2008 (10) TMI 97 - HC - Income Tax

Court orders return of passport, sets conditions. Rule absolute, no costs.

The Court allowed the Writ Petition, directing the Respondents to return the Petitioner's passport within 15 days, subject to the Petitioner's compliance ... Impounding of passport - Passports Act as complete code - Seizure versus impounding - Article 21 - right to travel abroad - Equitable jurisdiction under Article 226Impounding of passport - Passports Act as complete code - Seizure versus impounding - Lawfulness of retention/impounding of the petitioner's passport by investigative authorities under FEMA/Incometax powers - HELD THAT: - The Court applied the principle that the Passports Act constitutes a complete code for impounding passports and relied on the Supreme Court's interpretation in Suresh Nanda that the term 'document' as used in general provisions cannot be read so widely as to include a passport. The Court distinguished power to seize documents under statutes such as section 131(3) of the Incometax Act from power to impound (i.e., retain custody over a period), and held that seizure powers cannot be extended to validate prolonged impounding of a passport where the Passports Act prescribes the specific regime. Consequently, impounding of the petitioner's passport by respondent authorities without authority under the Passports Act was held to be without lawful authority. [Paras 11, 12]Retention/impounding of the passport by the respondents was without authority of law and cannot be sustained under general seizure powers; the writ petition on this ground succeeds.Equitable jurisdiction under Article 226 - Article 21 - right to travel abroad - Appropriate equitable relief and conditions for return of the passport in exercise of writ jurisdiction - HELD THAT: - Exercising its equitable jurisdiction under Article 226, the Court balanced the petitioner's rights against the respondents' investigative concerns. Noting shortcomings in the petitioner's disclosure regarding foreign accounts and transactions, the Court directed the petitioner to furnish the requested account statements, provide an authorization permitting respondents to obtain information from identified accounts, and give an undertaking to cooperate in the ongoing inquiry. Upon compliance with these directions within the specified time, the Court ordered return of the passport. The order was expressly made without prejudice to any rights of competent authorities under the Passports Act to impound the passport if they are so entitled. [Paras 13, 14, 15]Passport to be returned by respondent on completion of specified compliance by the petitioner; directions issued to furnish statements, authorization and undertaking, and return to follow within the time prescribed, while preserving rights of other authorities under the Passports Act.Final Conclusion: Writ petition allowed: impounding of the petitioner's passport by the respondents was held unlawful; however, in the exercise of equitable jurisdiction the Court directed conditional return of the passport subject to the petitioner furnishing account statements, an authorization and an undertaking, and preserved the rights of competent authorities under the Passports Act. Issues Involved:1. Authority to impound a passport.2. Applicability of the Passports Act versus other statutes.3. Right to personal liberty and to travel abroad under Article 21 of the Constitution.4. Due process and opportunity of hearing before impounding a passport.5. Equitable jurisdiction under Article 226 of the Constitution.Detailed Analysis:1. Authority to Impound a Passport:The Petitioner contended that only the authority under the Passports Act has the legal power to impound a passport. The Respondent's retention of the passport under the Foreign Exchange Management Act (FEMA) and the Income Tax Act was challenged. The Court agreed with the Petitioner, citing the Supreme Court's decision in *Suresh Nanda v. Central Bureau of Investigation*, which held that the Passports Act is a complete code for matters related to impounding passports. The Court emphasized that the term 'documents' in Section 131(3) of the Income Tax Act does not include passports, and thus the Respondent's action lacked legal authority.2. Applicability of the Passports Act Versus Other Statutes:The Court examined whether other statutes, such as FEMA and the Income Tax Act, could override the specific provisions of the Passports Act. The Respondent argued that Section 23 of the Passports Act allows for additional provisions under other enactments. However, the Court held that the Passports Act, being a special statute, takes precedence over general provisions in other laws. This principle was supported by the maxim *generalia specialibus non derogant* (general provisions do not derogate from special provisions).3. Right to Personal Liberty and to Travel Abroad Under Article 21:The Petitioner argued that impounding the passport without due process violated his right to personal liberty and to travel abroad under Article 21 of the Constitution. The Court referenced *Satwant Singh Sawhney v. Union of India* and *Maneka Gandhi v. Union of India*, which protect the right to travel abroad against executive interference not supported by law. The Court concluded that the Respondent's actions were contrary to the procedure prescribed by the Passports Act and thus violated the Petitioner's constitutional rights.4. Due Process and Opportunity of Hearing Before Impounding a Passport:The Petitioner asserted that impounding a passport results in adverse civil consequences and requires an opportunity for a hearing. The Court agreed, noting that the Respondents did not follow the due process outlined in the Passports Act, which mandates an opportunity for the affected person to be heard before such an action is taken.5. Equitable Jurisdiction Under Article 226 of the Constitution:While the law favored the Petitioner, the Court exercised its equitable jurisdiction under Article 226. The Court balanced equities by directing the Petitioner to furnish all relevant account statements and authorize the Respondents to obtain information from his accounts. This condition was set to ensure the Petitioner's cooperation in the ongoing investigation. Upon compliance, the Respondents were ordered to return the passport within 15 days.Conclusion:The Court allowed the Writ Petition, directing the Respondents to return the Petitioner's passport within 15 days, subject to the Petitioner's compliance with the specified conditions. The order was made without prejudice to the rights of any competent authority to impound the passport under the Passports Act if warranted.Final Order:The Rule was made absolute, and the Writ Petition was allowed with no order as to costs.