The Chief Justice:
1. This appeal is preferred by the Enforcement Officer, Enforcement Directorate; Madras, against the judgment of Ramanujam, J. in W.P 6771 of 1975 dated 16th July 1976 directing him (Enforcement Officer) to return the documents seized from the first respondent herein.
2. On 13rd September 1974, the residential premises of the first respondent was searched. Three fixed deposit receipts of the first respondent were recovered. One was in the name of one Vaidyalingam Chettiar. A statement was recorded from the first respondent. On 1st January 1974, the Deputy Controller of Reserve Bank was asked to block the operation of the fixed deposit receipts. The Deputy Controller by his order dated 5th November 1974, blocked the operation of the fixed deposit receipts. On 19th May 1975, the first respondent was directed under S. 40 of the Foreign Exchange Regulation Act, 1973, to appear before the Officer on 25th May 1975. The matter was adjourned to 16th June 1975, Fresh summons was issued on 31st May 1975. In the meantime, the first respondent filed W.P 4259 of 1975, questioning the validity of the summons. On 19th June 1975 this court issued a rule nisi and directed stay of operation of the summons. The first respondent also filed W.Ps 4287 and 5090 of 1974, questioning the blocking of the fixed deposit receipts. These writ petitions were allowed only in respect of two fixed deposit receipts as the remittances were found to be from authorised channels. On 29th October 1975, the first respondent filed W.P 6771 of 1975: praying for the return of the documents seized from him on the ground that one year had elapsed from 13rd September 1974. On 12th. December 1975, W.P 4259 of 1975 questioning the legality of issuing summons was taken up and was dismissed holding that the first respondent was bound to appear in obedience, to the summons. On 15th July 1976, W.P 6771 of 1975 was allowed as one year had elapsed from 13rd September 1974, and this writ appeal is preferred against that order.
3. On behalf of the Enforcement Officer, the appellant, it was submitted that the learned Judge was in error in directing the return of the documents as the Enforcement Directorate has not only the power but also a duty to retain the documents when proceedings are taken for adjudication. S. 19-A empowere the Enforcement Officer to search any person. S. 19-G provides that where in pursuance of an order under sub-S. (2) of S. 19, any document is furnished or seized and the Director of Enforcement or any other Officer of Enforcement has reason to believe that the said document would be evidence of the contravention of any of the provisions of the Act 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 one year; and the officer can keep the document for more than one year if he, before the expiry of the said period commenced any proceedings under S. 23, in which case, he will be entitled to retain the document until the disposal of those proceedings. S. 23 prescribes the procedure for levying penalty. If any person contravenes any of the provisions mentioned in S. 23, he shall be liable to such penalty not exceding three times the value of the foreign exchange in respect of which the contravention has taken place, or five thousand rupees, whichever is more, as may be adjudged by the Director of Enforcement in the manner provided for. He is also liable to be prosecuted in a criminal court. Under S. 23 (1-B), the power of confiscation is also conferred. S. 41 of the new Act, namely, Act 46 of 1973, corresponds to S. 19-G with an added explanation, which is not necessary for the purpose of this case. According to that section, the authority can retain the document for a period of one year; but he may retain it for an extended period if before the expiry of the said period of one year, he commences proceedings under S. 51 of the new Act. S. 51 confers power on the authority to adjudicate against any person who has committed a contravention of any of the provisions of the Act. S. 63 deals with the power of court and the Adjudicating Officer to direct confiscation.
4. The facts of the case as admitted are that the documents were recovered on 13th September 1974 and the proceedings were admittedly not commenced before 13th September 1975. On 31th March 1976, a notice was issued by the authorities asking the first respondent to show cause as to why adjudication should not be started. Admittedly, this is beyond one year from the date of seizure and it is also equally clear that no action, was taken to commence proceedings, which would enable the retention for a longer period before the expiry of the one year's period. In the circumstances therefore, under the wording of S. 41, the Enforcement Officer is not entitled to keep the document beyond 13th September 1975. An attempt was made on behalf of the Enforcement Directorate, to submit that during the period 19th June 1975 and 12th December 1975, there was an order of stay of operation and that the said period should be excluded. Even if that period is excluded, the notice that was given subsequently was not within one year. Therefore, on the plain wording of the section, the Enforcement Directorate has no authority to withhold the documents.
5. The Advocate General appearing for the appellant submitted that while under the provisions of S. 41, the Enforcement Directorate can no longer keep the documents, yet, the courts will not issue a Writ of Mandamus as under the other provisions of the Act, the Enforcement Authority has a duty to keep the documents when once the adjudication proceedings commenced. In other words, the contention of the, Advocate General is that even if more than an year has elapsed and under S. 41 and he could not retain the documents, when once he commenced proceedings for adjudication, he is entitled to retain the documents and as such, a Writ of Mandamus will not be issued. In support of his contention, he relied on the decision of the Supreme Court in Nilratan v. Lakshminarayan . A.I.R 1965 S.C 1.. The case was under Foreign Exchange Regulation Act, and under the Act, the authorities had a right to keep the documents for a period of four months from the date of seizure, under S. 23 they could keep the documents for a period of four months, and if proceedings are commenced within that period for an extended time. In that case, the search warrant was issued on 6th May 1959 by the Chief Presidency Magistrate, Calcutta. On 28th May 1959, the Enforcement Officer applied to the Chief Presidency Magistrate for permission for retention of the seized documents for a period of two months. The Chief Presidency Magistrate granted the permission. Again, on applications made by the Enforcement Officer, time was extended by the Chief Presidency Magistrate on 28th July and 28th September 1959. On 5th October 1959, the respondent therein applied to the Chief Presidency Magistrate for an order of return the said documents as the statutory period of four 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. On 20th October 1969, the Chief Presidency Magistrate ordered the return of the seized files to the respondent therein. He, however, modified this order the same day permitting the Enforcement Officer to retain the documents till 28th November 1959. The matter was heard on 26th October 1959 and on that day, the matter was adjourned for decision to 10th November 1959. In his application presented on 10th November 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 No. 2 and 7 of the seizure memo would be required. On 10th November 1959, the Chief Presidency Magistrate ordered the return of all the documents except those mentioned as items 2 and 7 of the search list. The respondent therein went up in revision against this order for the continued retention of the two documents and the High Court altowed the revision and ordered the return of those documents also to the respondent. Against that order, the appeal to the Supreme Court was preferred. The Supreme Court in paragraph 19 of that decision, after referring to Ss. 19-A and 23 of the Act, came to the conclusion that as the proceedings were not commenced before the expiry of the period of four months during which period they could keep the documents, the director could not have on his own retained those documents after the expiry of the fourth month. In that case, the documents were retained after obtaining the permission of the Chief Presidency Magistrate from the time of their seizure under the impression that the Magistrate could legally order the retention of the documents. In dealing with the question whether in the circumstances, the documents should be returned or not, the Supreme Court observed as follows:
“Proceedings under S. 23 did start prior to the order for the return of the documents. Considering the real intention of S. 19-A to be that the Dircetor of Enforcement can retain the documents seized till the final disposal of proceedings under S. 23 of the Act, the Magistrate's order, even if he had not the authority to pass order for the retention of the documents by the Director of Enforcement, till the final disposal of the proceedings under S. 28, was an order giving effect to the spirit behind the provisions of S. 19-A. The order of 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.”
This passage is relied on by both the learned counsel for the appellant and the first respondent, in support of their contentions. According to Mr. Abdul Kareem, the learned counsel for the first respondent, the court refrained from directing the return of the documents due to special circumstances, namely, that the Enforcement Officer was over careful in getting orders from the Magistrate for the retention of the documents and as his behaviour was exemplary. On the other hand, the contention of the learned Advocate General is that the special circumstance referred to is the starting of the further proceedings prior to the order of return of documents. On a careful reading of the passage, we feel that the special circumstance referred to by the Supreme Court is the commencement, of the proceedings before the order of retention of the documents.
6. In this matter, it is the common case that proceedings were commenced on 31st March 1976. The question is, even though the Enforcement Directorate is not entitled to keep the documents, according to S. 41, should they be directed to return them in view of the fact that they had commenced proceedings. According to the Supreme Court, no order directing the return of the documents should be issued. We feel that in view of the fact that the Enforcement Directorate has in law a right to retain the documents pending adjudication proceedings, return of the documents should not be ordered. It may be seen that when an Enforcement Officer commences proceedings in connection with the offence, he is entitled to require any person to produce or deliver any document relevant to the enquiry. Though under S. 19-G he can retain the documents only for the period specified therein, when once he commences adjudication proceedings, under S. 23-D he is empowered to hold an enquiry and impose the penalty specified under the provisions of S. 23 and while holding such enquiry, under S. 23-D(2), he has the power to summon and enforce the attendance of any person to give evidence or to produces document or any other thing, which, in the opinion of the Director of Enforcement, may be useful for, or relevant to, the subject matter of the enquiry. Under this section, after the Officer commences proceedings for adjudication, he is entitled to summon and retain the documents. Therefore, though he is bound to return the documents under S. 19-G, he is entitled to summon the same documents and those documents should be produced by the person as such. The proceedings may end with the confiscation of the documents. The position therefore, is that while under S. 19-G he has no right to retain the documents after the specified period, when once the enquiry is commenced, he is entitled to summon, receive and retain the documents. In such a situation, even though the adjudication proceedings had started after the period specified in S. 19-G, it will not be proper for the court to direct the return of the documents, for, in law, he would be entitled to have the documents for adjudication purposes. It would be for the purpose of technically obeying the requirements of S. 19-G, if a direction were to be made for the return of the documents when the officer could exercise his powers to summon them. If a direction to return the documents is to be issued, it is only for the purpose of making the Enforcement Officers to obey the provisions of the Act. This question had arisen before the Supreme Court of the United States where the desirability of strict enforcement of fourth amendment and the question whether the evidence procured during any illegal search is to be admitted or not were considered repeatedly. Recently, the Supreme Court in a decision Stone Warden v. Powell delivered on 6th July 1976, went back on its earlier view and held that the basis of exclusion of evidence to deter the policemen deflects the truth-finding process, and often frees the guilty and is not in conformity with the concept of justice. Taking all the circumstances into account, we do not think that a Writ of Mandamus should issue when the officers have got a right to retain the documents under the other provisions of the Act.
7. The law in England regarding the issue of a Writ of Mandamus is stated in Halsbury's Laws of England, 3rd Edn, Vol. II, in para 199 page 106 thus:
“A Mandamus will not go when it appears that it would be futile in its result. Accordingly, the court will not, by Mandamus, order something which is impossible of performance, by reason of the circumstance that the doing of the act would involve a contravention of law…………… A Mandamus will not be granted if the party complained of has powers which would enable him to make the order inoperative;… No Mandamus will issue in order to effect what amonnts to an evasion of a statute, or a breach of trust.”
We will now refer to a few decisions cited by the learned counsel for the first respondent. Reliance is placed upon the decision of the Supreme Court in Asst. Collector of Customs v. Malhotra, The court held that the Collector cannot extend the period of retention of the articles beyond the period permitted under the provisions of the Act. The court also held that before the time could be extended, notice should be given to the party concerned. The court further held that the power of extending the period is quasi-judicial in nature and an opportunity of being heard should have been to the respondent therein before orders for extension were made. This decision does not advance the case of the first respondent.
8. He then relied on the decision in Superintendent of Taxes v. O.N Trust . A.I.R 1975 S.C 2065.. In that decision, the Supreme Court held that the contention on behalf of the State that it became impossible for the State to issue notice under S. 7(2) of the new Act within two years of the expiry of the period of return is unsound on principles and facts. This decision also does not help us to decide the question arising in this case.
9. In the decision in C.I.T v. Jawaharlal Mastogi . 78 I.T.R 486. at page 490. in considering S. 132(2) of the Incometax Act, the court observed that the premises of the assessee were searched on 21st September 1964 and 22nd September 1964 and the documents were retained till May 1966, i.e, for a period of 19 mouths and that there was no order of the authorities recording reason for retaining the documents seized after the expiry of 180 days, nor was there any approval of the Commisioner for retaining such documents. In the circumstances, the court held that the retention of the documents without complying with the requirements of the statute after the expiry of the period of 180 days would be plainly contrary to law. The question that has arisen in this case as to whether the Enforcement Directorate could retain the documents pending adjudication proceedings did not arise there.
10. The learned counsel placed strong reliance upon the decision of this court in W.A 138 of 1976. In that case, the articles were seized on 3rd September 1974. Under provisions of the Act, the notice of confiscation ought to have been given within six months, i.e, before 3rd March 1975. The show cause notice was actully given on 1st April 1975, i.e, after the expiry of six months. The Government sought to rely upon the fact that a notice was given directing to show cause as to why the time should not be extended. It was held that that notice did not have the effect of extending the time and that the only notice that extended the time was dt. 1st April, 1975 which is beyond six months from the date of seizure and it would attract the prohibition under S. 110(2). The goods were ordered to be returned. In that case, the question whether the proceedings were commenced or not and if commenced what would be the effect was not considered at all.
11. Lastly, the learned counsel relied upon the decision in Commissioner of Commercial Taxes v. R.S Jhaver. He pieced reliance on the passage at page 468 where the court held that the proviso to sub-sec. (3) has fixed the period for which the officer seizing accounts can keep them, namely, 30 days at a time, and if he wants to keep them for more than thirty days then he has to take the permission of the next higher officer. The question whether after the expiry of the period if there were proceedings pending did not arise there.
12. On a consideration of the authorities before us we hold that the decision of the Supreme Court in Nilaram v. Lakshmi Narain is applicable to the facts of the case and that it will have to be held that in the circumstances of the case, the court should not direct the return of the documents by the issue of a Mandamus.
13. In the result, the appeal is allowed and the order of the single Judge is set aside. There will be no order as to costs.
VCS