Lawrence Brito vs Union of India and others

M.P. Chandrakantaraj Urs, J.—The petitioner is aggrieved by the proceedings initiated under the provisions of the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as "the Act"), inter alia, on the ground that he has committed no offence punishable u/s 9(1)(b) of the Act.

The facts, briefly stated, are as follows :

The petitioner is a civil contractor residing at Bajpe close to Mangalore city in Karnataka State. It suffices to say that he has a brother, admittedly, working in Dubai at Bank of Pakistan in the United Arab Emirates. On April 12, 1989, the Enforcement Director, Government of India, Southern Zone, Madras, the second respondent herein, and the Deputy Director, Enforcement Directorate, South Zone, Madras, conducted a raid and search of the residential premises of the petitioner at Bajpe. They seized a sum of Rs. 1,69,350 found in the steel cupboard in his house as well as three letters written by the petitioner''s brother to his father in Konakani language. Thereafter, he was served with a show-cause notice as at annexure J. The show-cause notice is dated October 25, 1989, calling upon him to show cause as to why he should not be subjected to adjudication proceedings in accordance with the provision made in section 51 of the Act read with the Rules made thereunder. Aggrieved by the same, he has approached this court for a writ of prohibition, inter alia, on the ground that no prima facie case is made out for commencing prosecution or proceedings u/s 51 of the Act, as the letters seized or the money seized do not themselves constitute an offence.

This submission overlooks the fact that, on April 12, 1989, as evidenced by annexure E, a statement by the petitioner before respondents Nos. 2 and 3 wherein he admitted that Rs. 1,69,350 the amount seized at the time of the raid and search was received by him from a stranger whose description he gave and who had delivered the said sum on the instructions of his brother working at Dubai, United Arab Emirates, and that he had been instructed by telephone by his brother in that regard of the arrival of the money which was meant for construction of a house for his brother. It is pursuant to that statement, apparently, that the adjudication proceedings have been initiated.

In this court, Mr. G. V. Shantharaju, learned counsel for the petitioner, has contended in support of the allegations that the statement made was under duress. In any event, it cannot be used against him on that count. Therefore, barring that statement, there is no material implicating him for the commission of any offence u/s 9(1)(b) of the Act.

No doubt, there is an allegation that the statement was obtained under duress. But in what manner the duress was practised or brought about is not stated. No doubt, under the normal criminal jurisprudence obtaining in this country, a statement made to the investigating officer may not be made use with law in that behalf in a trial for a criminal offence. But the Act is an exception and a different procedure is prescribed in section 51 of the Act read with the Rules made thereunder and an appeal is provided to the Board u/s 52 of the Act. Section 53 of the Act provides for the powers and procedure of the adjudicating officer and the Appellate Board to summon witnesses. Against the order of the Board, an appeal to the High Court is provided.

In order to question the initiation of proceedings u/s 51 of the Act, the petitioner must show total want of jurisdiction of he seeks a writ of prohibition. If the statement made by him u/s 40 of the Act is sufficient to implicate him in the commission of an offence under the Act, then the question of want of jurisdiction does not arise. It will be open to him to contend before the adjudicating officer about the manner of duress and the inadmissibility of the statement on the basis of which the offence is said to have been committed. Thereafter, he has other remedies under the Act which will ensure a decree of fairness. He may urge all the grounds which he has now urged. If a person is not successful in substantiating his claim that such a statement made by him u/s 40 of the Act was obtained under duress in this court, prima facie, there is no lack of jurisdiction to initiate proceedings of adjudication. The question of issuing a writ of prohibition, however, does not arise. The petition is, therefore, rejected.

However, Mr. Shantharaju pleaded that even if he were to proceed against him, at least this court may direct release from out of the funds seized from him a sum of Rs. 1,60,000. That is the subject-matter of adjudication to initiate proceedings of adjudication. If the adjudicating officer finds in favour of the Enforcement Directorate, then that money is liable to confiscation and penalty of five times that amount which has been seized is liable to be imposed. Therefore, offering a bank guarantee for Rs. 1,60,000 would not be sufficient to enable this court to make a direction to return the money to him because he is carrying on his business as a building contractor. But then his statement was made under duress or voluntarily, that the money was not to be used for business but for construction of a house of a house for his brother. Unless the petitioner is prepared to furnish a bank guarantee for a sum equal to six times the amount seized, this court ought not to direct the release of the same.

For the above reasons, the prayer for return of the money also is rejected.