Mr.Chandru P.Jethwani vs Union Of India & Ors
2011 Latest Caselaw 83 Bom

    VBC                                    1                          wp1742.11-21.11


           IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                            O. O. C. J.




                                                                                     
                            WRIT PETITION NO.1742  OF 2011




                                                             
                                                        
    Mr.Chandru P.Jethwani.                                           ...Petitioner.
                            Vs.
    Union of India & Ors.                                            ...Respondents.




                                                            
                                    ....
    Mr. B.J.Raichandani for the Petitioner.
    Ms.Madhavi   Tavanandi   with   Ms.Anamika   Malhotra   for   the 
    Respondents.




                                                
                                    .....
                                    CORAM : .D.Y.CHANDRACHUD AND
                                 ig                  A.A.SAYED, JJ. 

November 21, 2011.

ORAL JUDGMENT (PER DR.D.Y.CHANDRACHUD, J.) :

Rule; with the consent of Counsel for the parties

returnable forthwith. With the consent of Counsel and at their

request the Petition is taken up for hearing and final disposal.

2. A search took place of the premises of the Petitioner by

the officers of the SIIB Customs, Mumbai on 21 March 1997 during

the course of which certain foreign currencies together with Indian

currency in the amount of Rs. 5.90 lakhs were seized. A notice to

show cause was issued to the Petitioner by the Assistant Director in

the Enforcement Directorate. An order of adjudication was passed

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on 19 May 1998 by which the foreign currencies seized from the

premises were confiscated and a penalty of Rs.l lakh was imposed.

The adjudicating authority, however, held that there was no

concrete material evidence on the record to establish that the

Indian currency in the amount of Rs. 5.90 lakhs represented the

proceeds of foreign currency. Consequently, the Indian currency

was ordered to be released to the Petitioner after obtaining no

objection of the Income Tax authorities.

3. The order of the adjudicating authority attained finality

on 4 July 1998 upon the expiry of the period of limitation to file an

appeal. The ITO (Investigation) Unit-III, Mumbai issued a no

objection to the Assistant Directorate in the Enforcement

Directorate for the release of an amount of Rs. 5.90 lakhs after

adjustment of the penalty of Rs. 1 lakh.

4. On 3 August 2000, 25 February 2001 and 8 January

2002 communications were addressed by and for and on behalf of

the Petitioner for the release of the Indian currency after

adjustment of the personal penalty of Rs.1 lakh. On 1 February

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2002, the Petitioner was informed by the Assistant Director

(Administration) that the matter had been taken up with the

Deputy Legal Adviser at New Delhi for clearance and the amount

would be cleared as soon as clearance is received. Thereafter,

since nothing happened, the Petitioner addressed representations

through his Advocate on 25 September 2007, 5 November 2007

and 22 February 2008. On 4 March 2008, the Assistant Director

called the Petitioner for a personal hearing. Once again reminders

were addressed by the Petitioner on 5 February 2009 and 8 June

2009. On 9 July 2009, the Petitioner was informed by the

Assistant Director that a refund of Rs. 4.90 lakhs was being

examined once again. The Petitioner's Advocate addressed notices

dated 1 April 2010 and 8 April 2010. The petitioner was informed

on 3 May 2010 to intimate the details of the PAN number and the

Assessing Officer of the Income Tax Department to enable the

claim to be processed. The Petitioner responded by a letter dated

22 July 2010. On 3 August 2010, the Petitioner was informed that

no objection of the Income Tax authorities dated 12 May 2000 had

been considered for processing the release of the amount, which it

was stated, would be done shortly. The Petitioner was requested to

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bear with the Department for the delay. The Petitioner's Advocate

addressed a notice dated 13 August 2010 in response to which he

was informed by a letter dated 18 August 2010 that he may contact

the Assistant Director (Administration) for the release of the Indian

currency. Finally a notice was addressed on 24 August 2010. On 4

October 2010 the Petitioner was informed that a Pay Order for Rs.

4.90 lakhs dated 25 September 2010 was ready and that the

Petitioner could collect it after producing proof of identity. The

Petitioner claimed interest by his notices dated 21 October 2010,

29 October 2010, 20 December 2010 and 4 August 2011 to which

there is no reply.

5. Admittedly, the Petitioner was entitled to the release of

the Indian currency of Rs.5.90 lakhs after adjustment of a personal

penalty of Rs.1 lakh under the order of the adjudicating authority

dated 19 May 1998. The order was not questioned in appeal either

by the Petitioner or by the Department. The Department was duty

bound to make a refund within a reasonable period. The

Department failed to do so for nearly 12 years thereafter for which

there is not even a plausible explanation in the affidavit in reply.

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In the reply, it has been stated that the Petitioner should be

relegated to the remedy of filing a suit and that the Foreign

Exchange Regulation Act, 1973 does not provide for payment of

interest in such circumstances. We are of the view that the

conduct of the Enforcement Directorate is completely contrary to

law. The Enforcement Directorate was duty bound to refund the

amount which was seized from the premises of the Petitioner after

adjusting the personal penalty in terms of the order passed by the

adjudicating authority. Detaining monies of a citizen for ten years

is totally violative of the rule of law. The writ Court in the exercise

of its jurisdiction under Article 226 of the Constitution has

sufficient powers in such cases to award interest.

6. We accordingly dispose of this petition by directing the

Respondents to pay interest on the amount of Rs. 4.90 lakhs from

the expiry of the appeal period of 45 days from the date of the

order dated 19 May 1998 until 4 October 2010 when the

Petitioner was informed that a Pay Order in the amount of Rs. 4.90

lakhs was ready. Interest shall be computed at the rate of 9%

per annum and payment s hall be made to the Petitioner no later

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than within a period of two months from today. We also direct

that the Director in the Enforcement Directorate shall cause an

enquiry to be made of the reasons which led to the delay in the

disbursal of the amount due and payable to the Petitioner and in

the event that any negligence is found on the part of any officer, he

shall take necessary action in accordance with law. We also direct

that immediate administrative action shall be taken, laying down

clear guidelines for observance to ensure that such lapses do not

occur in the future.

7. The Petition is accordingly disposed of.

( Dr.D.Y.Chandrachud, J.)

( A.A. Sayed, J. )