Reason to believe under foreign exchange law upheld for renewed seizure after technical quashing of earlier seizure.

A later seizure of currency was held valid where an earlier seizure had been set aside only on a technical ground and the prior order had expressly reserved liberty to proceed in accordance with law. The Court rejected the argument that the later seizure was an impermissible re-seizure, holding that it followed return of the currency and was lawful further action. It also held that section 38 of the Foreign Exchange Regulation Act, 1973 was satisfied because the material already available from the earlier seizure and surrounding facts was sufficient to form reason to believe that the currency and documents were relevant to investigation. The challenge failed and the seizure was upheld.

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Issues: (i) Whether the seizure of the currency on 4 April 1989 was an impermissible re-seizure in violation of the earlier appellate order and the petitioner's right to hold property. (ii) Whether the seizure satisfied the requirement of reason to believe under section 38 of the Foreign Exchange Regulation Act, 1973.

Issue (i): Whether the seizure of the currency on 4 April 1989 was an impermissible re-seizure in violation of the earlier appellate order and the petitioner's right to hold property.

Analysis: The earlier order had not finally and unconditionally barred further action by the Enforcement Directorate. It had merely held the earlier seizure unsustainable on a technical ground and had expressly left liberty to the authorities to proceed in accordance with law. The later seizure was not treated as a prohibited re-seizure, because it was taken after the currency had been returned and was part of lawful further action permitted by the earlier order.

Conclusion: The challenge to the seizure as a re-seizure failed and was rejected.

Issue (ii): Whether the seizure satisfied the requirement of reason to believe under section 38 of the Foreign Exchange Regulation Act, 1973.

Analysis: Section 38 was treated as distinct from the search provisions under sections 36 and 37, and the material already available from the earlier seizure and the surrounding facts was held sufficient to form the requisite belief that the currency and documents were relevant to investigation under the Act. The Court held that fresh independent reasons were not necessary where the later seizure was only a renewed step on the same factual foundation after the earlier seizure had been set aside for a technical defect.

Conclusion: The seizure satisfied section 38 and the challenge on this ground was rejected.

Final Conclusion: The petition failed on all substantive grounds and the impugned seizure was upheld as a lawful step under the Act.

Ratio Decidendi: Where an earlier seizure is quashed only on a technical ground but liberty is expressly reserved to proceed in accordance with law, a later seizure based on the same material may be valid if the authorised officer has reason to believe under the governing provision that the property is relevant to investigation or contravention under the Act.

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