High Court orders release of seized gold and currency, deeming seizure illegal under FEMA Act.

The High Court allowed the writ petition regarding the non-return of seized gold and Indian currency by the Enforcement Directorate (ED) and Income Tax Department. The court found the seizure illegal under the FEMA Act, as no adjudication proceedings were pending. It highlighted the lack of legal justification for detention and ordered the IT Department to release the items within eight weeks, quashing the warrant. The court emphasized compliance with legal provisions and the necessity of issuing show cause notices in such cases.

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Issues:
Non-return of seized gold and Indian currency, legality of seizure under FEMA Act, authority to detain seized items, compliance with Income Tax Act, justification for detention, legal basis for detention by IT Department, absence of show cause notice, validity of detention by ED and IT Department.

Analysis:
The petitioner approached the High Court aggrieved by the non-return of 6 kgs of gold and Indian currency seized by the Enforcement Directorate (ED) from the business premises. The petitioner argued that the seizure was illegal under the Foreign Exchange Management Act, 1999 (FEMA Act) as it permits seizure only of foreign exchange, not gold or Indian currency. Despite no show cause notice issued for over four years, the items were not returned, leading to the court intervention under Article 226 of the Constitution.

The court noted that the ED had seized the items without any adjudication proceedings pending under the FEMA Act. The ED admitted that the seized items were not subject to any such proceedings. The Income Tax Department had issued a notice requisitioning the gold bars, but the legal basis for detention was unclear. The IT Department received the seized items after several years but did not provide justification for their continued detention.

The court highlighted the lack of legal justification for the detention of the gold and cash by both the ED and IT Department. Despite the issuance of a warrant by the IT Department, no explanation or orders were presented to justify the detention. The ED admitted that there was no basis for the seizure of gold, and the IT Department failed to show the legal basis for detaining the items.

Considering the absence of valid explanations from the respondents and the legal provisions governing seizure and detention, the court allowed the writ petition. A direction was issued to the IT Department to release the seized gold and Indian currency within eight weeks, quashing the warrant issued by the IT Department. The petition was disposed of accordingly, emphasizing the need for compliance with legal provisions and the issuance of show cause notices in such cases.

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