1. Rane Diffusion Pvt. Ltd. is a Company, engaged in the manufacture and sale of garments. Shri Arun Kakkar is the Managing Director of the Company. On 5-4-1982, the Government of India issued a notification under S. 25(1) of the Customs Act, 1962 whereby the goods specified in the 1st Schedule thereto and imported against an Advance Licence issued under the Imports (Control) Orders, 1955, were exempted from customs duty and the whole of the additional duty, leviable thereon under the Customs Tariff Act, 1975, provided:—

(i) the materials in question are required to be imported for the purpose of manufacture of goods for execution of one or more export orders, or

(ii) the materials which are for replenishment of materials used in manufacture of goods exported in execution of one or more export orders.

2. The said notification also laid down certain conditions, for claiming exemption. In pursuance to this scheme the petitioner secured the requisite Advance Licences, and importing 100% polyester fabrics, as well as foreign made zips with the said materials, the petitioner manufactured the garments for export. On 11-6-1986, a shipping bill No. 562 was filed by the company through Triways (Pvt.) Ltd. for the export of 7300 pieces of 100% polyester garments-ladies night dresses/night-wears with 20 cms. Y.K.K polyester zips as per invoice No. 1084 dt. 15-5-1986 and advance licence No. 307823.C/XX/91.D/84. The said shipping bill was processed at ICD Pragati Maidan. The export cargo covered under the said shipping bill arrived at CFS Patparganj on 12-6-1986.

3. Acting on a specific information that the Company, would be exporting a consignment of ladies night dresses made of cotton with zip fastners of Indian origin in the garb of ladies night dresses made of 100% polyester with zip fasteners of foreign origin, imported by the company under the DEEC Scheme, for the manufacture and export of the same under the Customs bond, the staff of ICD Pragati Maidan and CFS was alerted and a secret watch was kept on the filing of shipping bill and arrival of cargo for export. Immediately on the arrival of the consignment at Patparganj, the Asstt. Collector, I.C.D along with Asstt. Collector, Customs and other staff visited the C.F.S Patparganj, Delhi on 12-6-86. The consignments covered by the abovesaid bill were subjected to examination in the presence of two independent witnesses. It revealed that the ladies night dresses apprehended to be made of polyester fabrics, but the zip fastners did not appear to be of foreign origin. During examination Shri Arun, Kakkar, Managing Director of the Company was contacted and he came at the site of examination. Shri Arun Kakkar identified the goods and admitted that though ladies garments' consignments were made of 100 per cent polyester but the zip fastners used in them were mostly of Indian origin. In his subsequent statement he also admitted that the cargo covered by the abovesaid bills consisted of readymade garments of 100% polyester and 100% cotton fabrics and zip fastners used in them were mixed i.e of Indian and foreign origin.

4. Shri Arun Kakkar on demand could not give satisfactory explanation regarding the misdeclaration of cargo being exported/attempted to be exported and as such all the goods under the above bills were seized u/s. 110 of the Customs Act, 1962 against proper Panchanama on the reasonable belief that the same were liable to confiscation under the Act.

5. On the basis of the disclosures made by Shri Arun Kakkar, surveillance was mounted at his residence and factory premises. The premises were searched but nothing incriminating was recovered. During the course of the investigation, Shri Arun Kakkar and Arun Kumar Singhania were arrested, on 14-6-86 for the alleged contravention of S. 135 of the Customs Act. They were produced before the Duty Magistrate on 15-6-86. In the course of time, the detenu and his co-accused were released on bail. In the meantime, on the basis of the material, the Administrator, Union Territory of Delhi, came to the conclusion that the petitioner has been engaging himself in transporting, exporting, concealing and also dealing in smuggled-goods viz. synthetic fabrics and zip fastners of foreign origin. Even though prosecution and adjudication proceedings have to be initiated against the petitioners by the Customs authorities, he was of the opinion that with a view to prevent the petitioner from repeating the above acts in future, it is necessary that he should be detained under the COFEPOSA Act, 1974. The order of detention was passed on 31-10-86. On the same day, the grounds of detention were furnished to the detenu while he was still in judicial custody.

6. By way of present petition, the petitioner seeks to assail the said order U/s. 3(1) read with S. 2(f) of the COFEPOSA Act.

7. Even though the order of detention is under challenge on numerous grounds but during the course of hearing, the learned counsel laid stress on the ground that the impugned order being punitive in nature is liable to be quashed. The submission is that neither the company nor the detenu holds, any other import/export licence or Advance Licence. He is also not engaged in any other business of import or export. Except for the four consignments in question, which are lying under seizure, there had never been any previous export under the DEEC Scheme. The whole lot of foreign material, imported under the Advance Licence lying seized, the detenu cannot re-export the same or any further consignments of polyester fabrics. Learned counsel further submits that it is within the power of the respondents through its various licencing authorities, to deny the detenu any further Advance Licences under the DEEC Scheme. This will effectively prevent him from indulging in the import/export activities. In this situation, according to the learned counsel, it is not conceivable why the detenu should be detained under the COFEPOS A Act so as to prevent him from engaging in the said import/export activities. The order of detention is thus completely punitive which seeks to punish the detenu for the alleged irregularities comitted in respect of the Advance Licences, and not to prevent him from engaging in future illegal activities.

8. In the alternative, the submission of the learned counsel is that the Department has launched criminal proceedings in this matter under the Customs Act, which are pending determination. The impugned order of detention, therefore, is mala fide, punitive, wholly unwarranted uncalled for, and indeed is contrary to the very intent and purpose of the legislation of preventive detention. The next submission of the learned counsel for the petitioner is that the detenu has not been provided with all the documents and material on the basis of which the alleged grounds of detention purported to have been framed by the respondent. This default has prevented the detenu to make an adequate and purposeful representation against his detention.

9. The stand of the respondents on the other hand is that the detenu has not surrendered the import licences and the DEEC book. So far the import licence has not been cancelled and the detenu can still indulge in smuggling activities through some other modus operandi. In order to prevent him from indulging in prejudicial activities in future, the detaining authority was justified in passing the impugned order. The subjective satisfaction of the detaining authority cannot be called in question. On the second aspect, the submission is that the detenu was supplied with the copies of the documents relied upon by the detaining authority in forming his subjective satisfaction, within 5 days of his detention. Copies of some of the remaining documents were handed over to the detenu immediately after he made the representation. The provisions of Art. 22(5) of the Constitution of India have been duly complied with and as such the case is not fit for the grant of the relief prayed for.

10. On consideration of the rival contentions of the parties vis-a-vis the material before the Court, prima facie, I am of the opinion that there is much substance in the submission of the learned counsel for the petitioners. The detenu is the Managing Director of Rene Deffusion Pvt. Ltd. New Delhi. This company is involved in the import and export of various types of finished garments and other material used for the manufacture of garments. In compliance with the DEEC Scheme, the company was granted Advance Licences for the import of polyester fabrics. The company imported 90,000 metres of polyester fabrics of Korean origin from Hong Kong which was brought to the factory. Another consignment of polyester fabrics was imported from Singapore, through Bombay port and brought to the factory at Delhi. The company also imported zip fasteners from Japan. As per the scheme, the company was obliged to manufacture ladies night dresses out of the imported material for export purposes. While attempting to export the consignment alleged to contain ladies night dresses of 100% polyester fabrics as given in the S/Bills, the D.R.I Officers on checking found it to contain 35% of polyester fabrics and 65% of cotton fabrics. Even the fasteners used in the dresses were found to be of Indian origin. The officers seized the goods against proper Panchanama, being misdeclared goods. Consequent upon the searches of the business premises of the company and the residential premises of the petitioner, the relevant documents, including the Advance Licences have been taken into possession.

11. The fact remains that the detenu does not hold any other Advance Licence under which he can import any consignment of polyester fabrics or zip fasteners. Except for the consignment in question which is lying under seizure, there has never been any previous import or export of any consignment under the DEEC Scheme. The grounds of detention do not reveal that the detenu had at any time engaged himself in any other smuggling activities. In fact, now he cannot do so unless and until the various licensing authorities grant him future Advance Licences under the DEEC Scheme, which appears to be a rare possibility. The authorities can take recourse to blacklist the detenu and thereby permanently debar him effectively from undertaking any import and/or export activities. The Advance Licence in question has already exhausted.

12. Under these circumstances was it necessary on the part of the detaining authority to pass an order of detention? The only answer to the query can be in the negative. The object of the law of preventive detention, in relation to the conservation and augmentation of foreign exchange and prevention of smuggling activities is not punitive, but preventive. Having regard to the persons by whom and the manner in which such activities of smuggling or violations are organised and carried out clandestinely, it is necessary for the effective prevention of such activities to detain a person. In the present case, it is the solitary incident in which the petitioner was found to violate the provisions and conditions of the Advance licence. This is also clear from the grounds of detention. There is no averment of his previous involvement, or apprehension of his future involvement in such like economic offences. In fact, there cannot be. The Advance Licence in question is the first which was granted to the petitioner and it has proved to be the last. He is not possessed of any other licence for the import of the consignment in question. It may be, for which I have my doubts, that the petitioner has not surrendered the Advance Licence to the concerned authorities but the fact remains that it has exhausted itself and no new licence has been granted. His future prospects for import of the item are doomed for ever. In this situation, the order of detention is completely punitive and seeks to punish the detenu for the alleged irregularities committed in respect of Advance Licences and not to prevent him from engaging in any further illegal activities.

13. It is not disputed that the Department of Customs has already filed the prosecution in the Court of the Metropolitan Magistrate for which a show cause notice has already been issued. This in fact is the right course which the Department should have adopted from the very beginning. The detention of the detenu, in the given circumstances, to my mind is mala fide, punitive, unwarranted and uncalled for. It is quite contrary to the very intent and purpose of the legislation of preventive detention. On this score alone, the impugned order of detention is liable to be quashed.

14. On the second aspect also, the petitioners have something to say. The order of detention is dt. 31-10-86. Along with the order of detention the documents were served on the petitioner on 15-11-86. It is the case of the petitioner that on 8-.I-87 when he was produced before the Advisory Board, the detenu made out a grievance that some of the documents which are of vital import and essential to the case were not supplied to the detenu, thereby preventing him from making an adequate representation. The petitioner listed as many as 12 documents, the copies of which were not supplied to him. The detaining authority realised the mistake and undertook to supply the copies of these very documents. The sitting of the Advisory Board was adjourned to 16th Jan., 1987. In spite of the direction of the Board the copies of the documents, as per the averments, were furnished only after the orders of the Advisory Board were passed. This part of the case is not specifically denied by the respondents in their counter. This has prevented the petitioner to make an effective and purposeful representation before the Board. It also proves that the documents which were considered to be material by the Advisory Board were not before the detaining authority. It is now settled law that the failure of the detaining authority to apply its mind to important circumstances bearing on the detention of the petitioner will vitiate the order of detention. This principle fairly applies to this case. No other point has been urged nor requires going into. In the result, the petition succeeds. The order of detention dt. 31-10-86 is hereby quashed. The detenu be set at liberty immediately, if not required to be detained under any order of the competent Court or authority.

15. Petition allowed.