Section 20(3) empowers blocking directions to protect disputed funds without prior notice or enquiry.

Section 20(3) of the Foreign Exchange Regulation Act, 1947 was construed distributively to cover bankers as well as authorised dealers and other persons within the provision, enabling the Reserve Bank to issue directions securing compliance with the Act. On that construction, a direction preventing withdrawals from accounts holding monies subject to pending adjudication and confiscation proceedings was within power. Prior notice or an antecedent enquiry was not required because such procedure would defeat the object of securing the amounts, and the direction disclosed consideration of the relevant circumstances, supported by independent application of mind. The blocking direction was therefore valid and the challenge failed.

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Issues: Whether section 20(3) of the Foreign Exchange Regulation Act, 1947 empowered the Reserve Bank to direct the bank not to permit withdrawals from the petitioner's accounts, and whether such direction required prior notice, a prior enquiry, or could be challenged on the ground of want of independent application of mind.

Analysis: Section 20(3) was construed distributively so as to apply to bankers as well as authorised dealers and other persons covered by the provision. On that construction, the Reserve Bank could issue directions to secure compliance with the Act, including directions protecting monies that were the subject of pending adjudication and confiscation proceedings. The provision was held not to require prior notice or an antecedent enquiry, since such a procedure would frustrate the very object of securing the amounts. The impugned direction itself showed consideration of the circumstances, and the materials in the counter-affidavit disclosed an independent application of mind.

Conclusion: The impugned blocking direction was within the scope of section 20(3) and was valid. The challenge failed.

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