1995 (7) TMI 184 - HC - Central Excise

Validity of Summons Upheld, Petitioner Must Comply with Foreign Exchange Regulation Act

The court upheld the validity of the summons issued under Section 40 of the Foreign Exchange Regulation Act, 1973, dismissing the petitioner's challenge. ... Power to summon persons to give evidence and produce documents - Requirement to specify documents in a summons - Application of mind in exercise of statutory power - Nexus between documents called for and object of investigation - Proceedings deemed to be judicial proceedings (Sections 193 and 228 IPC) - Protection under Article 21 of the Constitution and Section 24, Indian Evidence ActPower to summon persons to give evidence and produce documents - Requirement to specify documents in a summons - Validity of a summons issued under Section 40(1) FERA which does not specify the detailed nature of the investigation or name the person who is the subject of the investigation - HELD THAT: - The court held that Section 40(1) empowers a gazetted Enforcement Officer to summon any person whose attendance is considered necessary to give evidence or produce documents 'during the course of any investigation or proceeding under this Act.' It is not mandatory under Section 40(1) that the summons disclose the detailed nature of the investigation or identify the person who is the subject of the investigation. Practical considerations - including the risk of tipping off persons under investigation and frustrating the enquiry - justify non-disclosure of those particulars in the summons. Where the summons itself specifies particular documents to be produced and those documents relate to the person summoned, absence of further detail about the investigation does not vitiate the summons. The court applied these principles to the impugned summons calling for the petitioner's passport, bank passbooks and property details and held that there was no vagueness in the documents called for and therefore the summons was not invalid for failure to state the nature of the investigation or the person under inquiry (see paras. 6, 8, 11, 17). [Paras 6, 8, 11, 17]Summons not invalid merely because it does not specify the detailed nature of the investigation or the third person under investigation; specifying documents relating to the summoned person suffices.Application of mind in exercise of statutory power - Whether the use of the phrase 'and/or' without striking out demonstrates lack of application of mind by the Enforcement Officer in issuing the summons - HELD THAT: - The court rejected the contention that leaving the phrase 'and/or' intact showed absence of consideration. The summons expressly states that the Enforcement Officer 'considered the attendance' of the petitioner necessary to give evidence and/or produce documents, which the court took as indicia of application of mind. The court observed that at the preliminary stage of inquiry it may not be possible or appropriate to limit a summons to a single restricted purpose; attendance may be needed both for production of documents and, if necessary, for recording of evidence. In these circumstances the non-striking of either conjunctive term did not demonstrate non-application of mind (see paras. 2, 11, 12). [Paras 11, 12]Non-striking of 'and/or' does not establish lack of application of mind; the summons indicates the officer considered the petitioner's attendance necessary.Nexus between documents called for and object of investigation - Whether the documents specified in the schedule to the summons lacked nexus with the object of investigation so as to render the summons invalid - HELD THAT: - The court held that the documents called for (passport, bank passbooks relating to accounts in India and abroad, and property details) were documents pertaining to the petitioner himself and therefore could legitimately be required in the course of an inquiry into possible transactions under the FERA Act. It is not necessary at the stage of a preliminary enquiry for the authority to have conclusively determined involvement; if suspicion exists as to the petitioner's involvement, documents relating to him may be summoned. The court observed that where documents relate only to the summoned person, there is an adequate nexus and the summons cannot be said to be without connection to the investigation (see paras. 5, 11, 13). [Paras 5, 11, 13]Documents called for related to the petitioner and bore sufficient nexus to the investigation; the summons was not invalid for want of nexus.Proceedings deemed to be judicial proceedings (Sections 193 and 228 IPC) - Protection under Article 21 of the Constitution and Section 24, Indian Evidence Act - Whether the petitioner (not being an accused) could invoke Article 21 and Section 24 of the Evidence Act to challenge the summons under Section 40(1) FERA - HELD THAT: - The court noted that Section 40(4) of the FERA Act expressly provides that such investigations or proceedings are to be deemed judicial proceedings for the purposes of Sections 193 and 228 IPC. However, issuance of a summons under Section 40(1) to a person for attendance to give evidence or produce documents does not convert that person into an 'accused' entitled to the protections reserved for accused persons. The court held that the petitioner could not claim the protections under Article 21 or Section 24 of the Evidence Act merely because a summons was issued; at the stage of a preliminary enquiry the person summoned is required to assist the investigation and avoidance to appear would only create suspicion. Accordingly, Article 21 and Section 24 did not render the summons invalid in the present context (see paras. 6, 13, 18). [Paras 6, 13, 18]A person summoned under Section 40(1) is not necessarily an accused and cannot invalidate the summons by invoking Article 21 or Section 24; attendance to assist the investigation is required.Final Conclusion: The writ petition challenging the summons issued under Section 40(1) of the FERA Act is without merit; the summons was validly issued, the officer had applied his mind, the documents called for bore sufficient nexus to the investigation, and the petitioner, not being an accused, could not invoke Article 21 or Section 24 to invalidate the summons. The petition is dismissed. Issues Involved:1. Validity of the summons issued u/s 40 of the Foreign Exchange Regulation Act (FERA), 1973.2. Requirement to specify the nature of investigation in the summons.3. Application of mind by the respondent in issuing the summons.4. Nexus between the documents demanded and the object of the investigation.Summary:Issue 1: Validity of the Summons Issued u/s 40 of FERA, 1973The petitioner challenged the summons issued u/s 40 of the Foreign Exchange Regulation Act, 1973, claiming it was illegal and did not comply with mandatory requirements. The court examined Section 40, which empowers any Gazetted Officer of Enforcement to summon any person whose attendance is considered necessary either to give evidence or to produce a document during the course of any investigation or proceeding under the Act. The court found that the respondent had the authority to issue such summons and that the petitioner was bound to attend.Issue 2: Requirement to Specify the Nature of Investigation in the SummonsThe petitioner argued that the summons should specify the nature of the investigation and the proceedings under the Act. The court held that it is not always feasible for the authority to reveal the nature of the investigation in the summons, as it could compromise the investigation. The summons indicated that the petitioner's attendance was necessary to give evidence and/or to produce documents, which the court found sufficient.Issue 3: Application of Mind by the Respondent in Issuing the SummonsThe petitioner contended that the summons was issued without proper application of mind, as it did not specify whether the petitioner's attendance was necessary to give evidence or to produce documents. The court observed that the summons clearly stated that the Enforcement Officer considered the attendance of the petitioner necessary, indicating the application of mind. The non-striking of the words 'and/or' did not invalidate the summons.Issue 4: Nexus Between the Documents Demanded and the Object of the InvestigationThe petitioner argued that the documents requested (passport, bank account passbooks, and property details) had no nexus with the investigation. The court found that the documents were related to the petitioner and could be relevant to the investigation under FERA. The court noted that the investigation might pertain to the petitioner or a third party connected to him, and the authorities were empowered to summon him for inquiry.Conclusion:The court dismissed the writ petition, holding that the summons issued u/s 40 of the FERA Act was valid and did not violate any legal requirements. The petitioner was required to comply with the summons and assist in the investigation.