State. by Nilratan Sircar, Enforcement v. Laf91Hmi Narain Ram Niwas

Raghubar Dayal, J. applicable, apply to searches under this sub-sec-tion:

Provided that such warrant shall not be issued to any police officer below the rank of sub-inspec:or. Explanation.-In this sub-section, 'place' includes a house, building, tent. vehicle, vessel or aircraft. * • • • • 19-A. Where in pursuance of an order made under sub-section (2) of section 19 or of a search war-rant issued under sub-section (3) of the said section, any book or other document is furnished or seized, and the Director of Enforcement has reasons to believe that the said document would be evidence of the contravention of any of the provisions of this Act or of any rule, direction or order made thereunder, and that it would be necessary to retain the document in his custody, he may so retain the said document for a period not exceeding four months or if, before the ex-piry of the said period of four nfonths, any pro-ceedings under section 23 : - (a) have been commenced before him, until the dis-posal of those proceedings, including, the pro-ceedings before the Appellate Board, if any, or (b) have been commenced before a Court, until the dbcument has been filed in that Court."

Chapter VII of the Code provides for processes to com-pel the production of documents etc. Section 94 empowers the Court to issue a summons to a person in pbssession of the document or whose production is considered necessary or desirable for the purpose of any investigation, inquiry, trial or other prbceeding under the Code to produce the same before it. In certain circumstances mentioned in s. 96 it may issue a search warrant, for conducling the search for such documents or articles as are mentioned in s. 94. The combined effect of the two sections is that the articles seized in execution of the search warrant have to be produced before the Magistrate and the Magistrate thereafter passes suitable orders abbut the custody or return of those documents. Form 8, Schedule V, of the Code gives the form of the search warrant and contains a direction that the articles seized cbe produced forth-with before the Court. Sections 98 and 99-A deal with search warrants in special circumstances and ss. IO 1 to 103 come under the general provisions relating to searches. s"''' b•t Nilratan

The appellant's main contentions are: Sircar, Enforcemen.f Officer I. The provisions of s. 19-A limit the period for retain-L k h v: "arai·· mg . t hd e ocuments seize "d" m execution . o f a searc h warran t"''""" Ram Niwas issued under s. 19 to 4 months by the Director of Enforce- - ment but does not limit the power of the Court issuing the Raglrubar Dayal, 1• search warrant to pass any orders for the retention of the seized documents or with respect to the disposal of those documents.

¶2In the absence of any prescribed procedure for the issue of a search warrant under s. 19, the provisions of ss. 96, 98 and Form 8 of Schedule V of the Code would be applica-ble to the search warrants issued under s. 19.

¶3lihe Court has inherent power to pass proper orders with respect to the retention of the documents seized for the purposes of investigation and proceedings following it.

The respondent contends:

I. Section 19 and 19-A are special provisions which provide for special procedure for investigation of the several offences created by the statute and were enacted in order to remove certain difficulties in investigation which led to the keeping of documents of citizens unduly long and thus caus-ing them inconvenience and harassment, and to relieve the Magistrate of his repeatedly dealing with police reports for permission to retain the documents and that therefore when s. 19-A fixes the maximum duration for the retention of the documents by the Director of Enforcement at 4 months and thus prohibits further detention except in certain circum-stances by the officer concerned, the Magistrate cannot allow the Director of Enforcement to keep the documents· beyond four months.

¶2There is no provision in the Act empowering the Court to extend the period for the detention of documents and any such power in the Magistrate will defeat the very object of the Act.

¶3The provisions of the Code relating to searches under the Code apply so far as the same be applicable to searches under sub-s. (3) of s. 19 of the Act and therefore the provision of the Code giving jurisdiction to the Magis-trate over the property seized in execution of a· search warrant issued by him will not fully apply to property seized in exe-cution of the search warrant issued under sub-s. (3) of s. 19.

The first question to determine is whether Magistrate issuing the search warrant has control over the disposal of the articles seized in execution of the warrant. The provisions of the Code relating to searches apply to search warrants issued under sub-s. (3) 'of s. 19 but only in so far as they bi.!

I964 applicable. The provisions dealing with the circumstances State, by Nilratan in which, and the authorities by which, search warrants can Sircar, Enforament be issued cannot apply, in view of the specific provision for

0~'." the issue of a search warrant under the Act in sub-s. (3) of Lakshmi Narain s. 19. Sect10ns 96, 98 and Form 8 of Schedule V, do not

Ram NiWM therefore operate in connection with searches under sub-s. 19.

- It is therefore the provisions which deal with what is done Raghubar Dayal, J. after the issue of a search warrant which have been made ap-

plicable to searches under the Act and such provisions there-fore would be the provisions relating to the mode of conduct-ing searches. The object of the aforesaid provision in sub-s. (3) of s. 19 is to provide how the searches are to be conducted as it deals with the issue of search warrant in sub-s. (3) of s. 19. It is only with respect to the intervening stage, that is the stage of actual search that no specific provision is made in the Act. We are therefore of opinion that the provisions relating to searches under the Code which apply to searches under sub-s. (3) of s. 19 are the provisions relating to the conduct of searches and that these provisions are ss. IOI, 102 and 103 of the Code. What is to be done with the articles seized does not strictly come within the expression 'searches'. It is dealt with in s. 19-A. It is therefore not correct for the appellant to say that the Magistrate can exercise his powers under the Code . in connection with property seized under sub-s. (3) of s. 19 of the Act.

It follows that any further reference to the Magistrate, as made by the Enforcement Officer in this case, for permis-sion to retain the documents seized was not necessary. The Enforcement Officer has a right under s. 19-A to retain the articles seized in accordance with its provision. What course is to be adopted by the person aggrieved when the Enforce-ment Officer contravenes the provisions of s. 19-A, is a different matter. The fact that such a contingency may arise does not mean that it is the Magistrate issuing the search warrant who is to be approached and who is competent to deal with the grievance. Any way, such a contingency is in-sufficient to warrant the finding that the Magistrate issuing the warrant has control and possession over the documents seized and that therefore he can pass any orders with respect to their disposal. He has no such power, in any case, till the period mentioned in s. 19-A has expired. There is no provision in the Act which gives him any power to deal with the situation arising after the expiry of that period. One should, however, presume that the Director of Enforcement will not by his order act against the provisions of s. 19.

Section l 9·A deals with the ci.stody oi documents which come into the possession of t.he Director of Enforcement in two ways. Documents are furnished to the Director of En-forcement in pursuance of an order made under sub·s. (2) of s. 19 under the directions of the Central Government or 1964 the R~serve Bank. No Magistrate as .such has i.urisdiction over State. by Nilratan the cl1sposal of such documents which come mto the posses-Sircar, ){nforcemen~ sion of the Director of Enforcement in pursuance bf orders Officer under sub-s. (2} of s. 19. The Director of Enforcement also Laksh:,; Narain gets possession of documents in execution of search warrants Ram n ll'i"a' under sub-s. (3) of s. 19. The provisions with respect to his R h b J retaining in his possession the documents which come in his ag " ar aya' possession are the same, whether they come so one way or the other. It follows that, in the latter case too, the Magis-trate issuing the search warrant has nothing to do with the retention or disposal of the documents seized in execution of the search warrant.

It was also urged for the appellant that the provisions of s. 5(2) of the Code apply to the present case in matters which are not provided by the Act. This contention too has no basis. Section 5 provides that all offences under any law other than the Indian Penal Code shall be investigated, in-quired into, tried and otherwise dealt with according to the provisions contained in the Code of Criminal Procedure, but subject to any enactment for the time being in force regu-lating the manner or place of investigating, inquiring into, trving: or otherwise dealing with such offences. The Act is a special Act and it provides under s. 19-A for the necessary in-vestigation into the alleged suspected-commission of an offence under the Act, by the Director of Enforcement. The provi-sions of the Code of Criminal Procedure therefore will not apply to such investigation by him, assuming that the expres-sion 'investigation' includes the retaining of lhc documents for the purposes of the investigation.

Reliance has also been placed for the appellant on the case reported as Mohammatl Seraiuddin v. R. C. Mishra(') in support of the contention that the Magistrate retains con-trol over the disposal of the articles seized in connection with the search warrant issued by him. In that case the Court was considering the question of the disposal of the documents seized in execution of a search warrant under s. 172 of the Sea Customs Act. The provisions of that section are differ-ent from those of sub-s. (3) of s. 19 of the Act. A search war-rant issued by a Magistrate under s. 172 of the Sea Customs Act has the same effect as a search warrant i>sued under the Code of Criminal Procedure and thus assumes the character . of a search warrant issued under the Code of Criminal Pro- . cedure. The same is not the case with respect to the search warrant issued under sub-s: (3) of s. 19. Further, there is no section corresponding to s. 19-A of the Act in the Sea Cus-toms Act. This case, therefore, is not of help to the appellant.

(') (1962] 1 Suppl. S.C.R. 545.

732 SUPRE:IIE COURT REPORTS [1004]

1964 In this view of the matter, the order of the Magistrate b N'l with respect to the disposal of the documents was beyol)d Sir~a:, 81 J.10:/,':.::, 1 his jurisdiction and the High Court was right in setting aside

·Officer his order directing the retaining of certain documents by the Lokshm"i.Narain Director of Enforcement ,

Ram :qiwas The question however remains whether the crder of the Baghubar Dayal, J. High Court. directing the return of the two documents to the

respondent 1s a correct order.

It has been urged for the appellant that there is no pro-vision under s. 19-A or any other section of the Act that the documents be returned to the party from whose custody they were seized, without an order from the Ma!!istrate and that therefore no order for their return can be - made by any authority. No such express provision is necessary. Documents seized have to be returned if the Jaw pro'lides that they are not to be retained after a certain period of time. Such a direction under the statute is sufficient justification and autho-rity for the person in possession of the documents to return them ·to the person from whose possession they had been seized. Provisions are necessary for retaining documents of others and not for returning them to the persons entitled.

Section 19-A authorises· the Director o[ Enforcement to retain a document for a period of not exceeding 4 months. or, if before the expiry of the said period of 4 months, any proceedings under s. 23(i) have been commence.:! before him. until the disposal of those proceedings, including the proceed-ings before the Appellate Board, if any, or (ii) if such pro-ceedings have been commenced before a Court. until the document has been Ii led in that Court. This means that the Director of Enforcement can justifiably retain with himself the document seized till the final disposal of the proceedings taken under s. 23 of the Act if the proceedings had commenc-ed before the period of 4 months, during which he could keep the documents. In the present case such proceedings had not been commenced within the period of 4 months of the Director of Enforcement getting possession of the docu-ments. He could not have therefore, on his own. retained those documents after the expiry of the fourth month. He could have taken legal steps for the retention of those docu-ments. He did not keep those documents with himself on his own. He had been obtaining the permission of the Chief Presidency Magistrate for retaining the documents from the time of their seizure under the impression that the Magistrate -:ould legally order the retention of the documents, presum-ably as the warrant had directed the production of documents seized, before him.

Proceedings under s. 23 did start prior to the order for the return of the documents. Considering the real intention of s. 19-A tn be that the Director of Enforcement can retain 1964 the doct!ments seized till the final disposal of proceedings State., b;;Nilratan under s. 23 of the Act. the Magistrate's order, even if he had Sircar, Enf0"""'"' not the authority to pass orders for the retention of the docu-0 'ff!,'." ments by the Director of Enforcement, till the final disposal Lakshmi Narain of the proceedings under s. 23, was an order giving effect Ram N•WM to the spirit behind the provisions of s. 19-A. The order of Raghu1mr Dayal, J. the High Court directing the return of the documents to the respondent therefore appears to us to be unjustified in the special circumstances of the case.

It is not necessary for us to consider in this case what legal steps the Director of Enforcement could take for re-taining p<>ssession (If the 'documents seized on the expiry of the 4 months' period in case his investigation in connection with those documents is not complete within that period.

One of the methods possibly can be his applying to the Cen-tral Government to make an order under sub-s. (2) of s. 19 directing the owner of those documents to furnish them to the Director of Enforcement. Such an order will be legal justification for the Director of Enforcement to retain in possession any of the documents which notionally he would be deemed to have returned to the owner on the expiry of the four months and to have got fresh possession over those doct•ments not by virtue of a search warrant but by virtue of ;;:1 order of the Central Government under sub-s. (2) of s. 19.

We therefore hold that the Magistrate has no jurisdiction over the articles seized in execution of the search warrant issued under s. 19(3) of the Act and that he cannot permit the retention of such documents by the Director of Enforce-ment after the expiry of the period he is entitled In to keep them in accordance with the provisions of s. 19-A. the special circumstances of the case, we allow the appeal, set aside the order of the High Court and order that the docurbents men- !ioned at items Nos. 2 and. 7 of the Seizure Memo can be re-tained by the Director of Enforcement till the final conclusion of the pnx--eedings commenced under s. 23 of the Act.

Appeal allowed.

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 83 of 196 I. Appeal from the judgment and order dated June 20. 1960. of the Calcutta High Court in Criminal Revi-sion No. 1525 of 1959. ,.

H. R. Khanna. K. L. Hathi and R. N. Sachthey, for the appellant.

G. S. Pathak, R Datta. J. B. Dadacha11ji, 0. C. Mathur and Ravinder Narain, for the respondent.

April 14. 1964. The judgment of the Court was delivered by

RAGIRJBAll DAYAL, J.-This appeal, on certificate grant-.Ragh!War Dayal, J· ed by the Calcutta High Court. is directed against an order of the High Court dated June 20. 1960 reversing the Order of the Chief Presidency Magistrate directing return of cer-tain documents to the respondent. and has arisen in the following circumstances:

On April 6. 1959. the Chief Presidency Magistrate, Cal-cuna. owered the issue of search· warrants on the application of the Enforcement Ollicer. Enforcement Directnrate, Minis-try of Finance. under sub-s. (3) of s. 19 of the Foreign Ex-change Regulation Act. 1947 (Act VII of 1947). The search warrant was issued on May 6, 1959. It required the produc-tion of documents seiz.ed. before the Magistrate. In execution of the search warrant. a, number of documents were seized from the possession of the respondent on May 14. 1959. The 1964 Enforcement Officer reported that day that a certaiJ room Sltrte, by 1iilratJin could not be searched and therefore further action on the Sircar, Enforcement search warrant was to be taken. He also noted in his appli-

Officer cation, for the Chief Presidency Magistrate's information:

v.

Lakslon·i Jtarain "that the seized documents as per enclosed Seizure

Rani .. Yiuw Memo have been kept with us. for scrutiny and llagh11bar Duya.1, J. ·those will be retained till the completion of the enquiry or the adjudication proceeding~ as the case may be and a report will be submitted lo Your Honour tpereafter."

On May 28, 1959, the Enforcement Officer applied to the Chief Presidency Magistrate for permission for the reten-tion of the seized documents for a period of two months for the submission of further report in the matter. The Chief Presidency Magistrate granted the necessary permis;ion. Similar permission was again granted on applications, by tl1e Chief Presidency Magistrate, on July 28 and September 28, )959.

On October 5, 1959, the respondent applied to the Chief Presidency Magistrate for an order of return of the said documents as the statutory period of 4 months during which the Director of Enforcement could keep the documents had expired, and no proceedings had been commenced against him under s. 23 of the Act. The claim for the return of the docun11mts was based on the provisions of s. 19-A. On Octo-ber 20, 1959 the Chief Presidency Magistrate ordered the return of the seized files to the respondent. He, however, modified this order the same day, when his attention was drawn to his earlier order dated September 28, 1959 permit-ting the Enforcement Officer to retain the documents till November 28, 1959. He directed the matter to be heard nn October 26, 1959 and on that day, in view of the Investigat-ing Officer being on leave, adjourned the matter for decision to November 10, 1959.

In his application presented on November 10, 1959 the Enforcement Officer stated that the Director of Enforcement had started adjudication proceedings against the respondent for alleged violation of s. 4(1) of the Act and had issued notice to him to show cause and that in connection with the adjudication proceedings seized files items Nos. 2 and 7 of the Seizure Memo would be required and that he had no objection to the return of the remaining seized files though they might have some distant bearings on those proceedings.

The Chief Presidency Magistrate ordered, on.November 10; 1959, the return of all the documents except those men-tioned at items 2 and 7 of the search list. The respondent went up in revision against this order for the continued retention of the two documents, and the High Court allowed the revi-1964 sion and ordered the return bf these documents also to the Stai., by Nilratan respondent. It is against this order that this appeal has been Bircar, Enforcem•n• Iii e d . Officer v. We may first refer to the relevant provisions of ss. 19 La~shmi f.·arain. and 19-A of the Act, and later to certain provisions of the am l>i•-1 Code of Criminal Prbcedure, hereinafter called the Code, to R01Jh"h;;Dayal, J. appreciate the contention for the parties.

"19(]). The Central Government may, at any time

by notification in the Official Gazette, direct owners, subject to such exceptions, if any, as may be specified in the notification, of such foreign exchange br foreign securities as may be so speci-fied, to make a return thereof to the Reserve Bank within such period, and giving such parti-culars, as may be so specified.

(2) Where for the purposes of this Act the Central

Government or the Reserve Bank considers it necessary or expedient to obtain and examine any informatibn, book or other document in the possession of any person or which in the opinion of the Central Government or the Reserve Bank it is possible for such person to bbtain and fur-nish, the Central Government or, as the case may be, the Reserve Bank may, by order in writing, require any such person (whose name shall be specified in the order) to furnish, or to obtain and furnish, to the Central Government or the Reserve Bank or any person specified in the brder with such information, book or other document.

(3) If on a representation in writing, made by a per-

son authorised in this behalf by the Central Government br the Reserve Bank, a District Magistrate, Sub-Divisional Magistrale, Presidency Magistrate or Magistrate of the first class, has reason to believe that a contravention of any of the provisions of this A,ct has been, or is being or is about to )le, committed in any place, or that a person to whom an order under sub-section

(2) of this section has.been tir might be addressed, will not or would no' produce the information, book or other document, or where such information, book or other document

is not known to the Magistrate to be in the pos-session of any person, or where th.e Ma.gist~ate considers .that the purposes

o~ any mvestigatton or prbceedmg under this Act w 11! be served by a general search or inspection, 1964 he may issue a search warrant and the person to whom State, b.11 .i.V ilratan such warrant is directed may search er inspect Sircar, Enforcement in accordance therewith and seize any book or

Ojficer other document, and the provisions of the Code

v.

Lalc&hmi Narain of Criminal Procedure, 1898 relating to searches

RamNiwas under that Code shall, so far as the same are