TaxTMI 
TaxTMI 
2022 (5) TMI 89
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...., the Petitioner in W.P.(CRL.) 73/2022 (hereinafter collectively referred to as the "Detenus"), praying for quashing of detention orders, both dated 26.11.2021, bearing No. PD-PD-12001/17/2021-COFEPOSA and PD12001/18/2021- COFEPOSA, issued under Section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (hereinafter "COFEPOSA") against the Petitioners/Detenus No. 1 and 2 respectively; and for further directions that the detenus be set at liberty forthwith. As these Petitions raise common questions of law and are premised on similar facts, they are being disposed off by this common order. FACTS OF THE CASE: - 2. The relevant facts qua the detenus, as are necessary for the adjudication of the subject writ petitions are briefly encapsulated as follows: - i) The Income Tax Department conducted a search and seizure operation on 10.10.2021 at 23 premises allegedly belonging to the Detenu No. 1 and persons allegedly associated with him. Thereupon, a Statement (Annexure P-4) of the Detenu No.1 was recorded u/s 132(4) of the Income Tax Act, 1961, on the 11.10.2021, wherein the Detenu No. 1 admittedly stated that he had studied only till the VII....
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....DRI resumed the said documents for further investigations. v) On or about the 18/19.10.2021, the Detenus were arrested by officers of the DRI and produced before the Court of CMM (Duty Magistrate), Patiala House Courts through Virtual Conference at around 08:30 PM (as it was a holiday) and were remanded to 3 days Judicial Custody. vi) On 22.10.2021, Detenus were produced before the Learned Court of CMM, Patiala House Courts, New Delhi and remanded to 14 days judicial custody till the 04.11.2021. vii) The Detenus admittedly filed retraction applications on the 28.10.2021, before the learned CMM Court thereby, retracting their statements recorded on 18/19.10.2021 before the DRI. viii) The DRI then caused to be filed an application before the learned CMM, Patiala House Courts, New Delhi seeking permission to record statements of the Detenus u/s 108 of the Customs Act, 1962, which was allowed vide order dated 01.11.2021. ix) On 02.11.2021, another container No. PCIU8010617 (40") imported by M/s Viha International at Kolkata Port, with a declaration to contain HDMI cables, was subjected to examination by the officers of DRI, Kolkata wherein it was allegedly found that it contain....
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....e proceedings reveal that the role assigned therein to the Detenu No.1 pursuant to the investigation carried out is that: - (a) Detenu was the founding member/owner of three Hong Kong based supplier firms viz. M/s Trackon Logistics Limited, Yottabyte International Co. Limited and M/s SFS Import & Export Co. Limited, and from these supplier firms, goods were imported in the name of shell entities/dummy firms owned by the Detenu No.1 and that he used to decide the prices at which such goods are to be invoiced and declared before the Indian Customs. The value of the imported goods declared by these shell entities before Customs was allegedly roughly 5% (1/20th) of the actual purchase value of these goods; (b) That the Detenu No.1 was the mastermind behind perpetrating the entire modus operandi of mis-declaration /undervaluation of imports through several dummy firms owned/controlled by him and differential remittances for the imported goods were remitted through hawala channels in order to evade custom duties, thereby causing huge loss to public exchequer. It is alleged that, during the period of 2017-2021, the Detenu No.1 had imported goods amounting to an estimated value of Rs.2....
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....ority has rendered of the impugned detention order invalid. Counsel also submitted that the supply of illegible copies of RUDs to the Detenus, has further severely prejudiced the detenus from filing an effective representation before the Detaining Authority as well as the Advisory Board. 6. It is submitted in this behalf by the Ld. Senior Counsel that, the proposal for preventive detention was received by the Detaining Authority from the Advisory Board only on 24.11.2021 and with surprising alacrity less than 2 days thereafter on the 26.11.2021, the impugned detention order was passed after considering and relying upon 977 pages of RUDs including the admittedly illegible documents. It is further submitted that it would be humanly impossible for the Detaining Authority to sift through such voluminous documents diligently in the said short span of a day and half; and for the Detaining Authority to arrive at the subjective satisfaction; and as a result the impugned Detention Order is evidently passed in a rushed, casual and cavalier manner, which is in gross violation of the Constitutional right guaranteed under Article 22(5) of the Constitution of India and the same is consequently ....
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....tatement dated 22.10.2021; xviii. Summons issued to persons who have allegedly not joined investigation (mentioned in Ground [xxvi] of the impugned detention order)" At this stage it is observed that in the RUDs, that were supplied, the following documents were found to be completely illegible: - Sr. No. of list of RUDs Description Page No. 3. Statement of Zakir before I/Tax Deptt 61 to 68, 75 to 89, 93 to 100 & 105 to 110 3. Statement of Priyanka Razdan before I/Tax Deptt 135, 137 to 139, 141 to 150, 155, 156, 166, 167, 170 to 172 9. Statement of Sanjeev Kumar u/s 108 Customs Act 217, 220 & 223 15. Panchnama dated 18.10.2021 drawn at the office of Custom Broker M/s Sai Dutta Clearing Agency Pvt. Ltd 244 & 245 18. Letter dated 19.10.2021 from I/Tax pertaining to forensic image of PR iphone and Zakir Khan iphone. 248 19. Panchnama dated 21.10.2021 in respect of goods stuffed in Container consigned in the name of M/s R.K. Overseas imported at Kolkata. 251 & 252 24. Panchnama dated 22.10.2021 at the office premises of Custom Broker M/s Jyoti Enterprises 270 25. Statement under 108 of the Customs Act dated 22.10.2021 - Ravichandra Mishra, Custom Br....
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....ive of the fundamental rights of the detenus as enshrined and guaranteed under Article(s) 14, 21 & 22 of the Constitution. 9. The learned Senior Counsel appearing on behalf of the Detenus submits that, the Detaining Authority has merely acted as a rubber stamp by issuing the Detention Order, based solely upon the specious allegations made by the Sponsoring Authority. There was no subjective satisfaction and considered formulation of grounds on the part of the Detaining Authority, which could warrant the passing of the detention order under Section 3(1) of the COFEPOSA. The Detaining Authority has relied upon certain documents, copies whereof were not made a part of the RUDS, as for example, in Para xiv of Grounds of Detention, wherein the statement of one Ravichandra Mishra before the Income Tax Department has been extensively relied upon by the Detaining Authority, however the same statement has not been made a part of the RUDs. It is therefore submitted that, owing to glaring instances of non-application of mind by the Detaining Authority, the same have entirely and unequivocally vitiated the said order; since they have rendered nugatory and illusory the fundamental right of the....
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....ewal v. UOI, reported as 1990 (Supp) SCC 59. x. Dharmista Bhagat v. State, reported as 1989 Supp (2) SCC 155. xi. Bhupinder Singh v. UOI, reported as (1987) 2 SCC 234. xii. A. Geetha vs. State of T.N., reported as (2006) 7 SCC 603. ARGUMENTS ON BEHALF OF THE RESPONDENT 12. Per Contra, Mr. Chetan Sharma, the learned Additional Solicitor General of India appearing on behalf of the Respondents would submit that the impugned detention orders dated 26.11.2021 passed by the Competent Authority under Section 3 (1) of the COFEPOSA are legal, valid and constitutional and the same have been passed by the Competent Authority with due application of mind and after arriving at the requisite subjective satisfaction; based on the sufficient material facts and circumstances of the case. It is further submitted that the subjective satisfaction of the Detaining Authority is elaborated in the grounds of detention communicated to the Detenus vide letter dated 26.11.2021 (Annexure P-3). Therefore, sensing the magnitude of offences being committed by the detenus with utter disregard to the law of land, the Detaining Authority was convinced and issued the Detention Order after carefully and exhau....
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....es the detaining authority consider the proposal along with all the relevant materials and arrive at the subjective satisfaction that preventive detention of the detenu(s) is necessary. The Detention Order is then issued along with the detailed grounds of detention. It is further submitted that, every document / material which was relied upon for the purpose of arriving at the subjective satisfaction in the issuance of the detention order, has been supplied to the Detenus under proper acknowledgement. It is further submitted that therefore, the subjective satisfaction of the detaining authority cannot be argued to stand vitiated. 17. It is submitted that; the present Detenus are involved in duty evasion to the tune of more than Rs. 500 crores. It is emphasized that the present case is not a "run of the mill" case but an instance of an organized syndicate of smuggling and evasion of duties and prohibitions wherein the mastermind, along with his associates have a remarkable proclivity towards indulging in gross misdeclaration with impunity and absolute disregard for law. It is further submitted that the booking of previous offences against the Detenus, the plethora of evidence avail....
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....eme Court in Gautam Jain v. Union of India reported as (2017) 3 SCC 133. 21. It is lastly submitted that, the case laws on which the Detenus have placed reliance in support of their case are distinguishable from the present case as in those cases, the alleged illegible documents were vital documents and had a bearing on the mind of the detaining authority. However, in the present case the alleged illegible documents are not vital and material or have a bearing on the formulation of the grounds of detention. The alleged illegible documents are the additional and supporting documents in the form of annexures of the statements/panchnamas wherein all such documents were duly explained. Further, such documents are fully comprehensible and understandable when seen with the statements/panchnamas to which they are made part of as acknowledged by the Detenus in their own handwriting. This amounts to due communication of the grounds of detention, in terms of the requirements of Article 22(5) of the Constitution of India. 22. In support of his arguments, Mr. Chetan Sharma, learned ASG appearing on behalf of the respondents relied upon the following decisions: - i. Naresh Kumar Goyal v. Un....
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....nce to public order owing to a crime that was reported over seven months prior to the detention order has no basis in fact. The apprehension of an adverse impact to public order is a mere surmise of the detaining authority, especially when there have been no reports of unrest since the detenu was released on bail on 8 January 2021 and detained with effect from 26 June 2021. The nature of the allegations against the detenu are grave. However, the personal liberty of an accused cannot be sacrificed on the altar of preventive detention merely because a person is implicated in a criminal proceeding. The powers of preventive detention are exceptional and even draconian. Tracing their origin to the colonial era, they have been continued with strict constitutional safeguards against abuse. Article 22 of the Constitution was specifically inserted and extensively debated in the Constituent Assembly to ensure that the exceptional powers of preventive detention do not devolve into a draconian and arbitrary exercise of state authority. The case at hand is a clear example of nonapplication of mind to material circumstances having a bearing on the subjective satisfaction of the detaining authori....
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....rity, so as to enable the detenu to make an effective representation to the Advisory Board, as well as to the Detaining Authority. Therefore, the non-supply of legible copies of all relevant documents inspite of a request and representation made by the detenu for the supply of the same, renders the order of detention illegal and bad; and vitiates the subjective satisfaction arrived at by the Detaining Authority. 48. In our considered view, therefore, the supply of the following documents namely, a) Passport, b) Identity Cards of codetenu's, c) WhatsApp chats, d) bill of entry, e) invoice, f) the statement of Mr. Rohit Sharma who is alleged to have defaced the gold bars imported illegally etc. was critical, in order to enable the detenu to make a comprehensive, holistic and effective representation against the impugned detention order, both before the Advisory Board, as well as before the Detaining Authority. 49. In the present case, the denial by the official respondent to supply legible copies of the relevant documents to the detenu, despite his express request to do so, tantamount to denial of his constitutional right, thereby vitiating the detention order, f....
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.... relevant documents which had been considered in forming the subjective satisfaction by the detaining authority before making the order of detention and referred to in the list of documents accompanying the grounds of detention in order to enable the detenu to make an effective representation to the Advisory Board as well as to the detaining authority. Therefore, the non-supply of legible copy of this vital document i.e. panchnama dated 12-2-1988 in spite of the request made by the detenu to supply the same renders the order of detention illegal and bad. This Court in Mehrunissa v. State of Maharashtra [(1981) 2 SCC 709 : 1981 SCC (Cri) 592 : AIR 1981 SC 1861] has observed that: (SCC p. 710) "The detenu was entitled to be supplied with copies of all material documents instead of having to rely upon his memory in regard to the contents of the documents. The failure of the detaining authority to supply copies of such documents vitiated the detention, as has been held by this Court in the two cases cited by counsel. The detenu is, therefore, entitled to be released. He is accordingly directed to be released forthwith." 51. To the similar effect are the observations recorded in the....
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.... the footing that he knew English, the matter was disposed of. We must make it clear that the law as laid down by this Court clearly indicates that in the matter of preventive detention, the test is not one of prejudice but one of strict compliance with the provisions of the Act and when there is a failure to comply with those requirements it becomes difficult to sustain the order. (See AIR 1975 SC 1513, [1975] 2 SCR 832 , AIR 1975 SC 245 )." 32. Further, we are constrained to observe that in the grounds of detention, strong reliance has been placed upon the statements of the detenus and co-detenus, recorded under the provisions of Customs Act, 1962. A plain reading of the said grounds of detention clearly reflects the extensive reliance placed upon the said statements by the Detaining Authority, for arriving at its subjective satisfaction. In this behalf, it is observed that the impugned orders of detention only a passing reference has been made to the circumstance that the Department of Revenue had issued rebuttals to the subject retractions of the Detenus and that too only on 24.11.2021, merely two days before the passing of the impugned orders. For abundant clarity the relevan....
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....ng gap between the recording of the statement and the retraction application makes it clear that the retraction application filed by you is an afterthought and based on legal tutoring. It was further stated by DRI that the applicant i.e. you was medically examined at Ram Manohar Lohia Hospital Delhi and thereafter produced before the Ld. Duty Magistrate. As per the reply of the DRI filed before the Ld. CMM Patiala House, New Delhi no injury marks (fresh or otherwise) or bruises was reported by the duty doctors during the medical examination." This above extracted grounds highlight the considerable gap of time between the retraction of their statements by the detenus and co-detenus, and the rebuttal thereof by the DRI. This belated rebuttal on the part of the official respondents was relevant and germane and therefore, merited consideration by the Detaining Authority, particularly when extensive reliance was evidently placed upon those statements. The Detaining Authority would also have been well-advised to consider the aspect of admissibility of the statements, which stood retracted; and were only belatedly rebutted by the Sponsoring Authority, two days before the passing of the i....
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....the retraction, both constituting a composite relevant fact both should have been placed. If any one of the two documents alone is placed, without the other, it would affect the subjective satisfaction of the detaining authority. What was the necessity of reproducing the details of the confessional statement of another co-accused in the present case? If the sponsoring authority would not have placed this then possibly no legal grievance could have been made by the detenu. But once the sponsoring authority having chosen to place the confessional statement, then it was incumbent on it to place the retraction also made by them. In our considered opinion, its non-placement affects the subjective satisfaction of the detaining authority. This Court has time and again laid down that the sponsoring authority should place all the relevant documents before the detaining authority. It should not withhold any such document based on its own opinion. All documents, which are relevant, which have bearing on the issue, which are likely to affect the mind of the detaining authority should be placed before him. Of course a document which has no link with the issue cannot be construed as relevant." ....
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....iew that on account of the non-supply of the documents mentioned hereinbefore, the detenu was prevented from making an effective representation against his detention. 34. In the said circumstances, we do not see any reason to interfere with the judgment and order of the High Court and the appeal is accordingly dismissed. 35. In parting, we may reiterate what we have indicated hereinbefore, that since the personal liberty and individual freedom of a citizen is curtailed by an order of preventive detention, the detaining authorities must apply their minds carefully and exercise great caution in passing such an order upon being fully satisfied from materials which are both for and against the detenu that such an order is required to be passed in the interest of the State and for the public good." 36. As regards, the emphasis placed by the respondents on the decision of the Hon'ble Supreme Court in Madan Lal Anand vs. UOI, reported as (1990) 1 SCC 81, to the effect that it has been held therein that only copies of documents, on which the impugned detention orders are primarily based should be supplied to the detenus and not any and every document; we only observe that it was also ....
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....tiates the subjective satisfaction arrived at by the detaining authority. Resultantly, in our considered view, the impugned detention order stands invalidated. 41. It therefore becomes incumbent upon us to determine the alternative issue framed hereinabove. Insofar as the second issue, as to whether the argument premised on S.5A of the COFEPOSA Act by the official Respondents has the effect of saving the detention order; in the facts and circumstances of the present case is concerned; we have accorded our careful consideration to the rival submissions made before us in this regard, in the backdrop of the original records and material placed before us in the present proceedings. 42. The issues as canvassed before this Court on behalf of the Detenus is not of mere non supply of legible copies of illegible documents despite demand. It is the contention of the Ld. Senior Advocate on behalf of the Detenus that had the Detaining Authority himself considered the documents for arriving at subjective satisfaction, rather than adopting any draft grounds of detention, the Detaining Authority would have been alive to the fact that several RUDs placed before it were wholly illegible. The spec....
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....inter alia, in Para 11 of the Grounds of Detention has clearly and categorically averred as under: "11. While passing the Detention Order under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act; 1974, I have referred to and relief upon the documents mentioned in the enclosed list, which are also being served to you along with the grounds of detention" The paucity of time for the Detaining Authority to himself consider the voluminous documents to form its subjective satisfaction, and thereafter to formulate lengthy grounds of detention, rather than merely approving draft grounds of detention, also tilts the scale in favour of the Detenus. 46. It is pertinent at this juncture to observe that, the official Respondents have pleaded the ground of severability under Section 5A of the COFEPOSA only by way of oral submissions before this Court, the same is not reflected in the counter affidavit, barring a passing reference to Gautam Jain (Supra) in the written submissions filed on behalf of the official Respondents. The omission is found to be conspicuous by its absence in the affidavits filed on behalf of the official Respondents. 47. T....
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....ber that Section 3 of the Act provides for power to make detention order. Sub-Section (1) of Section 3 of the Act speaks of the authorities who are competent to make detention orders. In the case of Central Government, an officer not below the rank of a Joint Secretary and in the case of State Government, not below the rank of a Secretary to that Government, who have been specially empowered for the purposes of Section 3, can only make detention orders. This clearly depicts the legislative intent that the task of passing a detention order can only be entrusted to high/senior functionaries of the State. Only such functionaries who are specially empowered in this behalf are entitled to pass the detention order if they are satisfied that the detention of any person is required with a view to preventing him from acting in any manner prejudicial to the conservation or augmentation of foreign exchange or with a view to preventing him from smuggling of goods, etc. Therefore, the satisfaction envisaged in Section 3 has necessarily to be of the officer specially empowered in that behalf and of nobody else. We do not mean to stretch this proposition to the extent that only the specially empo....