1986 (8) TMI 445 - HC - FEMA

Passport seizure upheld under Foreign Exchange Act, with time limit to protect travel rights

The court upheld the seizure of the petitioner's passport under Section 38 of the Foreign Exchange Regulation Act, 1973, deeming it relevant to the ... - Issues Involved:1. Authority to seize passport under the Foreign Exchange Regulation Act, 1973.2. Validity of the seizure order.3. Relevance of the passport in adjudication proceedings.4. Duration of the seizure and custody of the passport.Detailed Analysis:1. Authority to Seize Passport under the Foreign Exchange Regulation Act, 1973:The central issue in this case is whether the authorities under the Foreign Exchange Regulation Act, 1973 ('the Act') have the power to seize the passport of the petitioner, who is alleged to have breached Section 29 of the Act. The petitioner, a foreign national from South Africa, entered India on a South African passport and is accused of carrying on business in India without the Reserve Bank's permission, violating Section 29(1)(a) of the Act. Pending adjudication proceedings under Section 51, the petitioner's passport was seized under Section 38 of the Act.2. Validity of the Seizure Order:The petitioner contended that the seizure order was null and void, arguing that the enforcement officer lacked the authority to seize the passport. Section 38 of the Act allows for the seizure of any document or thing believed to be relevant to an investigation or proceeding under the Act. The court found that the order, although not explicitly stating 'reason to believe,' indicated that the authority considered the passport relevant to the proceedings. The court held that the absence of the phrase 'reason to believe' did not invalidate the order, as the authority's considered opinion implied such belief. Thus, the seizure order was deemed valid.3. Relevance of the Passport in Adjudication Proceedings:The petitioner argued that his passport was neither a document nor a thing as contemplated by Section 38 and was irrelevant to the adjudication proceedings. The court disagreed, stating that the passport is both a document and a thing, as defined by ordinary dictionary meanings. The court further held that the passport was relevant to the proceedings under Section 51 read with Section 50, as it could prove the petitioner's status as a foreign national residing in India without the necessary permissions. The court also rejected the petitioner's argument that his admission of being a foreign national rendered the passport irrelevant, citing the proviso to Section 58 of the Evidence Act, which allows the adjudicating authority to require proof of admitted facts.4. Duration of the Seizure and Custody of the Passport:The petitioner contended that the seizure of his passport should not continue indefinitely, as it would unreasonably restrict his right to move out of India. The court agreed that the seizure and custody of the passport could not be indefinite and must be conterminous with the adjudication proceedings. The court referred to Section 41 of the Act, which limits the custody of documents furnishing evidence of contravention to one year or until the completion of adjudication proceedings. The court directed the respondents to complete the adjudication proceedings within eight weeks and communicate the result within one week thereafter. If the petitioner is found not to have violated Section 29(1), the passport must be returned immediately. If a penalty is imposed, the passport should be returned upon payment of the penalty, without prejudice to the petitioner's right to appeal.Conclusion:The court upheld the seizure of the petitioner's passport under Section 38 of the Act, finding it relevant to the adjudication proceedings. However, it directed the respondents to complete the proceedings within a specified timeframe to prevent indefinite deprivation of the petitioner's right to travel.