Reason to believe and mandatory search safeguards govern foreign exchange searches; defective authorization and procedure vitiate seizure.

Search authority under the Foreign Exchange Regulation Act depended on an objective, pre-existing reason to believe that relevant documents were secreted at the premises; stale or uncorroborated material was insufficient to justify the authorization. The text also states that the statutory search safeguards incorporated from the Code of Criminal Procedure had to be strictly followed, including the prescribed procedural formalities. On the stated facts, the authorization and consequential seizure were treated as invalid for want of adequate grounds and non-compliance with mandatory procedure, and the seized documents were ordered to be returned except for those already relied on in adjudication.

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Issues: (i) Whether the authorisation for search under Section 19-D(1) of the Foreign Exchange Regulation Act, 1947 was validly issued on the basis of reason to believe that documents were secreted at the premises. (ii) Whether there was compliance with the mandatory procedural requirements under Section 19-D(2) of the Foreign Exchange Regulation Act, 1947 read with the search provisions of the Code of Criminal Procedure, 1898.

Issue (i): Whether the authorisation for search under Section 19-D(1) of the Foreign Exchange Regulation Act, 1947 was validly issued on the basis of reason to believe that documents were secreted at the premises.

Analysis: The power of search could be exercised only if the officer had reason to believe that documents useful or relevant to proceedings under the Act were secreted in the place to be searched. The belief had to rest on objective material existing before the authorisation, and the material had to support not merely a possibility that useful documents might be found, but the further inference that they were secreted. The materials placed before the Court were found insufficient to establish such a belief for the date of authorisation, since the earlier information relied on was stale and did not satisfactorily connect the premises with the alleged concealment of documents.

Conclusion: The authorisation was not validly issued under Section 19-D(1), and this issue was decided in favour of the petitioner.

Issue (ii): Whether there was compliance with the mandatory procedural requirements under Section 19-D(2) of the Foreign Exchange Regulation Act, 1947 read with the search provisions of the Code of Criminal Procedure, 1898.

Analysis: Section 19-D(2) incorporated the procedural safeguards applicable to searches under the Code of Criminal Procedure, 1898, including the modification relating to Section 165(5). The Court found no evidence that these procedural formalities had been observed, and held that the statutory safeguards governing the search were not complied with.

Conclusion: There was non-compliance with the mandatory procedural requirements, and this issue was decided in favour of the petitioner.

Final Conclusion: The search authorisation and the consequential seizure were quashed, and the seized documents were directed to be returned, save for documents already exhibited in adjudication proceedings.

Ratio Decidendi: The statutory power of search under Section 19-D is conditional upon a pre-existing, objectively supportable reason to believe that documents are secreted, and the prescribed procedural safeguards for search must be strictly observed; absence of either vitiates the authorisation and the search.

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