TaxTMI 
TaxTMI 
1995 (7) TMI 184
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.... he is its Director. The impugned summons is illegal and does not comply the mandatory requirement of Section 40 of the FERA Act. The summons have been issued to him as he happened to be the sister's son of Mrs. Sasikala, who is a close friend of Chief Minister of Tamil Nadu. The political overtones of the issuance of summons to the petitioner is all too obvious. Without a shred of evidence of material the petitioner is put to serious prejudice and his personal liberty is in jeopardy. The summons must delineate however skeletal it may be of what the investigation pertains to or the proceedings under the Act, as the same is a condition precedent and sine qua non for a valid summons. There is nothing in the summons to indicate in respect of what investigation or proceedings under the Act that the petitioner is sought to be summoned to appear before the respondent and answer questions or produce the documents and evidence. The proceedings and the subject matter of investigation is absolutely essential, to be furnished to the person summoned to appear. Unless the person concerned is informed of what he had been summoned to answer or the proceedings initiated are taken against him he ca....
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....d the nature of investigation pending before him in the summons. The absence of any details makes the summons illegal. (ii) There is no application of mind of the respondent in issuing the summons as the printed form has been filled up and sent to the petitioner. The officer has to consider as to the attendance of the petitioner is necessary to give evidence or to produce the documents specified in the schedule. The [clause] `necessary to give evi- dence and/or to produce the documents' has been left as it is and hence it is not clear as to whether the attendance of the petitioner is necessary to give evidence or to produce the documents. (iii) The respondent in the summons has directed the petitioner to produce the documents mentioned in the schedule. When the documents are directed to be produced, it is for the respondent to state the nexus between the documents and the object of the enquiry. When there is no details, it has to be presumed that there is no nexus between the documents and the object of investigation. When there is no nexus, the authorities cannot compel the petitioner to produce those documents. 4. The learned Senior Counsel referred to thr....
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....atements and produce such documents as may be required. Provided that the exemption under section 132 of the Code of Civil Procedure 1908 (5 of 1908) shall be applicable to any requisition for attendance under this section. (4) Every such investigation or proceedings as aforesaid shall be deemed to be a judicial proceeding within the meaning of Section 193 and 228 of the Indian Panel Code (40 of 1860)." Section 40(1) referred to above makes it clear that any gazetted officer of Enforcement shall have the power to summon any person whose attendance be considers necessary either to give evidence or to produce a document during the course of any investigation or proceeding under this Act. Sub-section (3) clearly makes the persons who are issued with the summons are bound to attend either in person or by authorised agent, as such officer may direct. Sub-section (4) envisaged that every such investigation or proceeding under the Act shall be deemed to be a judicial proceeding within the meaning of Sections 193 and 228 I.P.C. 7. The learned Senior Counsel for the petitioner did not challenge the power of the respondent to issue such summons. When the summons has bee....
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....thorities under the Act has been empowered to call for any information from any person relating to investigation or a proceeding under the Act. It may be pertinent to note that these sections do not refer to `accused' it only refers `any person'. 10. When once the power is not challenged, it has to be seen as to whe- ther the power has been exercised by the respondent in an arbitrary manner? 11. According to the points raised by the learned senior counsel for the petitioner, the first point is that the respondent should have mentioned in the notice the nature of investigation and whether the investigation relates to the petitioner or somebody else. When once the authority is empowered to summon any person, whose attendance he considers necessary either to give evidence or to produce a document during the course of investigation or proceeding under this Act, it is open to the authorities to summon any one of them to give evidence or to produce document or for both during the course of investigation or proceeding under the Act. Practically it should be seen as to whether it is possible for the respondent to reveal the nature of the investigation or the person concerne....
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....ecessary. When once these words are specified in the summons, that is an indication for the application of the mind of the authority issuing summons that he has satisfied that the attendance of the petitioner is necessary for the purpose mentioned in the summons. The non-striking of the words either `and' or `or' [does] not go to show that the respondent has not applied his mind before ever the summons were issued. Whenever the attendance is required to give evidence and to produce documents, it is clear that the concerned person is required for both the purposes. Some times on production of the documents the authority may satisfy without recording any evidence that the petitioner's involvement is not there, then the petitioner may be free. In case if on the verification of the records he found that the petitioner's involvement is there, in that case, naturally his statement has to be recorded. At this stage, it may not be possible for the concerned authorities to issue summons for a restricted purpose. It is known that the summons are being issued only to hold the preliminary enquiry and hence it would be too premature for the petitioner to contend that the authority should apply ....
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....ourt of law, it was incumbent upon the officer concerned to prove by giving satisfactory evidence of objective facts that the condition precedent had been fulfilled. The officer concerned has to show that he had reason to believe that documents would be, in his opinion, be relevant to or useful for proceedings either pending or contemplated under the Foreign Exchange Regulation Act were secreted or were likely to be secreted. In the present case, the jurisdiction of the officer has not been questioned. Once the power of the authority is not questioned, it is not open to this Court to call for the authority to satisfy this court about his action. 15. The next judgment reported in Gopikishan v. Asst. Collector, Customs, Raipur (AIR 1967 SC 1298). This case also relates to the power of search. In this case, the Supreme Court has held as follows : "The second contention is that under S. 105 of the Customs Act, hereinafter called the Act, the Assistant Collector shall have reason to believe that some goods are secreted, before he can authorise any officer of Customs to search for them or the relevant documents, but the authorization given by the Assistant Collector to the Custo....
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.... out, in the Supreme Court Judgment, the authority has to reveal the reason only in case if his section is challenged in a collateral proceeding. In the case in hand, the action of the respondent is not challenged in collateral proceeding and as such this court need not ask the respondent to satisfy this court with regard to his action. Further Section 40(1) of FERA does not contemplate that the Enforcement should reveal the nature of investigation and purpose of requirement of the documents. 17. So far as in the case reported in Barium Chemicals v. A.J. Rana [1974 L.W. (Crl.) 91]. (AIR 1972 SC 591) the summons has been set aside on the ground of vagueness in respect of the documents called for. The wordings of Section 19(2) of the Foreign Exchange Regulation Act, 1947 corresponding to Section 33 of the Foreign Exchange Regulation Act, 1973. The wordings of the Section is totally different from the wordings of Section 40 of the Foreign Exchange Regulation Act, 1973. In interpreting the wordings therein, the Supreme Court has held as follows :- "Before proceeding further, it may be mentioned that the Act was enacted, as according to is preamble, "it is expedient in the ec....
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....Bank or any person specified in the order such information, book or other document. It would, therefore, follow that the power under the above provision can be exercised either by the Central Government or by the Reserve Bank. The occasion for the exercise of this power would arise when either of them, viz., the Central Government or the Reserve Bank, considers it necessary or expedient for the purpose of the Act to obtain and examine any information, book or document. It is only when the said requirement is satisfied that the Central Government or the Reserve Bank, as the case may be, can proceed in the manner indicated above in Clause 2(a) or 2(b). WE ARE IN THE PRESENT CASE NOT CONCERNED WITH THE RESERVE BANK NOR WITH THE SITUATION HEREIN IT WAS CONSIDERED EXPEDIENT TO OBTAIN AND EXAMINE ANY INFORMATION, BOOK OR OTHER DOCUMENT. The impugned order purports to have been made by the Central Government because, according to it, the Central Government considered it necessary for the purpose of the Act to obtain and examine the papers and documents specified in the schedule attached to the order. The question which arises for determination is whether the authority concerned appl....
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....it is essential that such information, book or other document should be specified in the order. This is apparent from the concluding part of the said sub-section wherein there is reference to `such information, book or other document'. The word `such' points to the necessity of specifying the information, book or other document in the order. It is, no doubt, true that the order can relate to a large number of books, documents or informations it is all the same imperative that the same should be particularised in the order. According to sub-section (1A) of Section 23 of the Act, if any person contravenes any of the provisions of this Act of any rule, direction or order made thereunder, for the contravention of which no penalty is expressly provided, he shall upon conviction by a Court, be punishable with imprisonment for a term which may extend to two years, or with fine, or with both. The fact that penal consequences follow from non-compliance with an order made under sub-section (2) of Section 19 also highlights the importance of specifying the information, book or other document in the order. The order under the above provisions of law is addressed to the person who is either ....