1975 (7) TMI 156 - HC - FEMA

Court quashes search authorization, orders return of seized documents, upholds procedural safeguards

The Court ruled in favor of the petitioner, quashing the authorisation for the search and directing the return of unlawfully seized documents, except ... - Issues involved: Challenge to the legality of search and seizure u/s 19-D of the Foreign Exchange Regulation Act, 1947 and non-compliance with the provisions of Sub-section (2) of Section 19-D.Challenge to legality of search and seizure u/s 19-D:The petitioner, a public limited company, challenged the search conducted at its premises under an authorisation issued by the Assistant Director, Enforcement Directorate, Ministry of Finance u/s 19-D of the Act. The petitioner contended that the authorisation was illegal and there was non-compliance with the Act's requirements. The respondent justified the search based on documents indicating potential violations related to jute exports. The Court emphasized the need for the officer to have a genuine reason to believe that relevant documents were secreted, as per Section 19-D. The Court referred to precedents to establish that the officer must prove the fulfillment of conditions justifying the search. It was found that the respondent failed to establish a valid reason to believe that the documents were secreted, especially considering the time lapse between the information and the search.Non-compliance with Sub-section (2) of Section 19-D:The petitioner also challenged the non-compliance with the provisions of Sub-section (2) of Section 19-D, which required the recording of reasons for the search. The Court noted that procedural safeguards were essential for searches conducted u/s 19-D, and failure to adhere to these safeguards constituted a violation. The Court highlighted that the procedural formalities were not observed in this case, leading to a breach of the Act's provisions.Judgment:The Court ruled in favor of the petitioner, quashing the authorisation for the search and directing the return of documents seized unlawfully. However, documents exhibited in adjudication proceedings were excluded from the return order. The Court emphasized the importance of procedural safeguards and ordered the issuance of writs in the nature of certiorari and mandamus. The operation of the order was stayed for six weeks, and no costs were awarded in the circumstances of the case.