Supreme Court upholds detention orders under COFEPOSA Act to combat smuggling activities

MADAN LAL ANAND Versus UNION OF INDIA

MADAN LAL ANAND Versus UNION OF INDIA - 1990 (45) E.L.T. 204 (SC), 1990 AIR 176, 1989 (1) Suppl. SCR 733, 1990 (1) SCC 81, 1989 (0) Suppl. JT 295, 1989 ... Issues Involved:
1. Validity of the detention orders under Section 3(1) of the COFEPOSA Act.
2. Allegations of smuggling and abetment of smuggling.
3. Non-fulfillment of export obligations under the DEEC Scheme.
4. Existence and operation of benami firms.
5. Non-supply of relevant documents to the detenu.
6. Delay in considering the detenu's representation.
7. Potential for future involvement in smuggling activities.

Detailed Analysis:

1. Validity of the Detention Orders under Section 3(1) of the COFEPOSA Act:
The appeal challenges the judgment of the High Court of Punjab & Haryana, which dismissed the writ petition filed by three detenus, including the husband of the appellant. The detention orders were issued under Section 3(1) of the COFEPOSA Act to prevent the detenu from abetting smuggling activities. The Supreme Court upheld the validity of these orders, noting that they were issued with the intention of preventing the detenu from engaging in activities detrimental to the national economy.

2. Allegations of Smuggling and Abetment of Smuggling:
The detenu was accused of abetting the smuggling of goods and dealing in smuggled goods. The grounds of detention detailed how polyester filament yarn and polyester fibre were imported under the DEEC Scheme and disposed of in the local market without fulfilling export obligations. The Court noted that the definition of "smuggling" under Section 2(e) of the COFEPOSA Act, read with Section 2(39) of the Customs Act, was applicable as the goods were liable to confiscation under Section 111(o) of the Customs Act.

3. Non-Fulfillment of Export Obligations under the DEEC Scheme:
The firms M/s. Jasmine and M/s. Expo International obtained advance licences for importing polyester filament yarn without paying customs duty, under the condition that they would manufacture and export ready-made garments within six months. Investigations revealed that these firms did not fulfill their export obligations and sold the imported yarn in the local market, violating the conditions of the licences and the relevant customs notification.

4. Existence and Operation of Benami Firms:
The detaining authority alleged that the firms M/s. Jasmine and M/s. Expo International were benami concerns of the detenus, including Madan Lal Anand. The firms had no real existence or manufacturing facilities, indicating that the licences were procured solely for importing goods duty-free and selling them in the local market. The Court found sufficient grounds to support the detaining authority's allegations.

5. Non-Supply of Relevant Documents to the Detenu:
The detenu argued that certain documents, including abeyance orders and show cause notices, were not placed before the detaining authority, potentially influencing the subjective satisfaction of the authority. The Court rejected this contention, noting that the documents were either referred to in the grounds of detention or annexed to related civil revision petitions. The Court held that the non-supply of these documents did not affect the validity of the detention order.

6. Delay in Considering the Detenu's Representation:
The detenu's representation dated January 17, 1989, was received by the Ministry of Finance on January 18, 1989, and rejected on February 20, 1989. The Court examined the timeline and found that the delay was due to intervening holidays and the time taken for obtaining comments from the Collector of Central Excise & Customs. The Court concluded that there was no negligence or laches on the part of the authorities in dealing with the representation.

7. Potential for Future Involvement in Smuggling Activities:
The detenu argued that the expiry of the advance licences meant there was no chance of future involvement in smuggling activities. The Court rejected this argument, noting that the detenu could still set up fictitious firms and procure new licences. The Court emphasized that the detention was preventive, not punitive, and aimed at preventing future economic offences.

Conclusion:
The Supreme Court upheld the judgment of the High Court, dismissing the appeal and the writ petition. The Court found that the detention orders were justified based on the evidence and the need to prevent the detenu from engaging in activities harmful to the national economy.