1998 (4) TMI 530 - SC - FEMA

Supreme Court Upholds High Court Decision on COFEPOSA Detention, SAFEMA Proceedings

COMPETENT AUTHORITY AHMEDABAD Versus AMRITLAL CHANDMAL JAIN

The Supreme Court upheld the Gujarat High Court's decision declaring the detention under COFEPOSA as illegal and quashing SAFEMA proceedings. The detenu ... Whether the order of detention passed against the first respondent Amritlal Chandmal Jain ('Amritlal') under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (for short `COFEPOSA') was illegal? Held that:- When there is challenge to the legality of detention in writ of habeas corpus the challenge is in effect to the legality and validity of the grounds on which the order of detention is made. It is not that to challenge the legality and validity of the grounds on which order of detention is passed the detenu has to file a separate writ petition seeking a writ of certiorari. Once the detenu is released during pendency of his writ petition has become infructuous and that the grounds on which the order of detention become invalid. But then if the Court refuses corpus when detenu is released the detenu on that account cannot be made to suffer holding that he did not successfully challenge his order of detention. That is exactly what has happened in this case. . This Court did not go into the question of validity of the order of detention but disposed of the matter on account of the fact that detenu had already been released from his detention. We, therefore, cannot say that challenge to the order of detention by Amritlal was unsuccessful and that he or his relatives or his associates were in any way debarred from challenging the order of detention subsequently when notices under SAFEMA were issued to them. Appeal dismissed. Issues:1. Validity of the order of detention under COFEPOSA.2. Legality of the proceedings initiated under SAFEMA.3. Competent Authority's challenge regarding the release of seized silver.4. Competent Authority's appeal against the High Court's judgment.Validity of the order of detention under COFEPOSA:The judgment involved appeals against the Gujarat High Court's decision on the legality of the order of detention passed under COFEPOSA. The High Court had allowed writ petitions declaring the detention of the first respondent as illegal and quashed proceedings under SAFEMA. The Supreme Court noted the history of detention orders against the respondent, challenges faced, and the subsequent release on parole. The Court emphasized that challenges to the detention orders were made during the period of detention, and the High Court's findings on the legality of the detention were upheld. The Court rejected the argument that the challenges were not made at the appropriate time, stating that the detenu had indeed challenged the detention orders effectively during their enforcement.Legality of the proceedings initiated under SAFEMA:The judgment also addressed the legality of the proceedings initiated under SAFEMA based on the detention order under COFEPOSA. The High Court had allowed writ petitions against the Competent Authority, holding the detention illegal and quashing the SAFEMA proceedings. The Supreme Court upheld the High Court's decision, emphasizing that the foundation of the SAFEMA action was the detention order, which was deemed illegal. The Court rejected the argument that the SAFEMA proceedings could not be challenged due to the timing of the detention order challenges, stating that the detenu had effectively challenged the detention orders during their enforcement.Competent Authority's challenge regarding the release of seized silver:The Competent Authority filed an appeal against the High Court's judgment regarding the release of seized silver to the respondent and a company. The Authority had requested the Commissioner of Income-tax not to release the silver until SAFEMA proceedings concluded. The High Court dismissed the writ petition as infructuous after the SAFEMA proceedings were quashed. The Supreme Court upheld the High Court's decision, stating that once the foundation for the SAFEMA proceedings was invalidated, there was no further requirement to consider the release of seized silver. The Court noted that the Competent Authority's subsequent writ petition was practically the same as the withdrawn petition, and the High Court's decision was justified.Competent Authority's appeal against the High Court's judgment:The Competent Authority appealed against the High Court's judgment, arguing that the High Court had relied on a decision deemed invalid by a previous Supreme Court ruling. The Authority contended that the High Court did not consider the merits of the controversy and solely relied on the previous decision. The Supreme Court dismissed the appeal, stating that the challenges to the detention orders were made effectively during their enforcement, and the High Court's decision on the legality of the detention was upheld. The Court rejected the argument that the challenges were not made at the appropriate time, emphasizing that the detenu had challenged the detention orders during their enforcement effectively.