Foreign exchange seizure custody: court upheld transfer of seized currency to enforcement authorities pending statutory investigation and adjudication.

Where seized currency was found during police investigation to be linked to a suspected foreign exchange contravention, the Magistrate could properly decline interim release to the person from whom it was seized. The Foreign Exchange Management Act contemplates investigation by enforcement officers and separate adjudication by the competent adjudicating authority, rather than return of the property by the criminal court at that stage. On that basis, transfer of custody of the seized money to the Enforcement Directorate for further lawful action was upheld, and the request for release of part of the amount was rejected.

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Issues: Whether the Magistrate was justified in directing the seized currency to be handed over to the Enforcement Directorate and in rejecting the petitioner's request for interim custody of part of the amount.

Analysis: The seized money had been taken by the police during investigation, and the police later reported that the matter involved contravention of the foreign exchange law and required further investigation by the Enforcement Directorate. The statutory scheme of the Foreign Exchange Management Act authorises enforcement officers to investigate contraventions and confers powers akin to those available to income-tax authorities for search and seizure. The Act also provides for adjudication of contravention by the adjudicating authority, and not by the criminal court. In these circumstances, the seized money was not to be treated as property to be returned to the petitioner at that stage, and the request of the Enforcement Directorate to take custody of the material for further lawful action was held to be proper.

Conclusion: The direction handing over the seized money to the Enforcement Directorate was upheld and the petitioner's request for release of the amount was rejected.

Ratio Decidendi: Where seized property is found, on investigation, to be connected with a contravention under the foreign exchange law and the matter is referred for statutory investigation and adjudication, the criminal court may permit custody of the property to be transferred to the competent enforcement authority rather than ordering release to the person from whom it was seized.

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