Jamal Ajmal Saidi vs Union Of India (Uoi) And Ors.
2006 Latest Caselaw 854 Del

JUDGMENT

S. Ravindra Bhat, J

Page 1798

1. The writ petitioner in these proceedings under Article 226 of the Constitution claims directions to the respondents, for the release of his passport. He had been issued with a summons under Sections 37(1)(3) of the Foreign Exchange Management Act, 1999 (hereinafter called 'FEMA') read with Section 131 of the Income Tax Act, 1961 (hereafter called the 'IT Act') and asked to produce, his passport and two other documents. Subsequently, by the impugned order dated 10-2-2006 the respondent impounded the passport.

2. The un-controverter facts required for determination of the points involved in this case are stated as follows. The petitioner claims to be a Consultant of long standing, advising and acting on behalf of various multinational companies. He alleges that his expertise lies in promoting business in Gulf countries. It is stated that he continues in that capacity, and has to frequently travel abroad. During the course of business, he has to act on behalf of his principals, both named, as well as unspecified.

3. In October, 2005, the media and various Newspapers carried reports relating to the Volcker Report, which had named several persons as recipients of favors, for facilitating the Iraqi 'Oil for Food' Programme. One Mr. Andleeb Sehgal and his concern, Hamdan Export were named. The respondents (hereinafter refereed to as 'Directorate') caused notices to be issued to the petitioner on 15-11-2005, requiring him to appear in its Offices. He was also asked to produce copy of his passport. It is not disputed that the petitioner was out of town; he was in Sudan. The notice was received by his wife, who communicated it to him. He reached New Delhi the next day, and presented himself, in compliance with the notice. It is alleged, and not controverter by the respondents that the petitioner was asked to surrender his passport to the respondent Directorate, which he did, on 17-11-2005. The latter did not issue any formal or written order, in justification of its action, and kept the passport.

4. The petitioner avers that he co-operated with the respondents, at all times, in the investigations into the Oil for Food scam, and kept representing for the release of the passport, but to no avail. On 10.2.2006, the Directorate issued an order impounding the petitioner's passport along with that of four others. That order reads as follows:

"DIRECtorATE OF ENFORCEMENT

FOREIGN EXCHANGE MANAGEMENT ACT

GOVERNMENT OF INDIA

6th Floor, Lok Nayak Bhawan,

Khan Market, New Delhi-110 003

F.No.:T-1/HQ/305/05(Court) Pt.11 Date: 10.02.2006

ORDER FOR IMPOUNDING OF PASSPORTS UNDER SECTION 37 OF FEMA, 1999 READ WITH SECTION 131(3) OF THE INCOME TAX ACT, 1961

Consequent to the Volcker Committee Report on Oil-For-Food Programme of the United Nations in Iraq, investigations have been initiated by the Page 1799 Directorate of Enforcement under the provisions of the Foreign Exchange Management Act (FEMA), 1999. During the course of investigation, passports of the following persons were summoned by the Directorate, as detailed below, for the purposes of investigation:

----------------------------------------------------------------------------

SL.No. PASSPORT No.                       NAME OF THE HOLDER
----------------------------------------------------------------------------
1.     Z 1378210 and cancelled      Shri Suman Sehgal passport No. B 5079866
2.     Z 1378677                    Shri Zamil Ajmal Saidi
3.     E 1927688                    Shri Vijay Dhar
4.     Z 1175514                    Shri Mohammad Asad Khan
5.     D 1106465 and cancelled      Kanwar Jagat Singh passport No. B 
                                    5151256
----------------------------------------------------------------------------

 

The investigations in the matter are at a very crucial stage and the Directorate is in the process of collection of evidence and recording of statements for which these persons are required in the country. There is also need to ensure that evidence abroad is not tampered with.

In view of the foregoing reasons and considering the sensitive nature of the matter and in exercise of the powers conferred upon me under Section 37 of FEMA, 1999 read with Section 131(3) of the Income Tax Act, 1961, I, hereby impound and retain the above-mentioned passports for the purposes of investigation in the above case.

Sd/-

(S.K. Panda)

Special Director

5. The petitioner impugns the retention and impounding of his passport as violative of his fundamental rights under Articles 19(1)(d) and 19(1)(g) read with Article 21 of the Constitution of India. He also alleges that in the absence of being named in, or in any way connected with, the Iraqi ''Oil for Food'' Programme or implicated in the Volcker Report, the respondents could not have issued the order impounding his passport. It is also claimed that the withholding of his passport and its impounding is contrary to law and provisions of FEMA; it has an adverse impact on the petitioner's livelihood and right to life, which include the right to travel abroad.

6. Mr. Sandeep Sethi, learned Counsel submitted that the respondents also acted contrary to law, and the principles laid down in the judgment of the Supreme Court in In Maneka Gandhi v. Union of India , where it was held that:

It will be seen at once from the language of Article 21 that the protection it secures is a limited one. It safeguards the right to go abroad against executive interference which is not supported by law; and law here means 'enacted law' or 'State law', Vide A.K. Gopalan's case AIR 1950 SC 88. Thus, no person can be deprived of his right to go abroad unless there is a law made by the State prescribing the procedure for so depriving Page 1800 him and the deprivation is effected strictly in accordance with such procedure. It was for this reason, in order to comply with the requirement of Article 21, that Parliament enacted the Passports Act, 1967 for regulating the right to go abroad. It is clear from the provisions of the Passports Act. 1967 that it lays down the circumstances under which a passport may be issued or refused or cancelled or impounded and also prescribes a procedure for doing so, but the question whether that is sufficient compliance with Article 21. Is the prescription of some sort of procedure enough or must the procedure comply with any particular requirements? Obviously, the procedure cannot be arbitrary, unfair or unreasonable.

7. Counsel also submitted that the respondents did not follow any procedure, or even grant opportunity of hearing, following a fair procedure, but unilaterally detained the passport which had been given to them, in November, for about four months; before issuing the impugned order. It was submitted that such action was unsupported by law. It was also submitted that the impugned order does not disclose any reasons, much less valid, or cogent reasons for impounding the petititoner's passport. It was contended that more than 7 months have elapsed, and the respondents have not indicated when the passport would be returned. In the absence of any outer time limit, even if the exercise of power to impound the passport, is otherwise valid, the order wold be vitiated, because the petitioner's valuable right to travel would be extinguished forever.

8. It was contended that travel constitutes the backbone of the petitioner's business; in fact he was abroad when the respondents issued a notice, requiring his presence. His bona fides, it was claimed, were transparent, because he complied with the notice, and co-operated at all times with the investigations. Therefore, the withholding of passport, is unreasonable, and arbitrary.

9. It was also contended that apart from failing to disclose a terminus quo for validity of the period of impounding, the order is devoid of reasons. It was claimed that the petitioner has to visit Jordan, for about 10 days, and that withholding of the passport, in spite of safeguards offered by the petitioner (who has a family in India, as well as property) betrays an arbitrary and mechanical attitude. It was contended that as per provisions of Section 13 and 16 of FEMA, the offences, if established, would at the most, attract a fine; that cannot be a valid ground to withhold passport.

10. The respondent has justified the order, impounding the petitioner's passport. Mr. P.P. Malhotra, learned Additional Solicitor General stated that the facts leading to the detention of the petitioner's passport, and the issuance of the impugned order, impounding it, are not in dispute; he also submitted that the respondents extended the detention order, by the order dated 3-3-2006.

11. The learned ASG contended that the investigations into the Volker scandal, which involved "kickbacks" running into about US $ 1.8 billion, were afoot. It was submitted that though the petitioner's name was not mentioned, his activities were under scrutiny. Counsel submitted that the Page 1801 nature of the investigations demanded that no possibility of tampering with the evidence overseas, had to be ensured. The learned ASG submitted that the respondent is in trail of the amounts of foreign exchange, and at this stage of the investigation, it would not be desirable to permit the petitioner to travel abroad.

12. The learned ASG submitted that the issues of law raised in these proceedings stand covered by the decision of this court, in W.P.(C) 1212/2006 (decided on 18.04.2006), i.e Suman Sehgal v. Union of India. He also submitted that the petitioner too would be given the same benefit as in that judgment, and the authorities would review the issue of releasing the passport on 10-6-2006.

13. During the course of these proceedings, learned Counsel had submitted that the petitioner, as consultant of one of his principals, had to attend tender negotiations, between 5th and 15th May, 2006, at Amman, Jordan. The order-sheet for 27-4-2006, 1-05-2006, 2-5-2006 and 3-5-2006 disclose, that some attempts were made by the parties to resolve the issue; however they did not yield any fruitful result. The petition was, accordingly, heard on 5-5-2006, and reserved for judgment.

14. I have seen the judgment in Suman Sehgal's case (supra). There too, the challenge was to the same order, dated 10-2-2006. The court had ruled that the power to impound a passport was not restricted to provisions of the Passports Act, and that the provisions of FEMA could be invoked for the purpose. Section 23 of the Passports Act, was inter alia, noticed in support of that conclusion. The court had also ruled that the impounding order, in so far as the petitioner in that proceeding was concerned, was not violative of Articles 19 or 21 of the Constitution of India. The court had, in conclusion, directed as follows:

35. The impugned order also states that the nature of the mater is sensitive and keeping in mind all the four considerations, the passport of the petitioner, was being impounded. The petitioner has not seriously disputed that the process of investigation into the Volcker Committee Report on Oil for Food Programmes of the United Nations in Iraq are under way. In that report, names of several persons were indicated. The petitioner's son Andleeb Sehgal and his associates were named as persons who handled transactions. Although the petitioner strongly endeavored to state that he had no connection with his sons transaction and that there was only one entry in the balance sheet of Aviv Export House (Private) Limited in which he and his son are co-Directors, the respondents rely on the close relationship of the petitioner and his son and also the fact that the petitioner is now seeking release of his passport to sign a consultancy contract, which was entered into in November 2005 after the Volcker Committee Report became public. These facts were cited as grounds to voice the authorities' apprehensions about his true intentions.

36. Inherent in the nature of such enquiries, is the need to preserve evidence because unlike normal crimes or misdemeanours if an alleged offender or his associate is permitted to go abroad, the money trail might Page 1802 be lost. Equally the severity of penalty (the petitioner's counsel had urged that under Section 13 the maximum penalty could be only Rs. 2 lakhs) cannot be a consideration for holding that the investigation is based upon no material. Although, the penalty in case of unquantifiable amounts can be up to Rs. 2 lakhs, however, where quantification is possible, the penalty can be up to three times the sum involved in the contravention and in addition, it is subject to confiscation. Therefore, even on that score the petitioner's submissions are unmerited. The respondents are within their rights to state that at this stage it would un-wise and imprudent to disclose further material and that in the interests of investigation and enquiry, it would be necessary to impound the petitioner's passport.

37. The impugned order does not indicate any time frame within which the petitioner's passport can be released. As noticed by the Gujarat High Court in its judgment in Abdul Kader's case an order impounding a passport under similar circumstances cannot have indefinite life as it would then adversely impact upon the rights of citizen to travel abroad and carry on his business activities. Therefore, the respondents ought to review the entire issue and pass specific orders within a period of four months from the date of issuance of the order impounding the petitioner's passport, namely, 10.2.2006.

15. The factual distinction between the present case, and that in Sehgal's case is that there, the petitioner was the father of a person named in the Volker report. The petitioner's counsel had sought to stress this aspect, to say that in this case, the petitioner cannot be made to suffer and impounding of his passport would affect his commercial activities gravely.

16. The provisions of law, resorted to in this case, have not been admittedly impugned. The reasoning in Sehgal as far as it relates to the contention that the offences under FEMA are only punishable with penalty, too, applies with equal force. The only question is whether the petitioner can legitimately complain that the procedure adopted, in not granting any opportunity of hearing or before impounding, is opposed to principles of natural justice.

17. It is true that in Maneka Gandhi's case, the Supreme Court had underlined the importance of a hearing as a precursor to issuance of an order impounding a citizen's passport. However, the reasons furnished in that case, viz the public interest in ensuring the presence of the petitioner to attend Commissions of Inquiry, was upheld. The court did not ultimately interfere with the order, in view of the statement on behalf of the Central Government that a hearing would be given. In view of the undisputed fact that investigations are on to find out, and bring to book the offenders in relation to the Volker committee's disclosures, and the assertion of the respondents that the petitioner's presence is required for the purpose, due to which his passport stands impounded, no infirmity can be found with the order, impugned in this Petition.

Page 1803

18. A singular feature that stands out is that the respondents kept the petitioner's passport between 17th November 2005 and 10-2-2006, without any formal order. No legal provision, or power was pointed out in support of such an action. It is settled law that every decision or action of the State, in relation to a citizen's rights must be traced to, or be relatable to legal provisions; they must bear a "legal pedigree" (Ref State of U.P and Ors. Appellants v. Maharaja Dharmander Prasad Singh ; and Bishan Das v. State of Punjab . The period of "detention" of the passport between 17-11-2005 and 10-2-2005 was therefore, clearly without authority of law; such a practice, if one may so characterize it, violates the rule of law, and is arbitrary. Equally, the lack of an outer limit in respect of the impounding order, makes it suspect. The petitioner is therefore, entitled to the same relief as the petitioner in Sehgal's case, on that score.

19. The respondents are, therefore, directed to review the entire issue relating to the impounding of the petitioner's passport, and pass specific orders within a period of four months from the date of issuance of the impugned order 10.2.2006.

20. The petition is dismissed subject to the directions contained in the preceding paragraph. No costs.