Reason to believe for FEMA search upheld where intelligence material showed foreign transactions and enquiry was justified.

Search and seizure under FEMA will not be struck down merely because no incriminating material was ultimately found, where the authorising authority recorded satisfaction on the basis of intelligence inputs and supporting materials indicating foreign investments and transactions requiring enquiry. The Court treated search as an initial investigative step and held that, at that stage, the adequacy of the information is not for judicial interference if the belief is founded on relevant material and is not arbitrary or shown to lack application of mind. On that basis, the challenge to jurisdiction and to the statutory precondition of reason to believe failed, and the search and seizure were upheld.

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Issues: Whether the search and seizure conducted under the Foreign Exchange Management Act, 1999 was without jurisdiction or vitiated for want of reason to believe and application of mind.

Analysis: The writ petition challenged the search and seizure on the ground that no incriminating material was found and that the statutory precondition of reason to believe was absent. The record placed before the Court showed intelligence inputs and materials suggesting foreign investments and transactions requiring further enquiry, and the authorising authority had recorded satisfaction before issuing the search warrant. The Court held that search is an initial investigative step based on such material, and at that stage the sufficiency of the information is not for interference so long as the formation of belief is supported by relevant material and not shown to be arbitrary or without application of mind.

Conclusion: The search and seizure were not held to be illegal or ultra vires, and the challenge failed.

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