2023 (10) TMI 118 - HC - FEMA

Detention Order Invalidated Due to Procedural Non-compliance

The court found the detention order invalid due to procedural non-compliance and unexplained delay. The writ petition was allowed, quashing the orders ... Detention order - whether the inordinate delay of thirty years in the execution of the detention order is explained by the concerned authorities? - detention order indicates that the detaining authority has relied upon the search and seizure proceedings u/s 34 of the Foreign Exchange Act 1973 (“FERA”) - HELD THAT:- The detention under the COFEPOSA Act is for the purpose of preventing persons from acting in any manner prejudicial to the conservation or augmentation of foreign exchange or preventing from smuggling goods, or abetting smuggling goods, or engaging in transporting or concealing or keeping smuggled goods or dealing with the same or harbouring person engaged in such activities. Hence, there must be conduct relevant to the formation of the satisfaction having reasonable nexus with the petitioner's action, which is prejudicial to make an order for detaining him. The unexplained and inordinate delay of thirty years in the present case does not justify the preventive custody of the petitioner. As held in the case of Shafiq Ahmad [1989 (9) TMI 381 - SUPREME COURT] the satisfaction of the authorities based on conduct must precede action for prevention based on subjective satisfaction. In the present case, the action based on satisfaction is not commensurate with the situation after thirty years of the detention order. It is not even the case of the authorities that in the last thirty years, the petitioner was engaged in any prejudicial activity or has indulged in any objectionable activity. Petitioner is right in submitting that there was no material adduced indicating that the petitioner was “absconding” or that the petitioner was evading arrest. Thus, by relying on the principle of law laid down by the Hon’ble Supreme Court in the case of Shafiq Ahmad, we find that the action under Section 7 of the COFEPOSA Act would not be decisive or determinative of the question of whether there was undue delay in serving the order of detention in the present case. In the facts of this case, no attempts had been made to contact or arrest the petitioner. There is no explanation forthcoming for not taking any action to trace the whereabouts of the petitioner, and also, after the gazette publication in the year 1995 under section 7(1)(b) of the COFEPOSA Act, there is no action taken to serve the detention order. Thus, there is no merit in the submissions supporting the detention order. We find substance in the ground of challenge raised on behalf of the petitioner that the detaining authority has not meticulously followed the procedure to serve the detention order, making it invalid due to the passage of time. Issues Involved:1. Validity of the detention order dated 17th May 1993.2. Legality of the confirmation order dated 24th May 2023.3. Compliance with procedural requirements under the COFEPOSA Act.4. Justification for the delay in executing the detention order.Summary:1. Validity of the Detention Order Dated 17th May 1993:The petitioner challenged the detention order dated 17th May 1993, issued under section 3(1) of the COFEPOSA Act, and its confirmation dated 24th May 2023. The detaining authority relied on search and seizure proceedings under section 34 of the FERA and statements under section 40 of FERA. The authority concluded that the petitioner was involved in unauthorized foreign exchange transactions, adversely affecting the country's foreign exchange resources. Despite potential prosecution under FERA, the authority believed detention was necessary to prevent future activities prejudicial to the country's foreign exchange resources.2. Legality of the Confirmation Order Dated 24th May 2023:The detention order was served on the petitioner on 28th February 2023. The Central Advisory Board, after hearings on 2nd and 3rd May 2023, confirmed the detention order, directing detention for one year from 28th February 2023. The Board found no reason to interfere with the subjective satisfaction of the detaining authority.3. Compliance with Procedural Requirements Under the COFEPOSA Act:The petitioner argued that the detention order became invalid due to non-compliance with procedural requirements. The detaining authority failed to serve the order promptly and did not make adequate efforts to trace the petitioner. Despite the claim that the petitioner was absconding, evidence showed the petitioner was in Kerala, running a business for the past thirty years without engaging in illegal activities.4. Justification for the Delay in Executing the Detention Order:The authorities claimed efforts were made to serve the detention order in 1993, but the petitioner was untraceable. An order under section 7(1)(b) of the COFEPOSA Act was issued and published in the official gazette. However, the court found no substantial efforts were made to trace the petitioner beyond visiting the last known address. The delay of thirty years in executing the order was deemed unjustified, and the authorities failed to provide a satisfactory explanation.Conclusion:The court found the detention order invalid due to procedural non-compliance and unexplained delay. The writ petition was allowed, quashing the orders dated 17th May 1993 and 24th May 2023, and the petitioner was ordered to be released forthwith. The order was stayed for two weeks to allow the respondents to challenge it before the Apex Court.