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petition under Article 32 of the Constitution concerns constitutional validity of Section 3(1) of Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (for short, ‘COFEPOSA’) to the extent it empowers the competent authority to make an order of detention against any person ‘with a view to preventing him from acting in any manner prejudicial to the conservation or augmentation of foreign exchange’.The order of detention in question has not been executed so far in view of the contumacious conduct of the second petitioner. He is alleged to have absconded initially. Then on December 14, 2009 Delhi High Court, by an interim order directed that the detenue shall not be arrested till the next date of hearing, i.e. December 22, 2009. The said interim order was continued until the disposal of writ petition by the High Court and thereafter that interim order was continued by this Court in the special leave petition. In the writ petition also an interim order has been in operation. In view of the order dated July 13, 2010 passed by this Court, the petitioners cannot be permitted to challenge the order of detention until its execution. 67. In view of the above, the leave to make additional prayer for quashing the detention order dated September 23, 2009 by means of criminal miscellaneous application does not deserve to be granted and is rejected. However, it is clarified that after the execution of the detention order, the petitioners shall be at liberty to challenge the detention order in accordance with law. 68. Since we have rejected the criminal miscellaneous application, the argument of the learned counsel for the petitioners that the impugned order of detention was passed way back on September 23, 2009; the impugned order was preventive in nature and the maximum period of detention as per law is one year, which would have lapsed by now and, therefore, no purpose for the execution of the detention order survives is noted to be rejected. The detention order could not be executed because of the contumacious conduct of the second petitioner and, therefore, he cannot take advantage of his own wrong. 69. Writ petition and criminal miscellaneous application, for the reasons indicated above, are liable to be rejected and are rejected.

REPORTABLE

English: The supreme court of india. Taken abo...

English: The supreme court of india. Taken about 170 m from the main building outside the perimeter wall (Photo credit: Wikipedia)

 
IN THE SUPREME COURT OF INDIA
ORIGINAL JURISDICTION
WRIT PETITION (Crl. ) NO. 65 OF 2010
Dropti Devi & Anr. ….
Petitioners

Versus

Union of India & Ors.
….Respondents

 

 

 

 

 

JUDGMENT
R.M. Lodha, J.
The central issue in this petition under Article 32 of the
Constitution concerns constitutional validity of Section 3(1) of
Conservation of Foreign Exchange and Prevention of Smuggling Activities
Act, 1974 (for short, ‘COFEPOSA’) to the extent it empowers the competent
authority to make an order of detention against any person ‘with a view to
preventing him from acting in any manner prejudicial to the conservation or
augmentation of foreign exchange’.
2. It is necessary to state few material facts which have given
rise to this petition. The first petitioner – Dropti Devi – is the mother
of second
petitioner – Raj Kumar Aggarwal. In respect of second petitioner an order
of detention has been passed on September 23, 2009 by Smt. Rasheda
Hussain, Joint Secretary to the Government of India, specially empowered
under Section 3(1) of the COFEPOSA (as amended). The said order reads as
follows :
“No. 673/02/2009-Cus. VIII
Government of India
Ministry of Finance
Department of Revenue
Central Economic Intelligence Bureau
COFEPOSA Unit

6th Floor, ‘B’ Wing, Janpath Bhawan,
Janpath, New Delhi – 110001

Dated 23rd September, 2009

ORDER
Whereas, I Smt. Rasheda Hussain, Joint Secretary to the
Government of India, specially empowered under Section 3(1) of the
Conservation of Foreign Exchange & Prevention of Smuggling Activities
Act, 1974 (as amended), am satisfied with respect to the person known
as Shri Raj Kumar Aggarwal @ Munna, R/o SU-184, G.F. Near Park Citi
Hostel Pitampura, New Delhi that with a view to preventing him from
acting in any manner prejudicial to the conservation and augmentation
of foreign exchange in future, it is necessary to make the following
order:-

Now, therefore, in exercise of the powers conferred by Section
3(1) of the Conservation of Foreign Exchange and Prevention of
Smuggling Activities Act, 1974 (as amended), I direct that the said
Shri Raj Kumar Aggarwal @ Munna , be detained and kept in custody in
the Central Jail, Tihar, New Delhi.

Sd/-
(Rasheda Hussain)
Joint Secretary to the Government of
India”
3. The above detention order came to be passed in the backdrop of
the following events. On February 17, 2009 the premises of Ambika
Electronics situate at 136, MCD Market, Karol Bagh, New Delhi was raided by
the Office of the Directorate of Enforcement, New Delhi. In the course of
search, Indian currency amounting to Rs. 8.9 lacs (approximately) was
recovered along with some documents. The enforcement authorities took into
custody the passport of second petitioner (hereinafter referred to as
‘detenue’) as well. On that day itself, i.e. February 17, 2009 Office of
the Directorate of Enforcement also raided the residential premises of
detenue’s brother Anil Kumar Aggarwal at Pitam Pura, New Delhi and another
commercial premises of Ambika Electronics at Beadanpura, Karol Bagh, New
Delhi and M/s. Bhagwati Electronics, 135 Municipal Market, Karol Bagh, New
Delhi belonging to one Kapil Jindal were also raided. The detenue was
also taken away by the officials of the Directorate of Enforcement to their
office at Jamnagar House, Akbar Road, New Delhi in the intervening night of
February 17, 2009 and February 18, 2009. The detenue was interrogated and
his statement was recorded. On February 19, 2009 the detenue retracted from
the statement recorded in the previous night. The detenue was summoned on
various occasions but he did not appear before the authorities on the
ground of his illness. On May 15, 2009 the detenue appeared before the
authorities and his statement was recorded on that day and subsequently on
May 18, 2009. May 20, 2009 and May 28, 2009. The evidence gathered in the
course of searches and the follow up action revealed that the detenue was
indulging in hawala activities, the last of such activity being on April
24, 2009. Hence, the detention order which has been quoted above.
4. Initially a writ petition was filed before this Court
challenging the detention order but that was withdrawn. The first
petitioner then filed a writ petition before Delhi High Court being W.P.
(Crl.) No. 1787 of 2009 challenging the detention order dated September 23,
2009.
5. The Division Bench of the Delhi High Court on December 14, 2009
by an interim order directed that the detenue – Raj Kumar Aggarwal shall
not be arrested till the next date of hearing, i.e. December 22, 2009.
6. On December 22, 2009 the Division Bench allowed the application
for impleadment of Raj Kumar Aggarwal as petitioner no. 2, issued rule and
made interim order dated December 14, 2009 absolute during the pendency of
writ petition, subject to his joining the investigation as and when called.
The court on that day also issued a direction to the detenue to remain
present in the matter during the course of hearing.
7. The Division Bench completed the hearing on February 4, 2010
and reserved the judgment in the matter. On March 18, 2010, the Division
Bench dismissed the writ petition. While dealing with the effect of Foreign
Exchange Management Act, 1999 (for short, ‘FEMA’) and the repeal of
Foreign Exchange Regulation Act, 1973 (for short, ‘FERA’) , the Division
Bench relied upon a decision of this Court in Union of India & Anr. vs.
Venkateshan S. and another[1] and observed that if the activity of any
person was prejudicial to the conservation or augmentation of foreign
exchange, the authorities were empowered to make a detention order against
such person.

8. Not satisfied with the judgment of the Delhi High Court passed
on March 18, 2010, the petitioners filed a special leave petition before
this Court and it was mentioned on April 1, 2010. On that day, the Court
directed for listing the matter on April 9, 2010 and in the meanwhile
continued the interim order that was passed by the High Court operative
during the pendency of the writ petition.
9. It may be noted here that while the above special leave
petition was pending, the petitioners preferred the present writ petition.
On May 11, 2010 the Court ordered the writ petition to be heard along with
special leave petition (Crl.) no. 2698 of 2010. On May 13, 2010, the
special leave petition and the present writ petition were listed before the
Court. On that day in the special leave petition following interim order
was passed :

 

“By order dated December 22, 2009, the High Court directed the
Petitioner No. 2 i.e. Mr. Raj Kumar Aggarwal to join the investigation
as and when called. The grievance made by the respondents is that Mr.
Raj Kumar Aggarwal has failed to join the investigation, which is
disputed by Mr. Soli J. Sorabjee, learned senior counsel for the
petitioners. Mr. Sorabjee further states that Mr. Raj Kumar Aggarwal
will present himself on 19th May, 2010 at 11 A.M. in the office of the
Enforcement Director, Delhi Zonal Office, Jamnagar House, New Delhi
and shall also remain present before the said officer as and when
called along with the requisite documents. Mr. Raj Kumar Aggarwal is
directed to comply with and act according to the statement made at the
Bar by his learned counsel.
Interim orders shall continue subject to the direction given above.
In view of the order passed above, learned senior counsel for the
petitioners seeks permission to withdraw the application for extension
of interim order granted by this Court on 1.4.2010. The permission, as
prayed for, is granted and application is disposed of accordingly.
On the joint request of the learned counsel of the parties, the matter
is adjourned to 13th July, 2010.”

10. In the writ petition, notice was issued and it was detagged
from special leave petition (Crl.) No. 2698 of 2010.
11. On July 13, 2010, the special leave petition was dismissed as
withdrawn. The Court passed the following order :

“The Special Leave Petition is dismissed as withdrawn.
The petitioners are at liberty to avail such remedy as may be
available in law challenging the order of detention and the grounds on
which detention order has been passed after its execution. In which
event, the matter shall be considered on its own merits uninfluenced
by the observations made in the impugned order as well as dismissal of
this petition. The High Court may consider the request of the
petitioners/detenue for expeditious disposal of the writ petition to
be filed.”

 

 
12. We have heard Mr. Vikram Chaudhari, learned counsel for the
petitioners and Mr. P.P. Malhotra, learned Additional Solicitor General for
the respondents.
13. The crux of the argument advanced by Mr. Vikram Chaudhari is
this: Articles 14, 19 and 21 of the Constitution do not contemplate
preventive detention for an ‘act’ where no punitive detention (arrest and
prosecution) is even contemplated or provided under law. Such an ‘act’
cannot be made the basis for a preventive detention and such an ‘act’ could
not be termed as prejudicial so as to invoke the power of preventive
detention and, therefore, Section 3(1) of COFEPOSA to the extent noted
above is unconstitutional.
14. Elaborating his arguments, Mr. Vikram Chaudhari submitted that
there were three other Central Preventive Acts apart from COFEPOSA, namely,
(a) National Security Act, 1980, (b) Prevention of Blackmarketing and
Maintenance of Supplies of Essential Commodities Act, 1980 and (c)
Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Act, 1974.
In all these three enactments, there are corresponding penal provisions in
the form of prosecution. However, in COFEPOSA viz., the power to detain a
person to prevent him from indulging in any prejudicial activities relating
to conservation or augmentation of foreign exchange is given although there
is no corresponding penal punitive law available. He referred to various
provisions of FEMA, particularly, Chapter IV that deals with contravention
and penalties; Chapter V that provides for adjudication as well as appeal
against the order of adjudicating authority vide Sections 16 and 17;
Chapter VI that provides for establishment of Directorate of Enforcement;
Section 40 that stipulates that the Central Government may in any peculiar
circumstances suspend either indefinitely or for a limited period the
operation of all or any of the provisions of FEMA and Section 49 which
provides for repeal of FERA and sub-section (3) thereof that envisages that
no court shall take cognizance of an offence under the repealed Act and
submitted that there was major shift in the approach of the Legislature
inasmuch as foreign exchange violation has been made a civil compoundable
offence only under FEMA.

15. It was argued by learned counsel for the petitioners that a
dichotomy had arisen on repeal of FERA as conviction under FERA would be no
longer a relevant basis for initiation of proceedings under the Smugglers
and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976
(SAFEMA) whereas on the same set of accusations detention order under
COFEPOSA could be made thereby warranting proceedings under SAFEMA.

16. Relying on the decisions of this Court in Motor General Traders
and another v. State of Andhra Pradesh and others[2], John Vallamattom and
another v. Union of India[3] and Satyawati Sharma (Dead) by LRs. v. Union
of India and another[4], learned counsel for the petitioners contended that
impugned portion of Section 3 might not have been unconstitutional at the
initial stage when it was enacted but by reason of the new legal regime
articulated in FEMA and replacement of FERA by FEMA, the said provision has
become unconstitutional in the changed situation.
17. Learned counsel for the petitioners submitted that though
Article 31B of the Constitution provided protection to the laws added to
the Ninth Schedule by amendments but, as exposited by this Court in I.R.
Coelho (Dead) by LRs. v. State of T.N.[5], constitutionality of such laws
can be examined and if in judicial review, it is found that any of such
laws abrogates or abridges rights guaranteed by Part-III of the
Constitution, the Court can invalidate such law. According to him, since
the impugned provision violates fundamental rights reflected in Article 21
read with Articles 14 and 19, despite protection granted to COFEPOSA being
part of Ninth Schedule, in the judicial review the Court has power to
declare the said law unconstitutional.

18. Mr. Vikram Chaudhari contended that preventive detention was
aimed at preventing a person from committing prejudicial act which is
necessarily an offence capable of inviting penal consequences. If such
prejudicial act was not prosecutable in law and such act has not been made
part of criminal penal law, preventive detention of a person from
committing the prejudicial act which is not an offence is impermissible. In
this regard, he sought to draw support from decisions of this Court in
State of Bombay v. Atma Ram Sridhar Vaidya[6]; Bhut Nath Mete v. The State
of West Bengal[7]; Haradhan Saha v. The State of West Bengal and others[8];
Kanchanlal Maneklal Chokshi v. State of Gujarat and others[9]; Smt. Hemlata
Kantilal Shah v. State of Maharashtra and another[10]; State of Punjab v.
Sukhpal Singh[11] and Rekha v. State of Tamil Nadu Through Secretary to
Government and Another[12].
19. As regards the decision of this Court in Venkateshan S.1,
learned counsel submitted that in that case the events which led to the
detention of the detenue therein had taken place when FERA was in place
and FEMA had not come into force and in view of the sunset clause the
prosecution for violation of FERA could continue for next two years and,
therefore, the said decision was clearly distinguishable. He further
submitted that constitutionality of Conservation of Foreign Exchange (COFE)
part of COFEPOSA was not in issue. The Court proceeded on the assumption
that the past act which was made basis for preventive detention invited
punishment by way of prosecution and decided the matter accordingly. He
thus, argued that Venkateshan S.1 did not come in the way of the
petitioners in assailing the constitutional validity of part of Section 3
of COFEPOSA.
20. Learned counsel vehemently contended that since FEMA did not
regard its violation a criminal offence, the whole idea, spirit, intent and
object behind the enactment of preventive detention had ceased to exist and
the continuation of such provision was violative of Article 21 read with
Articles 14 and 19 of the Constitution. He, thus, submitted that the
provision for preventive detention under COFEPOSA was wholly unsustainable
and untenable.
21. Mr. Vikram Chaudhari in his written submissions has also dealt
with legal position with regard to preventive detention existing in USA,
England, Australia and Germany. He referred to the excerpts from “The
Limits of Preventive Detention” by Rinat Kitai – Sangero 2009 (Pgs. 904-
932) and submitted that in USA and in England law regarding preventive
detention does not exist except during war time. He, however, did submit
that in United States v. Anthony Salerno and Vincent Cafaro[13] the
constitutionality of pre-trial detention on the ground of dangerousness
under the Bail Reform Act of 1984 was upheld and after Anthony Salerno and
Vincent Cafaro 13 preventive detention laws were adopted in number of U.S.
States but the said procedure has been used sparingly and in U.K. under the
Prevention of Terrorism (Temporary Provisions) Act, 1984 a person may be
detained upto 7 days. In Australia preventive detention orders and
prohibited conduct orders are two mechanisms available under criminal law
for addressing terrorism concerns and dangerous sex offenders. The
preventive detention order permits detention of a person for a short period
of time (upto 48 hours) subject to certain procedural rights. In Germany in
1998 law for the prevention of sexual offences and other dangerous criminal
acts has been enacted.
22. Mr. P. P. Malhotra, learned Additional Solicitor General
stoutly defended the constitutional validity of the part of Section 3(1) of
COFEPOSA put in issue in the writ petition. He extensively referred to the
provisions of FERA and FEMA and the preamble of COFEPOSA and submitted that
dealings in foreign exchange by a person other than authorised
persons/dealers have serious and deleterious consequences. The foreign
exchange is the most precious reserve for national economy and necessary
for the economic security of the State and illegal and/or unaccounted
transactions through hawala have vide ramifications and are definitely
prejudicial to the conservation and augmentation of foreign exchange and
since the need for conservation and augmentation of foreign exchange
resources of the country continue to exist, preventive mechanism laid down
in COFEPOSA warrants its continuance and there is nothing unconstitutional
about it.
23. Learned Additional Solicitor General submitted that the
legislative power of the Parliament to enact criminal laws and preventive
detention laws was traceable from two distinct Entries appearing in Seventh
Schedule (List III) of the Constitution, i.e., Entry nos. 1 and 3
respectively. Parliament is, thus, fully competent to enact a law of either
type (criminal or preventive detention) or both the types (criminal laws
and preventive detention) to deal with any prejudicial activity. He
submitted that there was no constitutional prescription that the
Legislature must enact a criminal law as well while making a detention law
to curb any prejudicial activity. It is not imperative that detention law
should co-exist with a criminal law or vice versa.

24. Mr. P.P. Malhotra submitted that the constitutional validity
of COFEPOSA had already been upheld by a 9-Judge Bench of this Court in
Attorney General for India and others v. Amratlal Prajivandas and
others[14]. In Amratlal Prajivandas14 this Court has held that
Parliament was competent to enact COFEPOSA. Once constitutional validity
of COFEPOSA has been upheld by a 9-Judge Bench of this Court, learned
Additional Solicitor General submitted that constitutionality of Section
3 was not open to challenge again. He submitted that in I.R. Coelho5 a 9-
Judge Bench of this Court had observed that if the validity of a Ninth
Schedule law had already been upheld by this Court, it would not be open to
challenge such law again on the principles laid down in the case (i.e.,
I.R. Coelho5 ). However, if a law held to be violative of any rights in
Part-III was subsequently incorporated in the Ninth Schedule after April
24, 1973, such a violation/infraction would be open to challenge on the
ground that it was destructive of the basic structure of the Constitution.
The present case is not covered by the exception carved out in I.R. Coelho5
and moreover, the petitioners have miserably failed to make out a case as
to how COFEPOSA or impugned provision was destructive of the basic
structure of the Constitution.
25. In support of his submissions, learned Additional Solicitor
General heavily relied upon the observations made by this Court in
Venkateshan S.1.
26. Mr. P.P. Malhotra submitted that the objects and reasons of
COFEPOSA clearly showed that the purpose of the enactment was to prevent
violation of foreign exchange regulation and smuggling activities which
have increasingly deleterious serious effect on the security of the State.
Section 3 of COFEPOSA has not been amended or repealed by Parliament.
Section 3(1) of COFEPOSA that authorises detention with a view to prevent
activities prejudicial to the conservation or augmentation of foreign
exchange is valid from constitutional angle.
27. On 26th day of November, 1949, People of India resolved to
constitute India into Sovereign Democratic Republic and in the Constituent
Assembly adopted, enacted and gave to themselves an instrument of social
contract – the Constitution of India – which became effective from January
26, 1950. The Constitution of India is fountainhead of all laws and
provides the machinery by which laws are made. Any statutory law, in order
to be valid, must be in conformity with the constitutional requirements.
There cannot be any departure or deviation from this principle. For the
purposes of the present matter, it is not necessary to deal with the
diverse features of the Constitution elaborately, suffice, however, to
state that Part III that provides for fundamental rights is the most
important chapter insofar as individuals and citizens are concerned.
28. Article 12 for the purposes of Part III defines ‘the State’.
29. Article 13(2) mandates that the State shall not make any law
which takes away or abridges the rights conferred by Part III and any law
made in contravention of this provision shall be void to the extent of the
contravention.
30. Article 14 states that the State shall not deny to any person
equality before the law or the equal protection of the laws within the
territory of India.
31. Article 19 protects certain rights of the citizens. It provides
that all citizens shall have the right – (a) to freedom of speech and
expression; (b) to assemble peaceably and without arms; (c) to form
associations or unions or co-operative societies; (d) to move freely
throughout the territory of India; (e) to reside and settle in any part of
the territory of India and (g) to practice any profession or to carry on
any occupation, trade or business. The above clauses (a), (b), (c), (d),
(e) and (g) are, however, subject to restrictions set out in Article
19(2)(3)(4)(5) and (6) respectively.
32. Article 21, which is the most sacrosanct and precious of all
other Articles insofar as an individual is concerned, guarantees protection
of life and personal liberty. It mandates that no person shall be deprived
of his life or personal liberty, except according to procedure established
by law.
33. Article 31B saves challenge to the Acts and Regulations specified in
the Ninth Schedule on the ground of inconsistency with, taking away or
abridging any fundamental right. It was brought into statute by the
Constitution (First Amendment) Act, 1951. It reads as follows:
“31B. Validation of certain Acts and Regulations.—Without prejudice to
the generality of the provisions contained in article 31A, none of the
Acts and Regulations specified in the Ninth Schedule nor any of the
provisions thereof shall be deemed to be void, or ever to have become
void, on the ground that such Act, Regulation or provision is
inconsistent with, or takes way or abridges any of the rights
conferred by, any provisions of this Part, and notwithstanding any
judgment, decree or order of any court of tribunal to the contrary,
each of the said Acts and Regulations shall, subject to the power of
any competent Legislature to repeal or amend it, continue in force.”
34. COFEPOSA is specified in the Ninth Schedule at Item No. 104.
The amendment in COFEPOSA therein by Central Act 20 of 1976 is specified at
Item No. 129 in the Ninth Schedule.
35. Article 22 is in two parts. First part that comprises of
clauses 1 and 2 is applicable to those persons arrested or detained under a
law otherwise than a preventive detention law. The second part that
comprises of clauses 4 to 7 applies to persons arrested or detained under
the preventive detention law.
36. In the backdrop of the above constitutional provisions and
scheme, the issue with regard to constitutional validity of Section 3(1) of
COFEPOSA to the extent it empowers the competent authority to make an
order of detention against any person with a view to preventing him from
acting in any manner prejudicial to the conservation and augmentation of
foreign exchange has fallen for consideration.
37. There appears to be consistent line of cases of this Court
beginning from 1950 itself which says that preventive detention can
constitutionally operate. In A.K. Gopalan v. The State of Madras[15],
which was decided by this Court within few months of coming into force of
our Constitution, the Court upheld the constitutional validity of Section
3(1) of the Preventive Detention Act, 1950 on the touchstone of Articles
13, 14, 19, 21 and 22 of the Constitution.

38. In Atma Ram Sridhar Vaidya6 , Chief Justice Hari Lal Kania said
that preventive detention was not by itself considered an infringement of
any of the fundamental rights mentioned in Part III of the Constitution.
He, however, clarified that this was, of course, subject to the limitations
prescribed in clause (5) of Article 22. Echoing the same sentiment,
Patanjali Sastri, J. stated, “the Constitution itself has authorised
preventive detention and denied to the subject the right of trial before a
court of law and of consulting or being defended by a legal practitioner
of his choice, providing only certain procedural safeguards, the Court
could do no more than construe the words used in that behalf in their
natural sense consistently with the nature, purpose and scheme of the
measure thus authorised, to ascertain what powers are still left to the
court in the matter”.
39. A Constitution Bench of this Court in Haradhan Saha8 was
concerned with constitutional validity of Maintenance of Internal Security
Act, 1971 (for short, ‘MISA’) which enabled the State and its delegated
authority to order preventive detention of a person. The Court articulated
the concept of preventive detention in contra- distinction to punitive
action in the following words :
“19. The essential concept of preventive detention is that the
detention of a person is not to punish him for something he has done
but to prevent him from doing it. The basis of detention is the
satisfaction of the Executive of a reasonable probability of the
likelihood of the detenu acting in a manner similar to his past acts
and preventing him by detention from doing the same. A criminal
conviction on the other hand is for an act already done which can only
be possible by a trial and legal evidence. There is no parallel
between prosecution in a court of law and a detention order under the
Act. One is a punitive action and the other is a preventive act. In
one case a person is punished to prove his guilt and the standard is
proof beyond reasonable doubt whereas in preventive detention a man is
prevented from doing something which it is necessary for reasons
mentioned in Section 3 of the Act to prevent.”

 
With regard to the rights guaranteed to a detenue under Article 22(5), the
Court said, “Article 22(5) shows that law as to detention is necessary. The
requirements of that law are to be found in Article 22. Article 22 gives
the mandate as to what will happen in such circumstances”.
39.1. The Court in para 32 (pg. 208 of the Report) drew distinction
between the power of preventive detention and punitive detention thus :

 

“32. The power of preventive detention is qualitatively different from
punitive detention. The power of preventive detention is a
precautionary power exercised in reasonable anticipation. It may or
may not relate to an offence. It is not a parallel proceeding. It does
not overlap with prosecution even if it relies on certain facts for
which prosecution may be launched or may have been launched. An order
of preventive detention may be made before or during prosecution. An
order of preventive detention may be made with or without prosecution
and in anticipation or after discharge or even acquittal. The pendency
of prosecution is no bar to an order of preventive detention. An order
of preventive detention is also not a bar to prosecution.”
40. In Khudiram Das v. The State of West Bengal and others[16], a
four-Judge Bench of this Court held that although a preventive detention
law may pass the test of Article 22 yet it has to satisfy the requirements
of other fundamental rights such as Articles 14 and 19.
40.1. While dealing with the constitutional validity of MISA, the
four-Judge Bench in Khudiram Das16 stated in para 12 (pgs. 93-95 of the
Report) as follows :
“12. The next question which then arises for consideration is whether
Section 3 of the Act insofar as it empowers the detaining authority to
exercise the power of detention on the basis of its subjective
satisfaction imposes unreasonable restrictions on the fundamental
rights of the petitioner under clauses (a) to (d) and (g) of Article
19, and is, therefore, ultra vires and void. The view taken by the
majority in A.K. Gopalan v. State of Madras, (1950) SCR 88, was that
Article 22 is a self-contained code, and therefore, a law of
preventive detention does not have to satisfy the requirements of
Articles 14, 19 and 21. This view came to be considered by this Court
in three subsequent decisions to all of which one of us (P.
Jaganmohan, Reddy, J.) was a party. In Rustom Cavasjee Cooper v. Union
of India ((1970) 3 SCR 530) it was held by a majority of Judges, only
Ray, J., as he then was, dissenting, that though a law of preventive
detention may pass the test of Article 22, it has yet to satisfy the
requirements of other fundamental rights such as Article 19. The ratio
of the majority judgment in R.C. Cooper’s case was explained in clear
and categorical terms by Shelat, J., speaking on behalf of seven
Judges in Shambhu Nath Sarkar v. State of West Bengal (1973) 1 SCC 856
. The learned Judge said : [SCC p. 879 : SCC (Cri) p. 641, para 39)
“In Gopalan case the majority court had held that Article 22 was
a self-contained code and therefore a law of preventive detention
did not have to satisfy the requirements of Articles 19, 14 and
21. The view of Fazl Ali, J., on the other hand, was that
preventive detention was a direct breach of the right under
Article 19(a)(d) and that a law providing for preventive
detention had to be subject to such judicial review as is
obtainable under clause (5) of that Article. In R.C. Cooper v.
Union of India the aforesaid premise of the majority in Gopalan’s
case was disapproved and therefore it no longer holds the field.
Though Cooper’s case dealt with the inter-relationship of Article
19 and Article 31, the basic approach to construing the
fundamental rights guaranteed in the different provisions of the
Constitution adopted in this case held the major premise of the
majority in Gopalan’s case to be incorrect.”
Subsequently in Haradhan Saha v. State of West Bengal, (1975) 3 SCC
198, a Bench of five Judges, after referring to the decisions in A.K.
Gopalan’s case and R.C. Cooper’s case and pointing out the context in
which R.C. Cooper’s case held that the acquisition of property
directly impinged the right of the bank to carry on business, other
than banking, guaranteed under Article 19 and Article 31(2) was not a
protection against the infringement of that guaranteed right,
proceeded on the assumption that the Act which is for preventive
detention has to be tested in regard to its reasonableness with
reference to Article 19. That decision accepted and applied the ratio
in Shambhu Nath Sarkar’s case as well as R.C. Cooper case to both of
which Ray, C.J., was a party. This question, thus, stands concluded
and a final seal is put on this controversy and in view of these
decisions, it is not open to any one now to contend that a law of
preventive detention, which falls within Article 22, does not have to
meet the requirement of Article 14 or Article 19. Indeed, in Haradhan
Saha’s case this Court proceeded to consider the challenge of Article
19 to the validity of the Act and held that the Act did not violate
any of the constitutional guarantees embodied in Article 19 and was
valid. Since this Court negatived the challenge to the validity of the
Act on the ground of infraction of Article 19 and upheld it as a valid
piece of legislation in Haradhan Saha’s case, the petitioner cannot be
permitted to reagitate the same question merely on the ground that
some argument directed against the constitutional validity of the Act
under Article 19 was not advanced or considered by the Court in that
case. The decision in Haradhan Saha’s case must be regarded as having
finally laid at rest any question as to the constitutional validity of
the Act on the ground of challenge under Article 19.”
41. In Smt. Hemlata Kantilal Shah10 while dealing with detention
of the petitioner’s husband under Section 3(1) of COFEPOSA and the diverse
submissions made on behalf of the petitioner, the Court held that
prosecution or the absence of it was not an absolute bar to an order of
preventive detention. It was further held: “but, if there be a law of
preventive detention empowering the authority to detain a particular
offender in order to disable him to repeat his offences, it can do so, but
it will be obligatory on the part of the detaining authority to formally
comply with the provisions of Article 22(5) of the Constitution”.
42. The necessity of preventive detention was succinctly explained
by a two-Judge Bench of this Court in Sukhpal Singh11. In that case, the
Court was concerned with detention of the respondent’s father under
Section 3(2) of the National Security Act, 1980 read with Section 14A as
inserted by National Security (Amendment) Act, 1987. In paragraphs 8 and 9
(pgs. 42 – 44 of the Report) this Court held :

“8.……….A clear distinction has to be drawn between preventive
detention in which anticipatory and precautionary action is taken to
prevent the recurrence of apprehended events, and punitive detention
under which the action is taken after the event has already happened.
It is true that the ordinary criminal process of trial is not to be
circumvented and short-circuited by apparently handy and easier resort
to preventive detention……
…….To apply what was said in Rex v. Halliday, ex parte Zadig (1917 AC
260), one of the most obvious means of taking precautions against
dangers such as are enumerated is to impose some restriction on the
freedom of movement of persons whom there may be any reason to suspect
of being disposed to commit what is enumerated in Section 3 of the
Act. No crime is charged. The question is whether a particular person
is disposed to commit the prejudicial acts. The duty of deciding this
question is thrown upon the State. The justification is suspicion or
reasonable probability and not criminal charge which can only be
warranted by legal evidence. It is true that in a case in which the
liberty of such person is concerned we cannot go beyond natural
construction of the statute. It is the duty of this Court to see that
a law depriving the person of his liberty without the safeguards
available even to a person charged with crime is strictly complied
with. We have, however, to remember that individual liberty is allowed
to be curtailed by an anticipatory action only in interest of what is
enumerated in the statute.”
9. ….. As we have already seen the power of preventive detention is
qualitatively different from punitive detention. The power of
preventive detention is precautionary power exercised reasonably in
anticipation and may or may not relate to an offence. It cannot be
considered to be a parallel proceeding. The anticipated behaviour of a
person based on his past conduct in the light of surrounding
circumstances may provide sufficient ground for detention….”.

 

43. A three-Judge Bench of this Court in Additional Secretary to
the Government of India and others v. Smt. Alka Subhash Gadia and
another[17], was concerned with a criminal appeal preferred by Government
of India and its authorities against the judgment of the Bombay High Court
which quashed the detention order of the husband of the first respondent
issued under Section 3(1) of COFEPOSA. The Court framed the principle
question of law: ‘whether the detenue or anyone on his behalf is entitled
to challenge the detention order without the detenue submitting or
surrendering to it’. It was held that the provisions of Articles 21 and 22
read together make it clear that a person can be deprived of his life or
personal liberty according to procedure established by law, and if the law
made for the purpose is valid, the person who is deprived of his life or
liberty has to challenge his arrest or detention, as the case may be,
according to the provisions of the law under which he is arrested or
detained. The Court further observed: “what is necessary to remember for
our purpose is that the Constitution permits both punitive and preventive
detention provided it is according to procedure established by law made for
the purpose and if both the law and the procedure laid down by it, are
valid”.
44. A nine-Judge Bench of this Court in Amratlal Prajivandas14
was directly concerned with constitutional validity of COFEPOSA. One of
the issues before the Court was whether Parliament was not competent to
enact that Act. We shall refer to this judgment a little later as it has
substantial bearing on the matter under consideration and requires
detailed reference.
45. In Sunil Fulchand Shah v. Union of India and others[18], the
view of this Court on the question of law under consideration was not
unanimous. Chief Justice Dr. A.S. Anand speaking for majority noted:
“personal liberty is one of the most cherished freedoms, perhaps more
important than the other freedoms guaranteed under the Constitution. It
was for this reason that the Founding Fathers enacted the safeguards in
Article 22 in the Constitution so as to limit the power of the State to
detain a person without trial, which may otherwise pass the test of Article
21, by humanizing the harsh authority over individual liberty. Since,
preventive detention is a form of precautionary State action, intended to
prevent a person from indulging in a conduct, injurious to the society or
the security of the State or public order, it has been recognised as “a
necessary evil” and is tolerated in a free society in the larger interest
of security of the State and maintenance of public order. However, the
power being drastic, the restrictions placed on a person to preventively
detain must, consistently with the effectiveness of detention, be minimal.
In a democracy governed by the rule of law, the drastic power to detain a
person without trial for security of the State and/or maintenance of public
order, must be strictly construed. This Court, as the guardian of the
Constitution, though not the only guardian, has zealously attempted to
preserve and protect the liberty of a citizen. However, where individual
liberty comes into conflict with an interest of the security of the State
or public order, then the liberty of the individual must give way to the
larger interest of the nation”.
45.1. In the minority opinion, G.T. Nanavati, J. although differed
with the view of majority on the question of law but he also noted: “the
distinction between preventive detention and punitive detention has now
been well recognised. Preventive detention is qualitatively different from
punitive detention/sentence. A person is preventively detained without a
trial but punitive detention is after a regular trial and when he is found
guilty of having committed an offence. The basis of preventive detention is
suspicion and its justification is necessity. The basis of a sentence is
the verdict of the court after a regular trial. When a person is
preventively detained his detention can be justified only so long as it is
found necessary”.

46. In the case of Venkateshan S.1 , a two-Judge Bench of this
Court was concerned with the judgment and order of the Karnataka High Court
whereby it quashed and set aside the detention order passed by the Joint
Secretary, Ministry of Finance, Department of Revenue, Government of India
under Section 3(1) of COFEPOSA on the ground that what was considered to
be a criminal violation of FERA has ceased to be so on the repeal of FERA
which is replaced by FEMA. The Court considered the two situations of
preventive detention contemplated by COFEPOSA, the objectives of FEMA and
the repeal of FERA and discussed the matter thus:
“8. Hence, the limited question would be — whether a person who
violates the provisions of FEMA to a large extent can be detained
under the preventive detention Act, namely, the COFEPOSA Act. As
stated above, the object of FEMA is also promotion of orderly
development and maintenance of foreign exchange market in India.
Dealing in foreign exchange is regulated by the Act. For violation of
foreign exchange regulations, penalty can be levied and such activity
is certainly an illegal activity, which is prejudicial to conservation
or augmentation of foreign exchange. From the objects and reasons of
the COFEPOSA Act, it is apparent that the purpose of the Act is to
prevent violation of foreign exchange regulations or smuggling
activities which are having increasingly deleterious effect on the
national economy and thereby serious effect on the security of the
State. Section 3 of the COFEPOSA Act, which is not amended or
repealed, empowers the authority to exercise its power of detention
with a view to preventing any person inter alia from acting in any
manner prejudicial to the conservation or augmentation of foreign
exchange. If the activity of any person is prejudicial to the
conservation or augmentation of foreign exchange, the authority is
empowered to make a detention order against such person and the Act
does not contemplate that such activity should be an offence.
9. The COFEPOSA Act contemplates two situations for exercise of power
of preventive detention — (a) to prevent violation of foreign exchange
regulations; and (b) to prevent smuggling activities. Under Section
2(e) of the COFEPOSA Act, “smuggling” is to be understood as defined
under clause (39) of Section 2 of the Customs Act, 1962 which provides
that “smuggling” in relation to any act or omission will render such
goods liable to confiscation under Section 111 or Section 113. Section
111 contemplates confiscation of improperly imported goods and Section
113 contemplates confiscation of goods attempted to be improperly
exported. This has nothing to do with the penal provisions i.e.
Sections 135 and 135-A of the Customs Act which provide for punishment
of an offence relating to smuggling activities. Hence, to contend that
for exercising power under the COFEPOSA Act for detaining a person, he
must be involved in criminal offence is not borne out by the said
provisions.

10. The other important aspect is that the COFEPOSA Act and FEMA occupy
different fields. The COFEPOSA Act deals with preventive detention for
violation of foreign exchange regulations and FEMA is for regulation
and management of foreign exchange through authorised person and
provides for penalty for contravention of the said provisions. The
object as stated above is for promoting orderly development and
maintenance of foreign exchange market in India. Preventive detention
law is for effectively keeping out of circulation the detenu during a
prescribed period by means of preventive detention (Poonam Lata v. M.L.
Wadhawan, (1987) 3 SCC 347). The power of detention is clearly a
preventive measure. It does not partake in any manner of the nature of
punishment. It is taken by way of precaution to prevent mischief to the
community (Khudiram Das v. State of W.B., (1975) 2 SCC 81). The
Constitution Bench while dealing with the constitutional validity of
the Maintenance of Internal Security Act, 1971 (MISA), in Haradhan Saha
v. State of W.B., (1975) 3 SCC 198, held: (SCC pp. 208-09, paras 32-
33)
“32. The power of preventive detention is qualitatively different
from punitive detention. The power of preventive detention is a
precautionary power exercised in reasonable anticipation. It may or
may not relate to an offence. It is not a parallel proceeding. It
does not overlap with prosecution even if it relies on certain
facts for which prosecution may be launched or may have been
launched. An order of preventive detention may be made before or
during prosecution. An order of preventive detention may be made
with or without prosecution and in anticipation or after discharge
or even acquittal. The pendency of prosecution is no bar to an
order of preventive detention. An order of preventive detention is
also not a bar to prosecution.
33. Article 14 is inapplicable because preventive detention and
prosecution are not synonymous. The purposes are different. The
authorities are different. The nature of proceedings is different.
In a prosecution an accused is sought to be punished for a past
act. In preventive detention, the past act is merely the material
for inference about the future course of probable conduct on the
part of the detenu.”

 

In light of the above reasoning, the Court while setting aside the order of
the High Court held, “in our view the order passed by the High Court
holding that what was considered to be the criminal violation of FERA has
ceased to be criminal offence under FEMA, the detention order cannot be
continued after 1-6-2000, cannot be justified”.

47. The Constitution recognizes preventive detention though it
takes away the liberty of a person without any enquiry or trial.
Preventive detention results in negation of personal liberty of an
individual; it deprives an individual freedom and is not seen as compatible
with rule of law, yet the framers of the Constitution placed the same in
Part III of the Constitution. While giving to an individual the most
valuable right – personal liberty – and also providing for its safeguard,
the Constitution has perceived preventive detention as a potential solution
to prevent the danger to the state security. The security of the State
being the legitimate goal, this Court has upheld the power of the
Parliament and State Legislatures to enact laws of preventive detention.
The Court has time and again given the expression ‘personal liberty’ its
full significance and asserted how valuable, cherished, sacrosanct and
important the right of liberty given to an individual in the Constitution
was and yet legislative power to enact preventive detention laws has been
upheld in the larger interest of state security.
48. The power of Parliament to enact a law of preventive detention
for reasons connected with (a) defence, (b) foreign affairs, (c) security
of India; (d) security of State, (e) maintenance of public order or (f) the
maintenance of supplies and services essential to the community, is clearly
traceable to Article 22, Article 246 and Schedule Seven, List I Entry 9 and
List III Entry 3. With specific reference to COFEPOSA, a nine-Judge
Bench of this Court in Amratlal Prajivandas14 has held that the
enactment was relatable to Entry 3 of List III inasmuch as it provides for
preventive detention for reasons connected with the security of the State
as well as the maintenance of supplies and services essential to the
community besides Entry 9 of List I. In the words of this Court (para 23
pg. 73 of the Report):

 
“…COFEPOSA is clearly relatable to Entry 3 of List III inasmuch as it
provides for preventive detention for reasons connected with the
security of the State as well as the maintenance of supplies and
services essential to the community besides Entry 9 of List I…….”

 
49. In Amratlal Prajivandas14 constitutionality of COFEPOSA was
directly in issue. The Court made the following weighty prefatory remarks
in paragraph 1 (pg. 62 of the Report) highlighting the importance of
regulation and control of foreign exchange:

“Till the wind of liberalisation started blowing across the Indian
economic landscape over the last year or two, the Indian economy was a
sheltered one. At the time of Independence, India did not have an
industrial base worth the name. A firm industrial base had to be laid.
Heavy industry was the crying need. All this required foreign
exchange. The sterling balances built up during World War II were fast
dissipating. Foreign exchange had to be conserved, which meant
prohibition of import of several unessential items and close
regulation of other imports. It was also found necessary to raise
protective walls to nurture and encourage the nascent industries.
These controls had, however, an unfortunate fall-out. They gave rise
to a class of smugglers and foreign exchange manipulators who were out
to frustrate the regulations and restrictions — profit being their
sole motive, and success in life the sole earthly judge of right and
wrong. As early as 1947, the Central Legislature found it necessary to
enact the Foreign Exchange Regulation Act, 1947 and Imports and
Exports (Control) Act, 1947. Then came the Import (Control) Order,
1955 to place the policy regarding imports on a surer footing. In the
year 1962, a new Customs Act replaced the antiquated Sea Customs Act,
1878. The menace of smuggling and foreign exchange violations,
however, continued to rise unabated. Parliament then came forward with
the Conservation of Foreign Exchange and Prevention of Smuggling
Activities Act, 1974 (COFEPOSA). It provided for preventive detention
of these antisocial elements”.

 

 

 

 

The Court in paragraphs 3 to 7 referred to COFEPOSA, SAFEMA and FERA, the
amendments carried out in these Acts, and the constitutional protection
given to COFEPOSA and SAFEMA. The preamble and the provisions of COFEPOSA
were noted in paragraphs 9 to 14. The provisions of SAFEMA were noted in
paragraphs 15 to 19. In paragraph 20 (pg. 71 of the Report) , the Court
made following clarificatory observations:
“……Though a challenge to the constitutional validity of 39th, 40th and
42nd Amendments to the Constitution was levelled in the writ petitions
on the ground that the said Amendments — effected after the decision
in Kesavananda Bharati v. State of Kerala, (1973) 4 SCC 225) —
infringe the basic structure of the Constitution, no serious attempt
was made during the course of arguments to substantiate it. It was
generally argued that Article 14 is one of the basic features of the
Constitution and hence any constitutional amendment violative of
Article 14 is equally violative of the basic structure. This
simplistic argument overlooks the raison d’etre of Article 31-B — at
any rate, its continuance and relevance after Bharati — and of the
39th and 40th Amendments placing the said enactments in the Ninth
Schedule. Acceptance of the petitioners’ argument would mean that in
case of post-Bharati constitutional amendments placing Acts in the
Ninth Schedule, the protection of Article 31-B would not be available
against Article 14. Indeed, it was suggested that Articles 21 and 19
also represent the basic features of the Constitution. If so, it would
mean a further enervation of Article 31-B. Be that as it may, in the
absence of any effort to substantiate the said challenge, we do not
wish to express any opinion on the constitutional validity of the said
Amendments. We take them as they are, i.e., we assume them to be good
and valid. We must also say that no effort has also been made by the
counsel to establish in what manner the said Amendment Acts violate
Article 14.”

 

Then, in paragraph 21, the Court observed that COFEPOSA was a law relating
to preventive detention and it has, therefore, to conform to the provisions
in clauses (4) to (7) of Article 22. The Court quoted following
observations in R.K. Garg v. Union of India & Ors.[19]:

 

 

“The court must always remember that ‘legislation is directed to
practical problems, that the economic mechanism is highly sensitive
and complex, that many problems are singular and contingent, that laws
are not abstract propositions and do not relate to abstract units and
are not to be measured by abstract symmetry’; ‘that exact wisdom and
nice adaptation of remedy are not always possible’ and that ‘judgment
is largely a prophecy based on meagre and uninterpreted experience’.
Every legislation particularly in economic matters is essentially
empiric and it is based on experimentation or what one may call trial
and error method and therefore it cannot provide for all possible
situations or anticipate all possible abuses. There may be crudities
and inequities in complicated experimental economic legislation but on
that account alone it cannot be struck down as invalid. The courts
cannot, as pointed out by the United States Supreme Court in Secretary
of Agriculture v. Central Roig Refining Co., 94 L.Ed. 381, be
converted into tribunals for relief from such crudities and
inequities. There may even be possibilities of abuse, but that too
cannot of itself be a ground for invalidating the legislation, because
it is not possible for any legislature to anticipate as if by some
divine prescience, distortions and abuses of its legislation which may
be made by those subject to its provisions and to provide against such
distortions and abuses. Indeed, howsoever great may be the care
bestowed on its framing, it is difficult to conceive of a legislation
which is not capable of being abused by perverted human ingenuity. The
Court must therefore adjudge the constitutionality of such legislation
by the generality of its provisions and not by its crudities or
inequities or by the possibilities of abuse of any of its provisions.
If any crudities, inequities or possibilities of abuse come to light,
the legislature can always step in and enact suitable amendatory
legislation. That is the essence of pragmatic approach which must
guide and inspire the legislature in dealing with complex economic
issues.”
(emphasis added)

In the above backdrop, the Court considered the question, whether
Parliament was not competent to enact COFEPOSA and SAFEMA in paragraph 23
(pgs. 73-74 of the Report) as follows:

 

 

“23. It is argued for the petitioners that COFEPOSA is not relatable
to Entry 9 of List I of the Seventh Schedule to the Constitution
inasmuch as the preventive detention provided therefor is not for
reasons connected with defence, foreign affairs or security of India.
Even Entry 3 of List III, it is submitted, does not warrant the said
enactment. So far as SAFEMA is concerned, it is argued, it is not
relatable to any of the Entries 1 to 96 in List I or to any of the
Entries in List III. We are not prepared to agree. COFEPOSA is clearly
relatable to Entry 3 of List III inasmuch as it provides for
preventive detention for reasons connected with the security of the
State as well as the maintenance of supplies and services essential to
the community besides Entry 9 of List I. While Entry 3 of List III
speaks of “security of a State”, Entry 9 of List I speaks of “security
of India”. Evidently, they are two distinct and different expressions.
“Security of a State” is a much wider expression. A State with a weak
and vulnerable economy cannot guard its security well. It will be an
easy prey to economic colonisers. We know of countries where the
economic policies are not dictated by the interest of that State but
by the interest of multinationals and/or other powerful countries. A
country with a weak economy is very often obliged to borrow from
International Financial Institutions who in turn seek to dictate the
economic priorities of the borrowing State — it is immaterial whether
they do so in the interest of powerful countries who contribute
substantially to their fund or in the interest of their loan. In the
modern world, the security of a State is ensured not so much by
physical might but by economic strength — at any rate, by economic
strength as much as by armed might. It is, therefore, idle to contend
that COFEPOSA is unrelated to the security of the State. Indeed in the
very preamble to the Act, Parliament states that the violations of
foreign exchange regulations and smuggling activities are having an
increasingly deleterious effect on the national economy thereby
casting serious adverse effect on the security of the State. Be that
as it may, it is not necessary to pursue this line of reasoning since
we are in total agreement with the approach evolved in Union of India
v. H.S. Dhillon, (1971) 2 SCC 779 — a decision by a Constitution Bench
of seven Judges. The test evolved in the said decision is this in
short: Where the legislative competence of Parliament to enact a
particular statute is questioned, one must look at the several entries
in List II to find out (applying the well-known principles in this
behalf) whether the said statute is relatable to any of those entries.
If the statute does not relate to any of the entries in List II, no
further inquiry is necessary. It must be held that Parliament is
competent to enact that statute whether by virtue of the entries in
List I and List III or by virtue of Article 248 read with Entry 97 of
List I. In this case, it is not even suggested that either of the two
enactments in question are relatable to any of the entries in List II.
If so, we need not go further and enquire to which entry or entries do
these Acts relate. It should be held that Parliament did have the
competence to enact them.”

 

The Court concluded that Parliament did have the competence to enact
COFEPOSA and SAFEMA.
50. The constitutionality of COFEPOSA has been already upheld by a
nine-Judge Bench of this Court. Its constitutionality is again sought to
be assailed by the petitioners in the present matter on the ground that
with the change of legal regime by repeal of FERA and enactment of FEMA
(the provisions contained in FEMA did not regard its violation a criminal
offence) the intent and object behind the enactment of preventive
detention in COFEPOSA had ceased to exist and continuation of impugned
provision in COFEPOSA was violative of Article 21 read with Articles 14 and
19 of the Constitution.
51. In I.R. Coelho5, this Court had an occasion to consider the
power of judicial review in relation to the Acts falling under the Ninth
Schedule. After discussing His Holiness Kesavananda Bharati Sripadagalvaru
v. State of Kerala & Anr. [20], Indira Nehru Gandhi v. Shri Raj Narain[21],
Minerva Mills Limited and others v. Union of India and others[22], Waman
Rao and others v. Union of India and others[23] and Maharao Sahib Shri
Bhim Singhji v. Union of India and others[24] and relevant Articles of the
Constitution, particularly, Article 31B and 368, in paragraph 131, the
Court referred to the decision in Amratlal Prajivandas14 . With regard to
decision in Amratlal Prajivandas14 in paragraph 132, the Court held : “It
is evident from the aforenoted passage that the question of violation of
Articles 14, 19 or 21 was not gone into. The Bench did not express any
opinion on those issues. No attempt was made to establish violation of
these provisions. In para 56, while summarising the conclusion, the Bench
did not express any opinion on the validity of the Thirty-ninth and
Fortieth Amendment Acts to the Constitution of India placing COFEPOSA and
SAFEMA in the Ninth Schedule. These Acts were assumed to be good and valid.
No arguments were also addressed with respect to the validity of the Forty-
second Amendment Act”.
51.1. The Court affirmed the view taken in Waman Rao24 that the Acts
inserted in the Ninth Schedule after April 24, 1973 would not receive full
protection.
51.2. In paragraph 151 (pg. 111 of the Report), the Court recorded
its conclusions. Clauses (iii) and (v) thereof are relevant for the
present purposes which read as follows:
“(iii) All amendments to the Constitution made on or after 24-4-1973
by which the Ninth Schedule is amended by inclusion of various laws
therein shall have to be tested on the touchstone of the basic or
essential features of the Constitution as reflected in Article 21 read
with Article 14, Article 19, and the principles underlying them. To
put it differently even though an Act is put in the Ninth Schedule by
a constitutional amendment, its provisions would be open to attack on
the ground that they destroy or damage the basic structure if the
fundamental right or rights taken away or abrogated pertains or
pertain to the basic structure.
(v) If the validity of any Ninth Schedule law has already been upheld
by this Court, it would not be open to challenge such law again on the
principles declared by this judgment. However, if a law held to be
violative of any rights in Part III is subsequently incorporated in
the Ninth Schedule after 24-4-1973, such a violation/infraction shall
be open to challenge on the ground that it destroys or damages the
basic structure as indicated in Article 21 read with Article 14,
Article 19 and the principles underlying thereunder.”
52. Para 151(v) in I.R. Coelho5 leaves no manner of doubt that
where the validity of any Ninth Schedule law has already been upheld by
this Court, it would not be open to challenge such law again on the
principles declared by the judgment. The constitutional validity of
COFEPOSA has already been upheld by this Court in Amratlal Prajivandas14
and, therefore, it is not open for challenge again. On this ground alone
the challenge to the constitutional validity of the impugned provision must
fail. Despite this, we intend to consider the forceful submission made by
the learned counsel for the petitioners that on repeal of FERA and
enactment of FEMA (FEMA did not regard its violation of criminal offence)
an act where no punitive detention (arrest and prosecution) is even
contemplated or provided under law, such an act cannot be made the basis
for preventive detention and any law declaring it to be prejudicial to the
interest of the State so as to invoke the power of preventive detention is
violative of Articles 14, 19 and 21 of the Constitution and must be
struckdown.
53. FERA was enacted to consolidate and amend the law regulating
certain payments, dealings in foreign exchange and securities, transactions
indirectly affecting foreign exchange and the import and export of currency
for the conservation of the foreign exchange resources of the country and
the proper utilization thereof in the interest of the economic development
of the country. Section 2(b) defined ‘authorised dealer’. Section 6
provided, inter alia, for authorisation of any person by the Reserve Bank
of India (RBI) to deal in foreign exchange. The restrictions on dealing in
foreign exchange were provided in Section 8. Sub-sections (1) and (2) of
Section 8 read as follows :

 

“8. Restrictions on dealing in foreign exchange.—(1) Except with the
previous general or special permission of the Reserve Bank, no person
other than an authorised dealer shall in India, and no person resident
in India other than an authorised dealer shall outside India, purchase
or otherwise acquire or borrow from, or sell, or otherwise transfer or
lend to or exchange with, any person not being an authorised dealer,
any foreign exchange:
Provided that nothing in this sub-section shall apply to any
purchase or sale of foreign currency effected in India between any
person and a money-changer.

 
Explanation.—For the purposes of this sub-section, a person, who
deposits foreign exchange with another person or opens an account in
foreign exchange with another person, shall be deemed to lend foreign
exchange to such other person.
(2) Except with the previous general or special permission of
the Reserve Bank, no person, whether an authorised dealer or a money-
changer or otherwise, shall enter into any transaction which provides
for the conversion of Indian currency into foreign currency or foreign
currency into Indian currency at rates of exchange other than the
rates for the time being authorised by the Reserve Bank”.

 

FERA contained penal provisions. Section 50 provided for imposition of
fiscal penalties while Section 56 made provision for prosecution and
punishment. FERA stood repealed by FEMA in 1999.
54. Before we refer to FEMA, a brief look at the COFEPOSA may be
appropriate. COFEPOSA came into force on December 19, 1974. Its preamble
reads as under:
“An Act to provide for preventive detention in certain cases for the
purposes of conservation and augmentation of foreign exchange and
prevention of smuggling activities and for matters connected
therewith.
WHEREAS violations of foreign exchange regulations and smuggling
activities are having an increasingly deleterious effect on the
national economy and thereby a serious adverse effect on the security
of the State;
AND WHEREAS having regard to the persons by whom and the manner in
which such activities or violations are organised and carried on, and
having regard to the fact that in certain areas which are highly
vulnerable to smuggling, smuggling activities of a considerable
magnitude are clandestinely organised and carried on, it is necessary
for the effective prevention of such activities and violations to
provide for detention of persons concerned in any manner therewith;”

 
55. Section 3 of COFEPOSA provides for power to make orders
detaining certain persons. Sub-section (1) thereof to the extent it is
relevant, it reads as follows :
“S.3 – Power to make orders detaining certain persons

1) The Central Government or the State Government or any officer of
the Central Government, not below the rank of a Joint Secretary to
that Government, specially empowered for the purposes of this section
by that Government, or any officer of the State Government, not below
the rank of a Secretary to that Government, specially empowered for
the purposes of this section by that Government, may, if satisfied,
with respect to any person (including a foreigner), that, with a view
to preventing him from acting in any manner prejudicial to the
conservation or augmentation of foreign exchange or with a view to
preventing him from–
(i) smuggling goods, or
(ii) abetting the smuggling of goods, or
(iii) engaging in transporting or concealing or keeping smuggled
goods, or
(iv) dealing in smuggled goods otherwise than by engaging in
transporting or concealing or keeping smuggled goods, or
(v) harbouring persons engaged in smuggling goods or in abetting
the smuggling of goods,
it is necessary so to do, make an order directing that such person be
detained:”

 

 

Sub-section (3) mandates compliance set out therein as required in Article
22(5). Certain other safeguards as required under Article 22, particularly,
sub-clause (a) to Clause (4) and sub-clause (c) to Clause (7) of Article 22
of the Constitution have been provided in Sections 8 and 9. Maximum period
of detention is provided in Section 10. Notwithstanding the provision
contained in Section 10, Section 10A provides for extension of period of
detention in the situations contemplated therein and to the extent
provided. Section 11 empowers the Central Government or the State
Government, as the case may be, to revoke any detention order.
56. As noted above, FERA has been repealed by FEMA. FEMA was
enacted to consolidate and amend the law relating to foreign exchange with
the objective of facilitating the external trade and payments and for
promoting the orderly development and maintenance of foreign exchange
market in India. Section 2(c) of FEMA defines ‘authorised person’ which
means an authorised dealer, money changer, off-shore banking unit or any
other person for the time being authorised under sub-section (1) of
Section 10 to deal in foreign exchange or foreign securities. RBI may
authorise any person to deal in foreign exchange or in foreign securities
as an authorised dealer, money changer or off-shore banking unit or in any
other manner as it deems fit. Section 10 provides for the complete
procedure for authorisation of any person to deal in foreign exchange.
Section 13 provides for fiscal penalty to the extent of thrice the sum
involved in such contravention where such amount is quantifiable or upto
two lac rupees where the amount is not quantifiable and where such
contravention is a continuing one, further penalty which may extend to Rs.
5000/- for every day after the first day during which the contravention
continues. On failure of a person to make full payment of the penalty
imposed on him, Section 14 is an enforcement provision. If a person
remains in default in discharge of the penalty awarded to him, he is liable
to civil imprisonment. Section 15 provides for compounding of
contravention. By Section 49, FERA has been repealed and sub-section (3)
thereof provides : “Notwithstanding anything contained in any other law
for the time being in force, no court shall take cognizance of an offence
under the repealed Act and no adjudicating officer shall take notice of
any contravention under Section 51 of the repealed Act after the expiry of
a period of two years from the date of the commencement of this Act.”
57. It is true that provisions of FERA and FEMA differ in some
respects, particularly in respect of penalties. It is also true that FEMA
does not have provision for prosecution and punishment like Section 56 of
FERA and its enforcement for default is through civil imprisonment.
However, insofar as conservation and/or augmentation of foreign exchange is
concerned, the restrictions in FEMA continue to be as rigorous as they were
in FERA. FEMA continues with the regime of rigorous control of foreign
exchange and dealing in the foreign exchange is permitted only through
authorised person. While its aim is to promote the orderly development and
maintenance of foreign exchange markets in India, the Government’s control
in matters of foreign exchange has not been diluted. The conservation and
augmentation of foreign exchange continues to be as important as it was
under FERA. The restrictions on the dealings in foreign exchange continue
to be as rigorous in FEMA as they were in FERA and the control of the
Government over foreign exchange continues to be as complete and full as it
was in FERA.
58. The importance of foreign exchange in the development of a
country needs no emphasis. FEMA regulates the foreign exchange. The
conservation and augmentation of foreign exchange continues to be its
important theme. Although contravention of its provisions is not regarded
as a criminal offence, yet it is an illegal activity jeopardizing the very
economic fabric of the country. For violation of foreign exchange
regulations, penalty can be levied and its non-compliance results in civil
imprisonment of the defaulter. The whole intent and idea behind COFEPOSA is
to prevent violation of foreign exchange regulations or smuggling
activities which have serious and deleterious effect on the national
economy. In today’s world the physical and geographical invasion may be
difficult but it is easy to imperil the security of a State by disturbing
its economy. The smugglers and foreign exchange manipulators by flouting
the regulations and restrictions imposed by FEMA – by their misdeeds and
misdemeanours – directly affect the national economy and thereby endanger
the security of the country. In this situation, the distinction between
acts where punishments are provided and the acts where arrest and
prosecution are not contemplated pales into insignificance. We must
remember : the person who violates foreign exchange regulations or indulges
in smuggling activities succeeds in frustrating the development and growth
of the country. His acts and omissions seriously affect national economy.
Therefore, the relevance of provision for preventative detention of the
anti-social elements indulging in smuggling and violation and manipulation
of foreign exchange in COFEPOSA continues even after repeal of FERA.
59. The menace of smuggling and foreign exchange violations has to
be curbed. Notwithstanding the many disadvantages of preventive detention,
particularly in a country like ours where right to personal liberty has
been placed on a very high pedestal, the Constitution has adopted
preventive detention to prevent the greater evil of elements imperiling the
security, the safety of State and the welfare of the Nation.
60. On the touchstone of constitutional jurisprudence, as reflected
by Article 22 read with Articles 14, 19 and 21, we do not think that the
impugned provision is rendered unconstitutional. There is no constitutional
mandate that preventive detention cannot exist for an act where such act is
not a criminal offence and does not provide for punishment. An act may not
be declared as an offence under law but still for such an act, which is an
illegal activity, the law can provide for preventive detention if such act
is prejudicial to the state security. After all, the essential concept of
preventive detention is not to punish a person for what he has done but to
prevent him from doing an illegal activity prejudicial to the security of
the State. Strictly speaking, preventive detention is not regulation (many
people call it that way), it is something much more serious as it takes
away the liberty of a person but it is accepted as a necessary evil to
prevent danger to the community. The law of preventative detention arms the
State with precautionary action and must be seen as such. Of course, the
safeguards that the Constitution and preventive detention laws provide must
be strictly insisted upon whenever the Court is called upon to examine the
legality and validity of an order of preventive detention.
61. The following features, (i) detention order was issued on
February 8, 2000 and the detenue was served with the same on February 15,
2000; (ii) the events had taken place when FERA was in place as FEMA had
come into force only with effect from June 1, 2000; in view of the sunset
clause in FEMA the prosecution for violation of FERA could continue for
next two years; (iii) High Court had held the continued detention after
coming into force of FEMA to be bad; (iv) the constitutionality of
Conservation of Foreign Exchange (COFE) part of COFEPOSA was not in issue
and the facts brought the prejudicial act within the mischief of FERA
inviting penal consequences, were highlighted by the learned counsel for
the petitioners to distinguish Venkateshan S.1 . We are afraid, the above
features hardly render Venkateshan S.1 inapplicable to the issue raised
before us. We are in complete agreement with the position stated in
Venkateshan S.1: “if the activity of any person is prejudicial to the
conservation or augmentation of foreign exchange, the authority is
empowered to make a detention order against such person and the Act does
not contemplate that such activity should be an offence”.
62. It is too naïve to suggest that in today’s economic scenario
of abundant foreign exchange and booming foreign trade, contravention of
foreign exchange laws does not pose any threat to the national interest for
which a person has to be detained.
63. In view of the above, we do not find any merit in challenge to
the constitutional validity of impugned part of Section 3(1) of COFEPOSA.
64. Then comes the question upon the prayer made by means of
criminal miscellaneous application for permitting the petitioners to make
an additional prayer: “This Hon’ble Court may be pleased to quash the
detention order bearing No. 673/02/2009 – CUS/VIII dated September 23,
2009”.
65. The prayer made in the criminal miscellaneous application by
the petitioners cannot be granted for more than one reason. For,
petitioners initially filed a writ petition (Crl. No. 97/2009) under
Article 32 of the Constitution before this Court challenging the detention
order dated September 23, 2009. The said writ petition was dismissed by
this Court as withdrawn on December 4, 2009. The petitioners have not
stated the above fact in the present writ petition.
66. The petitioners then filed a writ petition before Delhi High
Court. That writ petition was dismissed by the High Court on March 18,
2010 on the ground that the petition was filed at pre-execution stage. The
petitioners filed special leave petition (Crl. No. 2698 of 2010) before
this Court challenging the judgment of the Delhi High Court. During the
pendency of special leave petition, the petitioners filed the present writ
petition wherein the only prayer made is that impugned part of Section 3(1)
of COFEPOSA be declared unconstitutional. Presumably, the detention order
was not challenged because special leave petition was already pending.
Later on, the special leave petition was withdrawn by the petitioners.
While dismissing the special leave petition as withdrawn, this Court
granted liberty to the petitioners to avail such remedy as may be available
in law in challenging the order of detention and the grounds on which
detention order has been passed after its execution (emphasis supplied).
The order of detention in question has not been executed so far in view of
the contumacious conduct of the second petitioner. He is alleged to have
absconded initially. Then on December 14, 2009 Delhi High Court, by an
interim order directed that the detenue shall not be arrested till the next
date of hearing, i.e. December 22, 2009. The said interim order was
continued until the disposal of writ petition by the High Court and
thereafter that interim order was continued by this Court in the special
leave petition. In the writ petition also an interim order has been in
operation. In view of the order dated July 13, 2010 passed by this Court,
the petitioners cannot be permitted to challenge the order of detention
until its execution.
67. In view of the above, the leave to make additional prayer for
quashing the detention order dated September 23, 2009 by means of criminal
miscellaneous application does not deserve to be granted and is rejected.
However, it is clarified that after the execution of the detention order,
the petitioners shall be at liberty to challenge the detention order in
accordance with law.
68. Since we have rejected the criminal miscellaneous application,
the argument of the learned counsel for the petitioners that the impugned
order of detention was passed way back on September 23, 2009; the impugned
order was preventive in nature and the maximum period of detention as per
law is one year, which would have lapsed by now and, therefore, no purpose
for the execution of the detention order survives is noted to be rejected.
The detention order could not be executed because of the contumacious
conduct of the second petitioner and, therefore, he cannot take advantage
of his own wrong.
69. Writ petition and criminal miscellaneous application, for the
reasons indicated above, are liable to be rejected and are rejected.

…………………….J.
(R. M.Lodha)
…………………….J.
(H. L. Gokhale)
July 2, 2012
New Delhi.
———————–
[1] (2002) 5 SCC 285
[2] (1984) 1 SCC 222
[3] (2003) 6 SCC 611
[4] (2008) 5 SCC 287
[5] (2007) 2 SCC 1
[6] 1951 SCR 167
[7] (1974) 1 SCC 645
[8] (1975) 3 SCC 198
[9] (1979) 4 SCC 14
[10] (1981) 4 SCC 647
[11] (1990) 1 SCC 35
[12] (2011) 5 SCC 244
[13] 481 US 739
[14] (1994) 5 SCC 54
[15] 1950 SCR 88
[16] (1975) 2 SCC 81
[17] 1992 Suppl (1) SCC 496
[18] (2000) 3 SCC 409
[19] (1981) 4 SCC 675
[20] (1973) 4 SCC 225
[21] (1975) Supp SCC 1
[22] (1980) 3 SCC 625
[23] (1981) 2 SCC 362
[24] (1981) 1 SCC 166

———————–
41

 

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