Retention of seized foreign exchange documents beyond six months is unlawful absent timely proceedings or valid extension.

Foreign exchange and Indian currency are treated as documents for section 41 of the Foreign Exchange Regulation Act, so seized documents may be retained only up to six months unless proceedings under section 51 or section 56 are commenced within that period or time is validly extended. Where show-cause notices were issued after six months, no proceedings under section 56 were initiated, no valid extension was obtained or communicated, and the delay was not attributable to the petitioner, continued retention was unlawful; the passport was also outside the scope of the notices. The seized items had to be returned.

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Issues: Whether the seizure of documents, foreign currency and passport could be retained beyond the statutory period under section 41 of the Foreign Exchange Regulation Act, 1973 in the absence of commencement of adjudication proceedings within time.

Analysis: Section 2(h) read with the Explanation to section 33 treats foreign exchange and Indian currency as documents for the purposes of section 41. Section 41 permits retention of seized documents only for a period not exceeding six months, unless proceedings under section 51 or section 56 are commenced within that period or the period is validly extended. On the facts, the show-cause notices were issued after the expiry of six months from the date of seizure, no proceedings under section 56 were commenced, and no valid extension of time was obtained or communicated. The Court also found that the delay was not attributable to the petitioner and that the passport was not even covered in the show-cause notices.

Conclusion: The continued retention of the seized documents beyond six months was illegal, and the petitioner was entitled to their return.

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