1. The petitioner has been served with a summons under Section 40 of the Foreign Exchange Regulation Act, 1973 (Act 46 of 1973) by the respondent herein. The petitioner has filled this writ petition to quash the said summons.
2. In the affidavit, the petitioner has stated that the respondent searched the premises and business place of a company known as "Super Duper T.V. Private Ltd." The petitioner's brother one Mr. Sudhakaran happened to be there and after the search he had been given summons purporting to be under Section 40 of the Foreign Exchange Regulation Act, 1973 (hereinafter refer to as FERA Act). The said summons addressed the petitioner in his capacity as Director of Super Duper T.V. Private Ltd. The petitioner is not in any way connected with the said company nor 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 cannot answer under Section 193 or 228, Indian Penal Code. Without a focused attention to a particular subject matter of investigation or proceedings under the Act, there is a grave risk that the petitioner may be exposing himself for being proceeded against, under section 193 and 228 I.P.C. It is one of the basic reasons requiring the Section to specify ex facie on the summons itself the subject matter of investigation of the proceedings in which he sought to be examined. Since the basic requirement is lacking, the summons issued to the petitioner is invalid. Requiring the petitioner to appear before the Enforcement Authorities is a drastic power. A roving enquiry of the nature could make the excise of power arbitrary and not one authorised by the Act. The very scheme of Section 40 of FERA Act and the basic guarantee under Section 24 of the Evidence Act and Article 21 of the Constitution of India would stand violated, if a summon issued without specifying on what subject matter he is put question or directed to produce the document. It is the requirement of law that reasons must exist for any action which are taken against a person which would adversely affect him or subjecting him to a decree of inconvenience of trouble and the power is exercised under a statute.
3. Mr. A. K. Sen, the learned Senior Counsel confined his argument on the following three grounds:
(i) Section 40(1) of the Foreign Exchange of Regulation Act, 1973 empowers the gazetted officer of Enforcement to summon any person whose attendants, the officer considers necessary either to give evidence or to produce a document during the course of any investigation or proceeding under this Act. When the petitioner had been issued summons, some investigation or proceedings under the FERA Act deemed to be pending before the respondent. If no such investigation or proceeding pending, the respondent has no authority to issue summons. When the investigation is pending, it is the bounden duty of the authority to inform the petitioner as to the nature of investigation pending before him or the nature of the proceedings under the Act. Without informing the nature of investigation and the proceedings the respondent had issued the impugned summons. The petitioner is entitled to know about the nature of investigation pending before the respondent and as such the respondent ought to have specified 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 evidence 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 three judgments reported in Barium Chemicals v. A. J. Rana - 1974 L.W. (Crl.) (91), N.C. Jute Mills v. T. N. Kaul (AIR 1976 Calcutta 178) and Gopikisan v. Asst. Collector, Customs, Raipur (AIR 1967 SC 1298)
5. The respondent issued the summons wherein it is stated as follows:
"Whereas, I.B. Kistoorchand, Enforcement Officer, Enforcement Directorates (Foreign Exchange Regulation Act) Government of India, Madras consider the attendance of Shri T. T. V. Dhinakaran, Super-Duper TV Pvt. Ltd., 25, 1st Floor No. 90, Welling Plaza, Anna Salai, Madras-2 necessary to give evidence and/or to produce the documents specified in the Schedule below, in an investigation being made by me under the Foreign Exchange Regulation Act, 1973 (46 of 1973).
NOW THEREFORE, in exercise of the powers conferred on me by Sec. 40 of the said Act, I hereby required the said Shri T. T. V. Dinakaran to appear before me in person alongwith the documents specified in the Schedule in my office at the address given above on 13-07-95 at 10.00 hours.
(1) His Passport.
(2) His Bank account pass books relating to his accounts in India & abroad.
(3) His Property Details."
The above said summons has been issued to the petitioner by the respondent purported to be one under Section 40 of the FERA Act. It may be pertinent to note that the impugned proceedings in only a summons directing the petitioner to appear before the respondent to give evidence and/or to produce the documents mentioned in the Schedule.
6. Section 40 of the Foreign Exchange Regulation Act reads as follows:
"S. 40. Power to summon persons, to give evidence and produce documents :-
(1) Any Gazetted Officer of Enforcement shall have power to summon any person whose attendance he considers necessary either go give evidence or to produce a document during the course of any investigation or proceeding under this Act.
(2) A summons to produce documents may be for the production of certain specified documents of for the production of all documents of a certain description in the possession on under the control of the person summoned.
(3) All persons so summoned shall be bound to attend either in person or by authorised agents, as such officer may direct, and all persons so summoned shall be bound to state the truth upon any subject responding which they are examined or make statements 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 Penal 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 been issued to a person, requiring him to produce the records or to give evidence, he cannot be considered to be an accused. He has been summoned for the purpose mentioned in the summons. At that stage his personal involvement in respondent of the matter under investigation matter may not be there [sic]. Only an accused person is to be summoned, then the concerned person should be put on notice as to the alleged office committed by him.
8. At this stage it is worthwhile to consider the purpose of the enactment. The Act has been enacted to consolidate the law relating the dealing affecting foreign exchange and the import and export of currency and billion with a view to conserve foreign exchange reserves of the country and proper utilisation thereon in the interest of the economic development of the country. The types of transaction which are affected by this Act are: In general, all those having international financial implications. Particularly, the following matters are subject to regulation by the Act.
(a) Purchase and sales of and other dealings in foreign exchange and maintenance of balances at foreign centres;
(b) Export and import of currencies, cheques, drafts, travellers cheques and other financial instruments, securities, jewellery etc.;
(c) Realisation of proceeds of exports;
(d) Transfer of securities between residents and non-residents and acquisition and holding of foreign securities; and
(e) Payments to non-residents or to their accounts in India.
Sections 33 to 40 deal with the powers of the officers to be exercised under this Act. Section 33 deals with the power to call for information. Section 35 deals with power to arrest. Sections 34, 36 and 37 deal with the power of search of person, conveyance and premises respectively. Section 39 empowers the Director of Enforcement or any other officer of Enforcement authorised in this behalf by Central Government to require any person to produce or delivery any document relating to the investigation or proceeding and examined any person acquainted with the facts and circumstances of the case.
9. Taking into consideration of the object of the Act, it is clear that the Central Government has enacted this Act to prevent the unauthorised transactions involving transfer of Indian currency as well as the foreign currency. As the economy of the nation is involved, the authorities 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 whether 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 concerned therein in the summons. When the enactment is to safeguard the economy of the country by preventing the unauthorised exchanges, if the authority mentions in the summons as to the purpose of investigation in respect of a third person, then it may not be possible for the authority to get the full particulars because the concerned person can manipulate the documents pertaining to that particular transaction. It may further be seen that if the person summoned is to be informed about the person against whom the investigation is pending, in case if that person is in custody there may not be any difficulty. But in case the person against whom the investigation is pending is at large, then naturally the concerned person would abscond himself beyond the reach of the officials. In that case, it may not be possible for the authorities to complete the investigation. Moreover, if the summons is taken into consideration it is stated therein that the petitioner's attendance is necessary to give evidence and/or to produce documents in an investigation being made by the respondent under the FERA Act. So far as the documents mentioned are concerned, it is mentioned the petitioner's passport, petitioner's account books relating to his accounts in India and abroad and his property details. If we take into consideration the required documents mentioned in the schedule, the enquiry relates only to the petitioner in respect of his involvement in some transaction under the FERA Act. If the investigation relates to any other person, then the authorities would have mentioned the documents relating to the concerned third parties or the transaction between the petitioner and those third parties. Hence I am of the view that the non-mentioning of the [nature] of investigation and the purpose of the requirement of documents do not vitiate the summons in any manner.
12. So far as the second point is concerned, the learned senior counsel for the petitioner contends that the summons has been issued without application of mind, because it does not specify as to whether the appearance of the petitioner is necessary to give evidence or to produce the documents specified in the schedule or for both because 'and/or' has been left without striking out the unnecessary words. It is specifically stated in the summons that the Enforcement Officer considered the attendance of the petitioner necessary. 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 his mind for what purpose the petitioner's attendance is required and indicate the same in the summons. Hence this contention is also rejected.
13. So far as the third point is concerned that the documents and the investigation must have nexus with each other, as already mentioned while considering the first point, that the documents mentioned are only concerned with the petitioner i.e., his passport, his bank account passbooks relating to his accounts in India and abroad and his property details. The documents 'are' all 'not' related to third parties but related to the petitioner himself. While so, the investigation may be in respect of the petitioner himself or in respect of third person who had some connection with the petitioner. When there is suspicion with regard to the involvement of the petitioner in any of the transactions which are prohibited under the FERA Act, it is open to the authorities to summon him for enquiry. Since the documents are pertaining to him, it cannot be said that the investigation has no nexus with the documents called for from the petitioner. When an investigation is commenced, it is not possible for the authorities to come to the conclusion with regard to the involvement or the non-involvement of any person until the enquiry is completed. During the enquiry if the authorities get any information with regard to the involvement of any other individual, those individuals can also be summoned by the concerned officer in order to complete the enquiry. When Section 40(4) of the FERA Act specifically mentions that the proceedings taken by the authorities are judicial proceedings, it is not open to the petitioner to challenge the summons issued under the said proceedings as ab initio void. The petitioner cannot claim any right under Article 21 of the Constitution of India and Section 24 of the Evidence Act, as he is not an accused.
14. Coming to the judgments referred to by the counsel for the petitioner, in the case reported in N.C. Jute Mills v. T. N. Kaul (AIR 1976 Calcutta 178) the court was dealing with Section 19D of the Foreign Exchange Regulation Act, 1973. It deals with the power of search of premises. In that case, the question of jurisdiction of the authority was, who authorised the search is involved. The learned Judge hold that if the jurisdiction of the officer who exercised the power was challenged in a court 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 Custom Officer did not say that he had reason to believe so.
The relevant part of the authorisation reads thus:
Whereas information has been laid before me of the suspected commission of offence under S. 11 read with S. 111 of the Customs Act, 1962 (52 of 1962) and it has made to appear the production of contraband goods and documents relating thereto are essential to the enquiry about to be made in the suspected offence. Though the words "reason to believe" are not in terms embodied in the authorization, the phraseology used in effect and substance meant the same thing.
The next contention is that on a reasonable construction of the said provision it should be held that the Assistant Collector of Customs should not only give reasons for his belief but also the particulars of the nature of the goods and of the documents for, if the reasons and the particulars are not given, the officer authorised may make a roving search of the house which is not in the contemplation of the said section. This argument may be dealt with in two parts. In terms S. 105 of the Act does not say that the Assistant Collector shall give reasons. The power conferred on him under S. 105 is not subject to any such condition. Though he cannot make a search or authorize any officer to make a search unless he has reason to believe the existence of the facts mentioned in the section, the section does not compel him to give reasons. While it may be advisable, and indeed proper, for him to give reasons, the non-mention of reasons in itself does not vitiate the order."
16. When dealing with the question of "reason to believe" the learned Judges have held that even though the words are not there, the substance and phraseology give that meaning that is sufficient. Further in this case, the authorisation has been challenged. The learned Judges have held that though under the Section the Assistant Collector of Customs need not give the reasons, if the existence of belief is questioned in any collateral proceedings, he has to produce relevant evidence to sustain his belief. So in both the cases reported in N. C. Jute Mills v. T. N. Kaul (AIR 1976 Calcutta 178) and Gopikisan v. Asst. Collector, Customs, Raipur (AIR 1967 SC 1298) the court has gone into the reasoning when the summons issued or the order issued was challenged by the aggrieved person on the ground of jurisdiction. As pointed 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 so 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 wording 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 economic and financial interests of India to provide for the regulations of certain payments, dealings in foreign exchange and securities and the import and export of currency and bullion." Section 19 of the Act confers power to call for information. Sub-section (2) of that section, with which we are concerned, reads as under :-
"2. Where for the purpose of this Act the Central Government or the Reserve Bank considers it necessary or expedient to obtain and examine any information, 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 obtain and furnish, the Central Government or, as the case may be, the Reserve Bank may, by other in writing, require any 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 order with such information, book or other document."
Sub-section (2) of Section 19 of the Act has been represented above and its perusal shows that the sub-section consists of two parts. The first part mentions the occasion or the circumstance in which an order under the sub-section can be made, while the second part deals with two contingencies and provides for the form and mode of the order in which it should be made to suit each contingency. The two parts of the sub-section are:
(1) Where for the purpose of the Act the Central Government or the Reserve Bank considers it necessary or expedient to obtain and examine any information, book or other documents.
2(a) In the said information, book or document is in the possession of any person, the Central Government or as the case may be the Reserve Bank may, by order in writing, require such person to furnish to the Central Government or the Reserve Bank or any person specified in the order such information, book or other document.
(b) In case however the information, book or document is not in the possession of the person to whom the order is addressed, but it is possible in the opinion of the Central Government or the Reserve Bank, for such person to obtain and furnish that information, book or other document, the Central Government or the Reserve Bank may, by order in writing require such person to obtain and furnish to the Central Government or the Reserve 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 applied its mind so as to show that the Central Government considered it necessary for the purpose of the Act to obtain and examine the papers and documents specified in the schedule.
The words 'considers it necessary' postulate that the authority concerned has though over the matter deliberately and with care and it has been found necessary as a result of such thinking to pass the order. The dictionary meaning of the word 'consider' is 'to view attentively, to survey examine, inspect (arch), to look attentively, to contemplate mentally, to think over, mediate on, give heed to, take note of, to think deliberately, be think oneself, to reflect' (vide Shorter Oxford Dictionary). According to Words and Phrases Permanent Edn.: Vol. 8A to 'consider' means to think with care. It is also mentioned that to 'consider' is to fix the mind upon with a view to careful examination; to ponder, study meditate upon, think or reflect with care. It is, therefore, manifest that careful thinking or due application of the mind regarding the necessity to obtain and examine the documents in question in sine qua non for the making of the order IF THE IMPUGNED ORDER WERE TO SHOW THAT THERE HAS BEEN NO CAREFUL THINKING OR PROPER APPLICATION OF THE MIND AS TO THE NECESSITY OF OBTAINING and examining the documents specified in the order, the essential requisite to the making of the order would be held to be non-existent.
A necessary corollary of what has been observed above is that mind has to be applied with regard to the necessity to obtain and examine all the documents mentioned in the order. An application of the mind with regard to the necessity to obtain and examine only a few of the many documents mentioned in the order, while there has been no such application of mind in respect of the remaining documents, would not be sufficient compliance with the requirements of the statute. If, however, there has been consideration of the matter regarding the necessity to obtain and examine all the documents and an order is passed thereafter, the Court would stay its hand in the matter and would not substitute its own opinion for that of the authority concerned regarding the necessity to obtain the documents in question.
The language of Section 19(2) of the Act points to the conclusion that while an order under it may be made with respect to 'any information, book or other document', 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 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 in possession of requisite information, book or other document or is IN THE OPINION OF THE AUTHORITY CONCERNED ABLE TO OBTAIN AND FURNISH SUCH INFORMATION, BOOK OR OTHER DOCUMENT. For compliance with such an order, it is imperative that the person against whom 'the order is directed should be late in no doubt with regard to the precise information, book or other document which is required to be furnished by him. It, therefore, becomes essential for the requisite information, book or other document should be specified in the order'.
Basing upon the interpretation the court held as follows:
"The fact that an order was made in respect of all documents relating to the appellants, which are in the custody of the Registrar under the order of this court, including the documents which have not even the remotest bearing on the matters covered by the Act, goes to show that there was no due application of the mind by the authority concerned".
Section 40 of the Foreign Exchange Regulation Act simply says that if any Gazetted Officer of Enforcement considers necessary either to give evidence or to produce document during the [sic] courts of investigation, he has power to summon any person. So far as the documents called for in this case, as already pointed out, are only the documents relating to the petitioner. In the case in hand, there is no vagueness in respect of the documents called for. The Documents have been specifically stated. In view of the above discussion, I am of the view that all the three judgments cited by the learned senior counsel for the petitioner are of no help to him.
18. The petitioner has challenged the summons in this writ petition. As pointed out already the summons is issued only enabling the authorities to get the particulars required for completion of any investigation pending before them. It is the bounden duty of the petitioner to appear before such authorities as per Section 40(3) of the FERA Act to attend before the authority and to assist the investigation. By avoiding to appear before the authorities, the petitioner merely creates a suspicion in the mind of the respondent.
19. For the reasons stated above, there in no merit in the writ petition and the same is dismissed.