Court Orders Return of Seized Currency in Writ Petition

The court allowed Writ Petition No. 1279 of 1994, directing the respondents to return the seized currency of Rs. 1,65,000 to the petitioner within eight weeks. In contrast, the court dismissed Writ Petition No. 1280 of 1994, affirming the jurisdiction of the Special Director to issue the show-cause notice.

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Issues Involved:
1. Power to retain the seized currency under section 41 of the Foreign Exchange Regulation Act (FERA).
2. Validity of the show-cause notice issued on August 4, 1993, under section 51 of the FERA.

Issue-wise Detailed Analysis:

1. Power to Retain the Seized Currency:
The primary issue in Writ Petition No. 1279 of 1994 concerns the power to retain the currency seized from the petitioner under section 41 of the FERA. The key dates are:
- Seizure of currency: August 18, 1992
- Amendment to section 41: January 8, 1993
- Show-cause notice: August 4, 1993
- Service of show-cause notice: August 24, 1993

The petitioner argued that post-amendment, section 41 allowed the authorities to retain the currency only for six months unless proceedings were initiated as per sub-clauses (i) and (ii) of section 41. Prior to the amendment, the retention period was one year. The respondents contended that the amended provisions did not apply retrospectively and that the right of seizure and retention is a substantive right, not procedural.

The court examined whether the amended provisions of section 41, effective January 8, 1993, were prospective or retrospective. The court noted that the law of limitation is procedural and generally applies retrospectively unless it affects a vested right. The court cited several judgments to support this principle, concluding that the amended section 41, which reduced the retention period to six months, is procedural and applies retrospectively.

The court also noted that the amended section 41 includes a proviso allowing the Director of Enforcement to extend the retention period by six months for recorded reasons. Since the respondents did not seek such an extension, the court held that the authorities lost the power to retain the currency beyond February 17, 1993.

Consequently, the court allowed Writ Petition No. 1279 of 1994, directing the respondents to return the seized currency of Rs. 1,65,000 to the petitioner within eight weeks.

2. Validity of the Show-Cause Notice:
In Writ Petition No. 1280 of 1994, the petitioner challenged the show-cause notice issued on August 4, 1993, arguing that the Special Director lacked jurisdiction under sections 3 and 4 of the FERA. The petitioner contended that the delegation of powers to the Special Director was illegal.

The respondents countered that a specific notification dated September 22, 1989, authorized the Special Director to act as an Officer of Enforcement with adjudication powers under section 50 of the FERA. The court found that section 4(1) of the FERA allows the Central Government to appoint any person as an Officer of Enforcement. The Special Director, Mr. S. S. Renghen, was specifically appointed with such powers.

The court also invoked the de facto doctrine, which validates the acts of an officer who is clothed with the insignia of office, regardless of the legality of the appointment. Citing the Supreme Court's decisions in Gokaraju Rangaraju v. State of Andhra Pradesh and Pushpadevi M. Jatia v. M.L. Wadhavan, the court upheld the validity of the show-cause notice.

Therefore, the court dismissed Writ Petition No. 1280 of 1994, affirming the jurisdiction of the Special Director to issue the show-cause notice. There was no order as to costs.

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