason that it was obligatory upon the Detaining Authority to apply its mind to the amended provisions and consider basic facts and if so satisfied issue the detention order by reading the new provision; one thing is certain that some restrictions have been imposed upon bringing cars by the NIRs in India on change of their permanent resident to India. Particularly, clause (ii) of para 125(1) is very relevant. The basic facts on which the Detaining Authority has placed reliance to come to a conclusion are already indicated above and these basic facts in our opinion, ought to have been looked into by the Detaining Authority with reference to the new provision. In our opinion, the amended provisions of para 125 have introduced certain changes and, therefore, the said provisions bearing one way or the other on the subjective satisfaction by the detaining authority. It was necessary on the part of the Authority to have placed the amended provisions of Para 125 for the consideration of the Detaining Authority. Mr. Karmali is, therefore, right in his submission that change in the policy effected on 27-2-1990 was likely to influence the mind of the Detaining Authority one way or the other and, therefore, it was necessary on the part of the Sponsoring Authority to have placed new provisions before the Detaining Authority and/or Detaining Authority itself should have apprised himself of the new provisions which were brought into force on 27-2-1990. In the present case, we are concerned with the situation of non-placement of relevant provisions having bearing upon subjective satisfaction one way or the other. Having regard to the return filed on behalf of the Detaining Authority we are satisfied that the subjective satisfaction of the Detaining Authority is vitiated on account of non-placement of amended provisions of para 125 of Chapter IX (Import of cars and vehicles). On this short ground, in our opinion, petition must succeed.

In the result, writ petition succeeds. The detenu is ordered to be set at liberty forthwith if not required in any other case. Rule made absolute. No order as to costs.