Court orders return of seized currency under amended FERA Act, upholds show cause notice validity.

The High Court of Madras ruled in favor of the petitioner regarding the retention of seized currency under the amended Section 41 of the FERA Act, directing the respondents to return the currency within eight weeks. However, the court upheld the validity of the show cause notice issued by the Special Director, dismissing the petitioner's challenge and affirming the proper delegation of powers under Sections 3 and 4 of the FERA Act.

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Issues Involved:
1. Power to retain seized currency under Section 41 of the FERA Act.
2. Validity of the show cause notice issued on 4-8-1993 under Section 51 of the FERA Act.

Detailed Analysis:

1. Power to Retain Seized Currency under Section 41 of the FERA Act:

The petitioner challenged the retention of Indian Currency of Rs. 1,65,000/- seized by the Enforcement Directorate on 18-8-1992. The core of the argument was based on the amendment to Section 41 of the FERA Act, effective from 8-1-1993, which reduced the retention period from one year to six months unless proceedings were initiated within that period. The petitioner argued that since the show cause notice was issued on 4-8-1993, beyond the six-month period, the currency should be returned.

The respondents contended that the amended provision did not apply retrospectively and that they were entitled to retain the currency for one year as per the unamended Section 41. They argued that the right of seizure and retention is a substantive right and cannot be curtailed by a procedural amendment.

The court analyzed whether the amended provisions of Section 41 are prospective or retrospective. It was highlighted that procedural laws, including statutes of limitation, generally apply retrospectively unless they impair vested rights. The court cited various judgments, including Begam Sultan v. Sarvi Begam and Khondkar Md. Saleh v. Chandra Kumar, to support the principle that procedural amendments apply to ongoing matters unless explicitly stated otherwise.

The court concluded that the amendment to Section 41, reducing the retention period, is procedural. The respondents had a short period from 8-1-1993 to 17-2-1993 to act under the amended law but did not do so. The proviso to the amended Section 41 allows for an extension by the Director of Enforcement, which was not utilized by the respondents. Consequently, the court held that the retention of the currency beyond the six-month period was not justified.

Judgment:
A writ of mandamus was issued directing the respondents to return the seized currency of Rs. 1,65,000/- to the petitioner within eight weeks.

2. Validity of the Show Cause Notice Issued on 4-8-1993:

The petitioner challenged the jurisdiction of the Special Director to issue the show cause notice under Section 51 of the FERA Act, arguing that the delegation of powers to the Special Director was illegal and contrary to Sections 3 and 4 of the FERA Act.

The respondents countered that the Special Director was duly authorized by a specific notification dated 22-9-1989, published in the Gazette of India, under Section 4(1) read with Section 3(e) of the FERA Act. This notification empowered the Special Director to enforce the provisions of the Act and exercise adjudication powers under Section 50.

The court held that the appointment of the Special Director was valid under Section 4(1), which allows the Central Government to appoint any person as an officer of Enforcement. The court also invoked the de facto doctrine, which validates the acts of an officer who is clothed with the insignia of office and purports to exercise its functions, even if the appointment is later found to be flawed. This principle was supported by the Supreme Court decisions in Gokaraju Rangaraju v. State of A.P. and Pushpadevi M. Jatia v. Wadhavan.

Judgment:
The court rejected the petitioner's contention and upheld the validity of the show cause notice issued by the Special Director. Consequently, W.P. No. 1280 of 1994 was dismissed with no order as to costs.

Summary:
The High Court of Madras addressed two primary issues: the retention of seized currency under the amended Section 41 of the FERA Act and the validity of a show cause notice issued by the Special Director. The court ruled in favor of the petitioner regarding the return of the seized currency, citing the procedural nature of the amendment. However, it upheld the validity of the show cause notice, affirming the jurisdiction and proper delegation of powers to the Special Director.

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