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Issues: (i) whether Section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 is unconstitutional to the extent it permits preventive detention for conduct prejudicial to conservation or augmentation of foreign exchange even though such conduct is not separately made a criminal offence under the foreign exchange regime; (ii) whether the petitioners could be permitted to challenge the detention order itself by an additional prayer at the pre-execution stage.
Issue (i): whether Section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 is unconstitutional to the extent it permits preventive detention for conduct prejudicial to conservation or augmentation of foreign exchange even though such conduct is not separately made a criminal offence under the foreign exchange regime.
Analysis: Preventive detention is a constitutionally recognised measure distinct from punitive detention. It is exercised in anticipation to prevent prejudicial conduct and does not depend on the existence of a parallel criminal prosecution. The constitutional scheme under Articles 22, 14, 19 and 21 permits preventive detention subject to safeguards, and the validity of the Act had already been upheld in earlier binding precedent. The Court also held that repeal of the earlier foreign exchange law and the shift to a civil penalty regime under the later foreign exchange law did not extinguish the object of conservation and augmentation of foreign exchange or render the preventive detention provision irrational. The relevant activity continued to be treated as prejudicial to the economic security of the State.
Conclusion: The challenge to the constitutional validity of Section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 failed and the provision was held valid.
Issue (ii): whether the petitioners could be permitted to challenge the detention order itself by an additional prayer at the pre-execution stage.
Analysis: The petitioners had earlier withdrawn a writ petition challenging the detention order and had later withdrawn the special leave petition while being granted liberty to pursue available remedies after execution of the detention order. In those circumstances, and since the detention order had not been executed, the request to add a prayer for quashing the detention order at that stage was not maintainable.
Conclusion: The additional prayer to quash the detention order was rejected.
Final Conclusion: The Court upheld the impugned preventive detention provision and declined to entertain the pre-execution challenge to the detention order, leaving the petitioners free to seek remedies after execution in accordance with law.
Ratio Decidendi: Preventive detention may validly be provided for conduct prejudicial to national economic security even if that conduct is not separately punishable as a criminal offence, and an already upheld Ninth Schedule law cannot be reopened to invalidate it on the same constitutional grounds.
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