Search under Foreign Exchange law upheld where bona fide belief existed; lack of recorded reasons did not invalidate seizure.

Under section 37 of the Foreign Exchange Regulation Act, a search is valid if the authorised officer acts on relevant material and bona fide reason to believe that documents connected with an investigation are secreted; the warrant need not record reasons or disclose the material in every case, and the search procedure need only broadly conform to the Criminal Procedure Code. The illegality of a search, even if assumed, does not automatically nullify the seizure or compel return of the seized documents. Allegations of personal mala fides and tampering must be supported by reliable particulars; vague assertions are insufficient.

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Issues: (i) Whether the search warrant issued under section 37 of the Foreign Exchange Regulation Act, 1973 was lawful basis or vitiated for want of recorded reasons. (ii) Whether the alleged illegality of the search entitled the appellants to return of the seized documents. (iii) Whether the search was vitiated by personal mala fides or by tampering with the seized material.

Issue (i): Whether the search warrant issued under section 37 of the Foreign Exchange Regulation Act, 1973 was without lawful basis or vitiated for want of recorded reasons.

Analysis: The power under section 37 can be exercised when the authorised officer has reason to believe that documents useful for, or relevant to, an investigation or proceeding under the Act are secreted in any place. The existence of such belief must rest on relevant material and be in good faith, but the officer is not bound in every case to disclose the material or record the grounds in the search warrant itself. Reading section 37(2) with the procedure relating to searches under the Code of Criminal Procedure, 1898, the statutory requirement is only that the search procedure be generally followed so far as may be, not that the recording requirement under section 165 of the Code is bodily incorporated. On inspection of the official file, the Court found that there was material before the officer sufficient to justify the formation of a reasonable belief.

Conclusion: The search warrant was validly issued and the challenge on the ground of absence of recorded reasons failed.

Issue (ii): Whether the alleged illegality of the search entitled the appellants to return of the seized documents.

Analysis: Even assuming that a search suffers from illegality, the settled rule is that the illegality of the method of search does not by itself render the seizure void or compel return of the materials seized. Relevant evidence is not excluded merely because it was obtained during an illegal search, and the authority before whom such material is produced may scrutinise it carefully. The Court therefore rejected the proposition that an invalid search automatically obliges the State to restore the seized articles.

Conclusion: No direction for return of the seized documents was warranted on the alleged illegality of search.

Issue (iii): Whether the search was vitiated by personal mala fides or by tampering with the seized material.

Analysis: The allegations of personal malice were found to be vague, scanty, and unsupported by reliable particulars. The material placed did not establish that the search power was exercised for an extraneous purpose. The complaint of tampering with the documents was also rejected as unsubstantiated after the material produced before the Court was examined and the alleged discrepancies were explained or found imaginary.

Conclusion: The allegations of mala fides and tampering were not proved.

Final Conclusion: The challenge to the search, seizure, and retention of the documents failed in its entirety, and the order of the High Court dismissing the writ petition was sustained.

Ratio Decidendi: Under section 37 of the Foreign Exchange Regulation Act, 1973, a search is valid if the authorised officer has relevant material forming a bona fide reason to believe that documents useful for an investigation or proceeding are secreted, and the absence of disclosure of such material or of recorded reasons in the warrant does not by itself invalidate the search; even an illegal search does not automatically require return of the seized materials.

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