Shomaela Dharani v. The State of Maharashtra & Ors.

Mr. R. M. Agarwal a/w Mr. Yogesh Rohira i/by Mr.Uday Warunjikar for the Petitioner. Mr. D. S.Mhaispurkar, Addl. P.P. for the State – Respondents. CORAM : BILAL NAZKI A. P. BHANGALE, JJ. RESERVED ON: 6TH MAY, 2008. PRONOUNCED ON : 24TH JUNE, 2008. JUDGMENT (Per Bilal Nazki, J.) : This writ petition has been filed by the daughter of Shri Sultan Kamruddin Dharani, hereinafter referred to as “the detenu”. The detenu was detained by an order of detention of the Detaining Authority on 11th January, 2008 under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (for short “COFEPOSA Act”). He was arrested on 11th January, 2008 and is lodged in Nashik Road Central Prison, Nashik. This order of detention is challenged on various grounds. Counter affidavit has been filed. We have perused the record and heard learned Counsel for the parties.

2. The background in which the grounds of detention were framed and order of detention was passed are given in paragraphs 2 and 3 of the grounds of detention. Paragraphs 2 and 3 read as under: 4 Pursuant to an intelligence gathered by the officers of the "2. Directorate of Revenue Intelligence, Mumbai that goods imported at Nhava Sheva port by certain Delhi based firms, which are cleared without payment of Customs duty, by filing a Bills of Entry for Warehousing, are being diverted and sold in the market, instead of being taken to the bonded warehouses stated to be located in Haryana (Kundli, Rohtak, Faridabad, etc.) for the purpose of storing. As a consequence, Government was losing huge amount of Customs duty on such illegal diversion and sale. It was also gathered that the import consignments comprising of Copper Scrap, Brass Scrap, Zinc Ingots, Tin Sheets, Chemicals, Dry Fruits, Betel Nut, Gambier, Tiles, etc. were being imported and cleared in the name of some Delhi based firms like M/s. Ankush Trading Co., M/s. Kajal Creations Inc., M/s. Span International, M/s. Perfect Impex, M/s. Ranbakura Brothers, M/s. Muskan Enterprises and M/s. X-Cellent Exim Overseas, etc. and were being diverted in clandestine manner, as aforesaid.

3. Based on the above intelligence, discrete enquiries were made through the concerned Central Excise Commissionerates for verification of existence of bonded warehouses in the names of the above-mentioned firms. It was reported by the concerned Central Excise authority that no bonded warehouse in the name of above said firms were in existence at the addresses provided. Further, photocopies of ` Re-warehousing Certificates' certifying receipt and storage of the goods imported in the names of the above said firms at the declared bonded warehouse, were sent to the jurisdictional Central Excise authorities, for verifying genuineness of the same. It was reported by the concerned Central Excise authorities that the proper officer has issued no such Certificates. The said `Re-warehousing Certificates' were being submitted to the authorities in Bond Section of JNCH, Nhava Sheva for getting the Bonds cancelled and release of supporting Bank Guarantees, which were furnished at the time of filing of the Bills of entry for Warehousing. It was also further confirmed that no Ex-Bond Bills of Entry were filed for clearance of the imported goods, in the names of the above said firms.” 5 The order of detention is passed by the Detaining Authority with a view to prevent the detenu in future from smuggling goods, as the order of detention clearly states, with a view to prevent you in future from smuggling goods it is necessary to make the order.

3. In this background, it is submitted by the learned Counsel for the petitioner that in March, 2006 the Directorate of Revenue Intelligence started investigations into large scale fraudulent imports of various items by several Delhi based importers. During investigations, the godown premises of the detenu was sealed on 29th March, 2006 and his office premises were also searched. On 10th April, 2006 books containing details of some offending consignments were also recovered from the detenu's warehouse. Since the Department found certain incriminating material against the detenu, he was arrested on 12th April, 2006. The detenu was released on bail on 15th April, 2006. The Directorate of Revenue Intelligence moved for cancellation of his bail before the Court, but later on it was withdrawn after arguments. Fresh application for cancellation of bail was, however, filed before the Chief Metropolitan Magistrate, Esplanade Court, Mumbai. The application seeking revocation of bail was rejected on 20th June, 2008. The application filed before the Sessions Court was also rejected on 17th August, 2006. On 12th April, 2006 and 22nd May, 6 2006 the Commissioner of Customs informed the concerned authorities for initiating preventive action. Several statements of detenu and other persons were recorded. Quantities of various detained goods lying in detenu's warehouse were sealed. The detenu moved the High Court by filing Writ Petition No. 3912 of 2006 for release of the goods, which was, however, dismissed. The Supreme Court in Special Leave Petition directed the Department to issue show cause notice, but the Department on their own released some of the goods unconditionally. But the investigation was going on and show cause notice was issued on 27th September, 2006 proposing confiscation of seized Copper Scrap, Zinc Ingots and Copper Cathodes and imposition of penalty on the detenu. After 27th September, 2006 when the show cause notice was issued, no further investigation was made as is manifest from the grounds of detention. In the adjudication proceedings the Commissioner of Customs on 31st January, 2007 unconditionally released the seized goods but confiscated the zinc ingots and imposed penalty. The detenu preferred appeal on 20th February, 2007 before the Customs, Excise and Service Tax Appellate Tribunal (for short “the Tribunal”) against the order of the Commissioner. The Department filed cross-objection in the said appeal. Separate appeal was also filed by the Department to challenge the unconditional release of copper scrap and 7 copper cathodes to the detenu. Vide order dated 28th February, 2007 the High Court at Delhi in Writ Petition (Civil) No. 1551 of 2007 allowed the detenu to file application for compounding of offences under Section 137 (3) of the Customs Act. 1962. Two more orders on 15th May, 2007 and 13th December, 2007 were passed in the said petition. After hearing both the sides the Tribunal on 6th September, 2007 exonerated the detenu and the penalty on the detenu as well as confiscation of the zinc ingots was also set aside. The Revenue's appeal was dismissed. The Tribunal held, “In the light of aforesaid discussions, we hold that 88.935 MT of Zinc Ingots are not liable to confiscation and no liability of duty, fine or penalty can be imposed. Therefore, the said goods are to be released forthwith unconditionally. The appeal filed by the appellant is allowed accordingly. The cross objections filed by the Revenue are disposed of accordingly”. In para 2 of the grounds on which the order of detention is sought to be quashed, the petitioner made a specific plea that the comprehensive order dated 6th September, 2007 passed by the Tribunal was not at all taken into consideration by the Detaining Authority and as such it was non- application of mind to the vital material as the order would clearly reveal that the allegations against the detenu were found to be untenable. Even in the counter affidavit no reply is made to this ground of detention. 8 Therefore, in our view, on this ground alone the detention order could be quashed.

4. Another ground is that though the investigations in the matter was complete on 27th September, 2006 but the order of detention was passed on 11th January, 2008. There is a delay of more than 15 months and no explanation has been given by the respondents explaining the delay. The only justification given is that the detenu moved various representations. We do not understand as to what type of representations were being made and why was not the order of detention passed, and was it necessary in terms of the provisions of COFEPOSA Act to decide the representations made prior to issuing of a detention order. The matter was pending before the Detaining Authority when representation after representation was made and without looking into the material as to whether the order of detention needs to be passed, it appears that the Detaining Authority was waiting for representation. The counter affidavit says, `thereafter the file was placed before the deponent and he directed to place the file with parawise comments on the representations dated 1st October, 2007 and 20th October, 2007. These representations, which were made prior to passing of the detention order, were rejected by the Detaining Authority on 5th December, 2007 when the final draft was prepared with regard to the 9 grounds of detention and Dy. Secretary endorsed the file on 15th December, 2007. The Detaining Authority approved the draft grounds of detention and Detention Order on 20th December, 2007 but the order was not issued as the detenu preferred another pre-detention representation dated 7th January, 2008. Again parawise report was called, which was received by letter dated 8th February, 2008 and the representation was rejected on 10th January, 2008. On 11th January, 2008 again a representation was made, which was rejected on the same day. Thus, the delay from September, 2006 is unexplained.

5. Various judgments of the Supreme Court as also of this court have been cited. In Issac Babu v/s Union of India & Anr., reported in (1990) 4 SCC 135, the Supreme Court has held, “It was not incumbent on the authorities to wait till the issue of the show cause notice. The need to issue a show cause notice within six months has nothing to do with the proceeding of the detention papers. Therefore, the explanation is far from satisfactory”. In an unreported Judgment of this Court in Criminal Writ Petition No. 2167 of 2007 (Sajid Dilawar Khan v/s State of Maharashtra & Ors.) delivered on 29th February, 2008, this Court after referring to the judgment of the Supreme Court in Issac Babu (Supra) held, “In the present context, it should be said that once the incident occurred on 3rd April, 10 2006, the Detaining Authority could have immediately passed an order of detention. It had neither to wait for show-cause notice under Section 108 of the Customs Act, 1962, nor the reply of the detenu nor the final order.”

6. The other grounds agitated are that the order of detention was passed only because the Court had directed release of the passport in favour of the detenu. Since we are holding the order of detention bad on the grounds hereinabove stated, we would not like to go into the said question.

7. For the reasons given herein above, the order of detention is quashed and set aside. Let the detenu be set at liberty forthwith unless he is required for any other offence under any Act.

8. Rule made absolute in terms aforesaid. Writ Petition is disposed of.

9. No order as to costs. Sd/- (BILAL NAZKI, J.) Sd/- (A. P. BHANGALE, J.)