Reason to Believe and statutory summons under FERA were upheld; writ relief was refused at the threshold.

Search and seizure under the Foreign Exchange Regulation Act, 1973 was upheld where the department had relevant material forming reason to believe, and the court would not reappraise the sufficiency of that material; the challenge to illegality or mala fides failed. Proceedings were treated as initiated by timely despatch of the show-cause notice, so later service issues did not invalidate the notice or justify return of seized currency while adjudication remained pending. Allegations of arrest, illegal detention and improper summons under section 40 were not established, and the writ court declined to interfere with ongoing statutory investigation or future action at the threshold.

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Issues: (i) Whether the search and seizure of currency and documents under section 37 of the Foreign Exchange Regulation Act, 1973 were vitiated for want of reason to believe. (ii) Whether the show-cause notice and continued retention of the seized currency were invalid because proceedings were said to have been initiated beyond six months. (iii) Whether the alleged arrest, detention and summons under section 40 of the Foreign Exchange Regulation Act, 1973 justified writ interference.

Issue (i): Whether the search and seizure of currency and documents under section 37 of the Foreign Exchange Regulation Act, 1973 were vitiated for want of reason to believe.

Analysis: The search power under section 37 turns on the existence of reason to believe that documents useful for or relevant to an investigation are secreted in a place. The expression does not require disclosure of all materials in the writ proceedings, nor does it permit the court to sit in appeal over the departmental satisfaction. The belief must be founded on relevant material, but its sufficiency is not justiciable. On the facts, the prior search, the simultaneous search, the unexplained cash, and the statement recorded from the petitioners' father supplied a rational basis for the departmental belief.

Conclusion: The search and seizure were not shown to be illegal or mala fide, and the challenge failed.

Issue (ii): Whether the show-cause notice and continued retention of the seized currency were invalid because proceedings were said to have been initiated beyond six months.

Analysis: Proceedings under the Act were treated as commenced on issuance of the show-cause notice, not on its later service. A notice despatched within time but returned with postal endorsements did not defeat the initiation of proceedings, and the presumption of service was not rebutted by a mere denial. Since adjudication had commenced, the seized currency could not be ordered to be returned at the threshold merely because the matter was still pending.

Conclusion: The notice was not invalid on the ground of delay in service, and the request for return of the seized currency was rejected.

Issue (iii): Whether the alleged arrest, detention and summons under section 40 of the Foreign Exchange Regulation Act, 1973 justified writ interference.

Analysis: On the materials placed, the alleged arrest and illegal detention were not established. The department denied custody, the petitioners did not place convincing proof of arrest, and examination of persons during investigation could lawfully occur at any place and time. Summons under section 40 were within statutory power, and the writ court would not interdict ongoing statutory investigation or adjudication at a preliminary stage, especially when no completed adjudicatory order was under challenge.

Conclusion: The prayer to halt the investigation, restrain future statutory action, or invalidate the summons was rejected.

Final Conclusion: The writ petitions and the writ appeal failed in substance, as the departmental action was held to be within statutory bounds and no ground for extraordinary writ relief was made out.

Ratio Decidendi: In challenges to search and seizure under the Foreign Exchange Regulation Act, 1973, the court will interfere only if the absence of reason to believe or mala fides is shown on relevant material; the sufficiency of the material, the initiation of adjudication by show-cause notice, and routine statutory summons are not matters for writ interference at the threshold.

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