JUDGMENT Mookerjee, J.: This is an appeal from a judgment and order dated 8 May, 1970 passed by P. K. Banerjee, J. by which an application under Article 226 of the Constitution of India was dismissed. The material facts and circumstances out of which this appeal arises lie in a short compass and are as follows : 2. Hindustan Motors Limited, the petitioner No.1 and hereinafter referred to as the 'petitioner-company' and, sometimes, where the reference in clear, as 'the company' is a well-known manufacturer of automobiles in India with its factory premises situate at Uttarpara in the district of Hooghly. The petitioners Nos. 2, 3, 4 and 5 are variously connected with the petitioner-company, petitioner No.2 being the President, petitioner No.3 a shareholder and also the Vice-President (Finance), petitioner No.4 the Director of Supplies and petitioner No.5 a shareholders and also the Supply Manager of the company. On 4 October, 1969 T.N. Kaul, the respondent No.1 who is an Assistant Director of Enforcement in the Ministry of Finance, Government of India issued various search warrants, often described as 'Authorizations' by which several Enforcement Officers including the respondents Omkar Nath Chattopadhyaya, D.K. Banerjee, S.C. Ghosh, S.K. Ghosh and P.N. Paul who are respectively respondents Nos. 3 to 7 in this Appeal were authorized to conduct a search in various premises of the petitioner company and its executives, including the premises at Uttarpara. These Authorizations which were all in identical language were issued by Kaul in exercise of powers under section 19D of the Foreign Exchange Regulation Act, 1947. I shall hereinafter refer to this Act as the FER Act and; sometimes where the context makes it absolutely clear refer to the section without mentioning the Act. A specimen Authorization, being Authorization No. 236/69 has been set out in paragraph 5 of the petition. The authorization is reproduced verbatim under hereunder :–– No. 236/69 "Warrant to search premises under section 19D of foreign exchange regulation Act 1947. A specimen Authorization, being Authorization No. 236/69 has been set out in paragraph 5 of the petition. The authorization is reproduced verbatim under hereunder :–– No. 236/69 "Warrant to search premises under section 19D of foreign exchange regulation Act 1947. Whereas, on careful consideration of the materials placed before me, I.T.N. Kaul Assistant Director of Enforcement have reasons to believe that documents which in my opinion will be useful for or relevant to the proceedings under the Foreign Exchange Regulation Act 1947, are secreted in the premises described in the Schedule below, I hereby authorize Sri O.N. Chattopadhyaya who is an officer of Enforcement to enter the aforesaid premises with such assistance as may be required and search for the seizure of such documents and produce them forthwith before me to be dealt with in accordance with the law. Given under my hand and seal this 4th day of October, Nineteen hundred and Sixty-nine. Schedule above referred to : Hindusthan Motors Ltd., Uttarpara (Hooghly) Sd/ T. N. Kaul Asst. Director of Enforcement Calcutta Branch. 3. On the strength of the said Authorizations search operations were carried out in various places during the period from 4 October, 1969 to 22 October, 1969 with a short break between 17 October, 1969 and 21 October, 1969 when, we are told, the search was suspended because of the Durga Puja Holidays. The search was finally over on 22 October, 1969. Such searches, we have been told further, took place all over India at the premises of various persons and concerns connected with the petitioner company. We are not, however, concerned with all these searches in this case. We are concerned only with the searches that took place at Uttarpara and at the offices of the company at No. 4 and 15 India Exchange Place and at No.11 R.N. Mukherjee Road, Calcutta as well as in the residence of petitioners Nos. 2, 3 and 5 at Uttarpara and at the residence of petitioner No.4 at Calcutta. As a result of the searches a very large number of files, papers and documents were seized. The procedure that was followed seems to be this that at the end of each day's search seizure memos were prepared showing the time of the search, the names and addresses of the witnesses and the particulars of documents seized. As a result of the searches a very large number of files, papers and documents were seized. The procedure that was followed seems to be this that at the end of each day's search seizure memos were prepared showing the time of the search, the names and addresses of the witnesses and the particulars of documents seized. The seizure memos were then signed by the Enforcement Officers who conducted the search as well as some representative or representatives on behalf of the company or the owners of the premises which were searched. Copies of the seizure memos have all been included in an annexure to the petition. Apart from the searches certain notices under section 19E of the FER Act were served during and after the search on various persons connected with the company. There are four such notices dated 15 October, 1969, 7 November, 1969, 18 November, 1969 and 29 November, 1969 respectively. All these notices are practically in similar terms. We reproduce the notice dated 15 October, 1969 which was served on the petitioner R. P. Jhunjhunwalla and a copy of which also is annexed to petition. This document bears incidentally an endorsement made by R. P. Jhunjhunwalla on it. Sri D. K. Guha, Asstt. Director of Inspection (Int), Income-Tax Deptt., Calcutta. Dated 15th October, 1969 No. SIC 8/68-69/ To Shri R. P. Jhunjhunwalla Vice-President (Finance), M/s. Hindusthan Motors Ltd., Uttarpara, Dist. Hooghly. Whereas in terms of the notification of the Govt. of India, Ministry of Finance, Deptt. of Revenue & Insurance dated the 21st May, 1968, I have been authorized to exercise all the powers and discharge all the duties of an Assistant Director of Enforcement under the Foreign Exchange Regulation Act, 1947. And whereas certain cases of violation of provisions of the Foreign Exchange Regulation Act, 1947 are presently being enquired into by me and whereas I consider the documents specified below annexed to this letter relevant to the enquires now being made by me. NOW THEREFORE? I hereby required you to deliver the documents specified to me at your Factory Office on the 16th October, 1969 at 11-30 a.m. It may please be noted that this notice is being issued under section 19E of the Foreign Exchange Regulation Act, 1947. Enclo : List of documents to Sd/- D. K. Guha be delivered.****** Asstt. Director of Inspection (Int) Income-tax Department, Calcutta. Enclo : List of documents to Sd/- D. K. Guha be delivered.****** Asstt. Director of Inspection (Int) Income-tax Department, Calcutta. ******All documents including letters of credit, import licences, correspondence, books of account, cables, shipping documents and all other relevant papers and documents relating to imports of ail kind of merchandise made by M/s. Hindusthan Motors Ltd., during the year 1961-1969 from East European countries against payment made in non-convertible rupee in India. Received a copy I am in heart trouble. I have been advised by the doctor to take complete rest in bed. As such I may not be able to attend to this notice. Sd/- R. P. Jhunjhunwalla 15.10.1969. 5-30 P.M. 4. The notices under section 19E were all signed by respondent No.2 D. K. Guha who was an Assistant Director of Inspection in the Income-tax Department. On 26 November, 1969 the petitioner No.4 W.D. Jones was arrested by Omkar Nath Chattopadhyaya under section 19B(1) of the FER Act, 1947 on the plea that he had reasons to believe that W.D. Jones had violated the provisions of sections 5, 21 and 23B read with sections 5 and 21 of the FER Act. 5. On 4 October, 1969 the petitioners moved an application before this High Court under Article 226 of the Constitution of India challenging the legality of the various 'authorizations' issued by T.N. Kaul for search and seizure under section 19D of the FER Act, the legality of the actual searches and seizure made pursuant to the said authorizations as well as the legality of the notices under section 19E of the FER Act and all proceedings pursuant thereto. The petitioners asked for appropriate writs for the quashing of the Authorization letters, the notices, etc. and also for mandates upon the respondents to forbear from taking any steps pursuant to or in connection with the said searches and seizures and also to return to the petitioners all the books, papers and documents seized during the aforesaid searches. A Rule was issued in favour of the petitioners on 4 December, 1969. There was also an interim order of injunction restraining the respondents from acting upon or taking any proceedings in connection with the said searches and seizures and notices under section 19E of the FER Act. Thereafter the petitioner's application was heard by Banerjee, J. who after hearing the parties dismissed the application and discharged the Rule. There was also an interim order of injunction restraining the respondents from acting upon or taking any proceedings in connection with the said searches and seizures and notices under section 19E of the FER Act. Thereafter the petitioner's application was heard by Banerjee, J. who after hearing the parties dismissed the application and discharged the Rule. The petitioners have now come up on appeal from the said judgment and order of Banerjee, J. 6. We shall concern ourselves first, with the challenge of the petitioners against the searches and seizures. The challenge is based on various grounds which can be conveniently grouped under three broad heads. Under the first bead, Mr. Anil Mitter appearing on behalf of the appellants sought to assail the Authorizations as bad on account of non-compliance with what he described as the conditions precedent to the exercise of power under sub-section (i) of section 19D of the FER Act. Under the second head, the searches were sought to be impugned as illegal because of non-observance of what has been described as the procedural safeguards laid down in sub-section (2) of the same section. Finally, under the third head, it was contended that the entire exercise of powers under section 19D was mala fide and merely a colourable exercise of the power given under the FER Act. 7. Obviously the arguments under the first two heads turn respectively round the scope and effect of sub-section (1) and sub-section (2) of section 19D of the FER Act which is in the following terms :–– Section 19D Power to search premises :––(1) If an Officer of Enforcement, not below the rank of Assistant Director of Enforcement, has reason to believe that any documents which in his opinion will be useful for or relevant to any proceeding under this Act, are secreted in any place, he may authorize any officer of Enforcement to search for and seize or may himself search for and seize such documents. (2) The Provisions of the Code of Criminal Procedure, 1898 (5 of 1898), relating to searches shall, so far as may be, apply to searches under this section subject to the modification that sub-section (5) of section 165 of the said Code shall have effect as if for the word 'Magistrate', wherever it occurs, the words 'Director of Enforcement or other officer exercising his power' were substituted. 8. 8. I start with controversies between the parties around sub-section (1) which is admittedly the statutory provision on which is based the right or jurisdiction to authorize the kind of searches and seizures that were made in this case. The principal contentions of Mr. A. C. Mitter are as follows :–– (I) The power given in sub-section (1) to authorize the search of premises can be exercised only if certain conditions precedent to the exercise of such power are satisfied. (II) The most fundamental condition precedent is that the officer who authorizes the search must have 'reason to believe' that certain documents are secreted in the place which will be searched. This reason to believe, of course, connotes two things : first, the officer must in fact believe and secondly, he must have materials to induce such belief. Mere suspicion is not enough. (III) The Officer who authorizes the search must also believe that the documents which he believes to be secreted will be 'useful for or relevant to' a proceeding under the Foreign Exchange Regulation Act. (IV) The proceedings which have been mentioned just now must be of a definite nature and must have connection with either one or more of the specific offences under the Act. Besides, they should be pending proceedings. Should it, however, he held that the proceedings need not be pending and that it would be enough if they are merely contemplated, it was contended that the 'contemplation' of the proceedings would be in such specific details as would pinpoint the offence that the officer concerned had in his mind. (V) Contentions at (II), (III) and (IV) above are justiciable. The authorizing officer will have to satisfy upon challenge, by clear evidence that the conditions mentioned in (II), (III) and (IV) were satisfied. The authorities concerned must produce evidentiary facts from which a reasonable man could come to hold a genuine belief about the secretion of documents. (VI) The word 'secreted' in sub-section (1) means 'actually secreted'? The word does not include the sense of 'likely to be secreted'. (VII) In cases where the authorizing officer does not himself carry out the search he must give such instructions as would enable the searching officers to ensure that the documents that are seized as a result of the search are relevant and useful to the proceedings mentioned in the sub-section. (VII) In cases where the authorizing officer does not himself carry out the search he must give such instructions as would enable the searching officers to ensure that the documents that are seized as a result of the search are relevant and useful to the proceedings mentioned in the sub-section. (VIII) The Court must be satisfied that the officers who carried out the search applied their minds at the time of search to the usefulness of the documents or their relevancy to proceedings under the Act. (IX) In justifying the exercise of power under sub-section (1) by showing that the conditions precedent had been fulfilled it is not permissible to rely on materials which become available after the search or as a result of the search. (X) The onus regarding the fulfillment of the conditions precedent to the exercise of power under sub-section (1) is entirely on the respondents. Once a challenge is thrown to the exercise of the power it will be for the respondents to show that the power had been exercised properly and legitimately. (XI) In the instant case the authorizing officer has failed to furnish such primary or evidentiary facts as can satisfy the Court that the conditions mentioned in (II), (III) and (IV) above have been fulfilled. He has failed to prove that he had any bona fide belief about the secretion of any documents. Further, he has failed to show that he had given such instructions as would enable the officers to ensure that only such documents are seized as may be 'useful' or 'relevant' within the meaning of the Act. 9. The principal contentions of Mr. Subrata Roy Chowdhury who argued on behalf of the respondent were, on the other hand, as follows : (1) The power under sub-section (1) of section 19D is one that can be exercised on the purely subjective satisfaction of the officer concerned that there are circumstances calling for the exercise of the power. So long as the officer acts honestly and bona fide there is no limitation on the exercise of the power and the Courts have no jurisdiction to scrutinize the exercise of the power. 'Reason to believe' under sub-section (1) is not justiciable. If there is a challenge regarding the existence of 'the reason to believe' it is enough for the officer to show that he did hold an honest belief. 'Reason to believe' under sub-section (1) is not justiciable. If there is a challenge regarding the existence of 'the reason to believe' it is enough for the officer to show that he did hold an honest belief. Neither the adequacy of the grounds nor the reasonableness of the belief can be gone into by the Court. It is enough for the authority to show that the exercise of power has been bona fide. In my event, the authoriziny officer need not disclose the source of his information Further, the officer need not divulge to the Court the content of his 'reason to believe'. The scope of the Court's scrutiny is very limited. The Court is expected, if at all, to judge whether the facts produced by the authorizing officer have a rational connection which the circumstances which under the statute would justify a search and consequent seizure. This scrutiny should be satisfied even if only prima facie materials are produced to indicate suspicious circumstances. The Court, in any case, should not presume to test the truth of the information on which the authorizing officer acts, for, it is the authorizing officer who is the best judge of the reliability of the information available to him. (6) The authorizing officer in the present proceedings is entitled to rely on the statement made in the authorization document as well as on such facts as have become available after or as a result of the search to support the formation of belief regarding secretion of documents. (7) (a) The appellants have neither alleged nor proved mala fide in the petition. (b) No challenge has been made out regarding the existence of the legitimacy of the reason to believe. (8) (a) The fact that the authorizing officer had 'reason to believe' regarding the violation of Foreign Exchange Regulation Act would appear sufficiently from the (i) document containing the authorization to search, (ii) the affidavit of Kaul, the authorizing officer, as well as (iii) the documents recovered as a result of the search. (b) As for the existence of a bona fide ‘reason to believe' that there had been secretion of documents, enough materials will be available in the various affidavits filed on behalf of the respondents and the document of authorization. (9) In any event, the respondents have offered to disclose some of the documents to Court without, however, showing them to the appellants. (9) In any event, the respondents have offered to disclose some of the documents to Court without, however, showing them to the appellants. This, it was urged, the respondents are entitled to do and Court should actually look into these documents, if necessary, for the purpose of the Court's own satisfaction regarding the bona fide of the respondents' belief and act to. 10. It is obvious that a very large number of questions have been raised. In fact, I have in my experience seldom seen a legal battle fought out with such uncompromising and unrelating vehemence no party was prepared to give quarters to the other on any point whatsoever. However, though the paints of controversy were many, in my judgment, from a purely logical point of view there are only four cardinal issues in this case and all the other issues are either incidental or consequential. If those four issues are resolved to our satisfaction the other issues will automatically sort themselves out. The four issues that I have in mind should receive priority in the order in which they are set out : (1) Is the fulfilment of the conditions precedent to the exercise of the power under sub-section (i) of section 19D a mere matter of subjective satisfaction of the officer who exercises the power or is it justiciable ? (2) If the question is justiciable, what are the limits of the judicial scrutiny to which it is subject? (3) What are the conditions precedent which have to be satisfied before the power to authorize a search and to seize documents can be exercised by the appropriate officer under section 19D ? (4) In the facts and circumstances of the instant case have the conditions precedent been satisfied? 11. I now proceed to deal with these questions in the order in which I have set them out. As I do so, I shall in the process dispose of the various ancillary points of subsidiary problems raised by both sides round about these issues. It will be convenient to deal with the first two issues together. 12. It was contended on behalf of the appellants that upon a challenge being thrown to the exercise of the power, the officer concerned must justify before the Court his exercise of the power by demonstrating that the conditions precedent to such exercise had been satisfied. It will be convenient to deal with the first two issues together. 12. It was contended on behalf of the appellants that upon a challenge being thrown to the exercise of the power, the officer concerned must justify before the Court his exercise of the power by demonstrating that the conditions precedent to such exercise had been satisfied. The authority concerned, it was argued, was therefore under an obligation to produce clear evidence of the existence of such facts as would induce a reasonable man to hold the belief mentioned in section 19D. Mr. Roy Chowdhury, on the contrary, contended on behalf of the respondents that the power in question is one that can be exercised on the purely subjective satisfaction of the officer concerned. Further, Mr. Roy Chowdhury argued on the following lines. If there is a challenge regarding the existence of the 'reason to believe', the officer concerned has only to show that he honestly held the appropriate belief and it is not for the Court to scrutinize the materials which led to the formation of the belief. In fact, the officer concerned is not called upon either to disclose the materials on which the belief came to be held or to disclose the source of the belief. At the utmost the Court can consider, if at all, whether the facts produced by the authorizing officer had a rational connection with the circumstances which under statute would justify the authorization of a search and of the consequent seizure. Further even if it be held that the matter is not one of subjective satisfaction of the officer who exercises the power and that it is subject to judicial scrutiny the Court should still be satisfied if only such materials are produced as indicate the existence of suspicious circumstances. The Court in no case should presume to test the truth of the information on which the authorizing officer acts, for, it is the authorizing officer who is the best judge of the reliability of the information on which the acts. 13. A decision in this matter is, in a sense, going to be a matter of first impression, because there are no decided authorities on this particulars section of the FER Act. 13. A decision in this matter is, in a sense, going to be a matter of first impression, because there are no decided authorities on this particulars section of the FER Act. There are, however quite a number of decisions of the Supreme Court and of the Calcutta High Court as well as of other High Courts on analogous provisions of other statutes which furnish some guidelines for answering the questions. Both Mr. Mitter and Mr. Roy Chowdhury relied on these judgments and they construed them in a manner which suited their respective contentions. Some of these decisions relate to cases under the Income Tax Acts of 1923 and 1862, some relate to cases under the Sea Customs Act and some again relate to cases connected with exercise of the special powers conferred upon the Central Government under section 235 and section 237(D) of the Companies Act, 1956 for investigation into the affairs of Companies. 14. The whole problem, of course, turns round apparently simple question as to what is the effect of the expression 'reason to believe'. There are many statutes which confer powers of various kinds and degrees on Executive Officers which powers are to be exercised only upon the officer concerned having reason to believe in the existence of a specific state of facts or circumstances. The language is not always the same. Sometimes the expression used is 'reasonably suspects', sometimes it is of the opinion', and sometimes against, 'is reasonably satisfied'. Is it enough in cases where powers are exercised under this statutes for the officer concerned to say merely that he had 'reason to believe' or that he was 'of the opinion' or that he was reasonably satisfied that the state of things which authorized the exercise of the powers existed? Or was it incumbent on the officer or authority concerned to justify to the Court when there is a challenged to the exercise of the power that they did have 'reason to believe' or that they were 'of the opinion or satisfied' on reasonable grounds about the existence of state of things specified in the statute ? 15. In support of his contention that whenever the statute uses such expression as 'reason to believe' the existence of such belief and of such reasons is justiciable, Mr. 15. In support of his contention that whenever the statute uses such expression as 'reason to believe' the existence of such belief and of such reasons is justiciable, Mr. Mitter relied strongly on four decisions in particular, namely, the decision of the Judicial Committee of the Privy Council in (1) King Emperor v. Vimlabai Deshpandey & Anr., LR 73 IA 144 and the decisions of the Supreme Court in (2) Calcutta Discount Co. Ltd. v. Income Tax Officer, AIR 1961 SC 372 : 41 ITR 191, (3) Barium Chemicals Ltd. v. Company Law Board, AIR 1967 SC 295 and (4) Rohtas Industries v. S.D. Agarwal & Ors., AIR 1969 SC 707 : 1969 (1) SCC 325 . We might very conveniently make a start by analyzing these four decisions first. 16. In King Emperor v. Vimlabai Deshpandey, LR 73 Indian Appeal 144 the Privy Council had to construe the effect of Rule 129, sub-rule 1 of the Defence of India Rules, 1959, The sub-rule provided that 'any Police Officer… may arrest without warrant any person whom he reasonably suspects of having acted ...... (a) ....in a manner prejudicial to the public safety or to the efficient prosecution of the War. Upon a detenu being arrested by a Police Officer under this sub-rule, the wife, of the detenu challenged under section 491 of the Code of Criminal Procedure the legality of the arrest and detention. The High Court of Nagpur upheld the petitioner's challenge and directed the detenu to be set at liberty forthwith. An appeal against this decision was dismissed by the Judicial Committee of the Privy Council. Sir John Beaumont who delivered the judgment of their Lordships formulated two questions which in their Lordships' view, arose on the appeal. One of the questions was where a Police Officer makes an arrest under Rule 129, sub-rule 1 of the Defences of India Rules, is he bound to prove to the satisfaction of the Court before whom the arrest is challenged that he, the Police Officer, had reasonable grounds of suspicion. Their Lordships followed the judgment of the House of Lords in (5) Shearer v. Shields, LR (1940) AC 808 and upheld the decision of the Nagpur High Court in so far as the High Court had held that the burden lay on the Police Officer to satisfy the Court that his suspicious were reasonable. Their Lordships followed the judgment of the House of Lords in (5) Shearer v. Shields, LR (1940) AC 808 and upheld the decision of the Nagpur High Court in so far as the High Court had held that the burden lay on the Police Officer to satisfy the Court that his suspicious were reasonable. In coming to this decision their Lordships considered it important notice the different differences between Rule 26 and Rule 129 of the Defence of India Rules. Under Rule 26 the Central or Provincial Government could make an order of detention if it was satisfied with respect to any particular person that, with a view to preventing him from indulging in the subversive activities specified it is necessary so to do. It is to be noticed that Rule 26 required that Government must be satisfied and mere suspicion was not enough. There is, however no qualifying adverb such as 'reasonably' or 'honestly' attached to the word 'satisfied'. On the other hand, under Rule 129, any Police Officer can arrest on mere suspicion but the suspicion had to be reasonable, the exact words being any person, whom he reasonably suspects'. Their Lordships thought that just as in Shearer v. Shields (ibid) the House of Lords construction the provision of the Glasgow Police Act authorizing constables to arrest if they had reasonable ground of suspicion and held that the burden rested on the constable concerned to show that his suspicion was reasonable and his act, therefore, justified, so also the same result must follow under Rule 129. In other words, the presence of the word 'reasonable' made the act of the constable liable to judicial scrutiny. 17. In Calcutta Discount Company Ltd v. Income Tax Officer, Companies District I, Calcutta & Anr., AIR 1961 SC 372 : 41 ITR 191 the company had been served with notices under Clause (1)(a) of section 34 of the Indian Income Tax Act, 1922. That section, it will be remembered, provided a machinery for assessment or reassessment of income, profits or gains that have escaped assessment or have been under-assessed. Notice under section 34(1)(a) may be issued at any time within eight years from the end of the relevant year. That section, it will be remembered, provided a machinery for assessment or reassessment of income, profits or gains that have escaped assessment or have been under-assessed. Notice under section 34(1)(a) may be issued at any time within eight years from the end of the relevant year. Two conditions have, however, to in satisfied before the Income Tax Officer can have jurisdiction to issue the notice first the Income Tax Officer must have reason to believe that income, profits or gains chargeable to income-tax have been under assessed and secondly, he must have also reason to believe that such under assessment has occurred by reason of either (i) omission or failure on the part of an assessee to make a return of his income under section 22 or (ii) omission or failure on the part of an assessee to disclose fully and truly all material facts necessary for his assessment for that year. There was no dispute in that case regarding the first condition having been satisfied but the question arose whether the Income Tax Officer has reason to believe that there had been omission or failure to disclose fully and truly all material facts necessary for the assessment in consequence of which there was under assessment. It was contended on behalf of the appellant company who had lost before the Calcutta High Court that the second condition had not been fulfilled. Dasgupta, J. delivering the majority judgment of the Supreme Court held that on the facts of the case, the Income-Tax Officer who issued the notices had not before him any non-disclosure of material fact so that he could have no material before him for believing that there had been any material non-disclosure by reason of which an under assessment had taken place. Das Gupta, J. further held that the scheme of the law is clearly this that both the conditions, (i) the Income Tax Officer having reason to believe that there has been under assessment and (ii) his having reason to believe that such under assessment has resulted from non-disclosure of material facts, must co-exist before the Income Tax Officer has jurisdiction to start proceedings after the expiry of four years'. 18. Even Shah, J., as his Lordship then was, who delivered the minority judgment did not doubt that the existence of the belief and the reasons for the belief were both justiciable. 18. Even Shah, J., as his Lordship then was, who delivered the minority judgment did not doubt that the existence of the belief and the reasons for the belief were both justiciable. In fact, his Lordship thought that 'the expression 'reason to believe' postulates belief and the existence of reasons for that belief. The expression, his Lordship observed does not mean a purely subjective satisfaction of the Income Tax Officer. His Lordship, however, observed that 'the existence of the belief, and the reasons for the belief, but not the sufficiency of the reasons will be justiciable. As his Lordship said, the expression 'predicates that the Income Tax Officer holds the belief induced by the existence of reasons for holding such belief, it contemplates existence of reasons on which the belief is founded, and not merely a belief in the existence of reasons inducing the belief. 19. The next two decisions are those of the Supreme Court in Barium Chemicals Limited & Anr. v. Company Law Board & Anr., AIR 1967 SC 295 and Rohtas Industries v. S. D. Agarwal & Ors., 1969 (1) SCC 325 . These happen to be the latest pronouncements of the Supreme Court on the questions that we are now discussing. The thickest battle between the parties ranged around the scope and effect of these two decisions, for, apparently both Mr. Mitter and Mr. Roy Chowdhury recognized the profound importance of these decisions for the purpose of the instant case. Mr. Mitter for the appellants sought to rely on these and argued that the Supreme Court has laid down in these cases the correct guidelines to be followed in the matter of deciding justiciability of executive action in respect of special powers of search and seizure given to them by Statutes. Mr. Roy Chowdhury, of course, contests this proposition vehemently. Even at the risk of prolixity, I propose to examine these two decisions of the Supreme Court in some detail. I shall deal first with the case of Barium Chemicals Ltd. which in point of time came first and, later on, the decision in the case Rohtas Industries which, as we shall see presently, though later in point of time gives us more definite and conclusive guidance in the matter. 20. Both these two decisions were concerned with the construction of section 237(1)(b) of the Companies Act. 20. Both these two decisions were concerned with the construction of section 237(1)(b) of the Companies Act. It is, therefore, necessary to set out section 237 for an appreciation of the scope and effect of the Supreme Court decisions, section 237 is in the following terms :–– "Section 237 Without prejudice to its powers under section 235, the Central Government–– (a) shall appoint one or more competent persons as Inspectors to investigate the affairs of a company and to report thereon in such manner as the Central Government may direct, if–– (i) the company, by special resolution, or (ii) the Court, by order, declares that the affairs of the company ought to be investigated by an Inspector appointed by the Central Government, and (b) may do so if, in the opinion of the Central Government there are circumstances suggesting–– (i) that the business of the company is being conducted with intent to defraud its creditors, members, or any other persons, or otherwise for a fraudulent or unlawful purpose, or in a manner oppressive of any of its members, of that the company was formed for any fraudulent or unlawful purpose; or (ii) that persons concerned in the formation of the company the or management of its affairs, have in connection therewith been guilty of fraud, misfeasance or other misconduct towards the Company or towards any of its members; or (iii) that the members of the company have not been given all the information with respect to its affairs which they might reasonably expect, including information relating to the calculation of the commission payable to a managing or other director, the managing agent, the secretarier and treasurers, or the manager, of the company". 21. An understanding of the precise scope of clause (b) of section 237 requires a reference not only to clause (a) of that section but also to two earlier sections, namely, 235 and 236. Section 235 authorizes the Central Government to appoint Inspectors to investigate into the affairs of any company and to report thereon on the application of a required proportion of the members of the company or upon a report by the Registrar under section 234. Section 236 lays that the application by members for the appointment of Inspectors under section 235 should be supported by evidence and the Central Government may before making the appointment call for security. Section 236 lays that the application by members for the appointment of Inspectors under section 235 should be supported by evidence and the Central Government may before making the appointment call for security. In other words, certain conditions precedent have to be satisfied before the Central Government exercises the power conferred by section 235. Section 237(a) makes it incumbent or Central Government to appoint such Inspectors to investigate the affairs of the company if the company itself by special resolution or the Court by an order declares that there ought to be an investigation by an Inspector appointed by Central Government. The power under section 237(a) is, not a discretionary power like that given under section 235 or under section 237(b) only if the Central Government is of the opinion that there are circumstances, that is to say facts which suggest that the business of the company is being conducted with intent to defraud its creditors, members and other persons and certain other similar circumstances involving fraud, misfeasance or misconduct in the management of the company. The question arose as to the extent the action of Central Government under section 237(b) is subject to judicial review. 22. In the Case of Barium Chemicals Limited, the Secretary of the Company Law Board appointed for persons as Inspectors for investigating the affairs of the Barium Chemicals Limited, and reporting to the Board in regard to certain irregularities and illegalities alleged to have been committed by the Company. The order was made by Mr. R.C. Dutt, Chairman of the Company Law Board in exercise of the powers under section 237(b) of the Companies Act, 1956. The company challenged this order under Article 226 of the Constitution in the Punjab High Court, inter alia, on the grounds that order was mala fide and made on materials extraneous to the matters mentioned in section 237(b) of the Companies Act. The Punjab High Court having dismissed the application the Company want on appeal to the Supreme Court who allowed the appeal by a majority decision. The Punjab High Court having dismissed the application the Company want on appeal to the Supreme Court who allowed the appeal by a majority decision. Mudholkar, J. who delivered the judgment on behalf of himself and Sarkar, C. J. were in favour of dismissing the appeal, Hidayatullah, J. as His Lordship then was, Bachawat, J. and Shelat, J. delivered separate judgments in which each of them allowed the appeal though on slightly different grounds, Hidayatullah, J. reasoned on the following : The exercise of the power under section 237(b) depended upon the honest formation of an opinion that an investigation was necessary. That was the first requirement. The second requirement was the existence of certain circumstances which would lead to various inferences mentioned in clauses (i), (ii) and (iii) of sub-clause (b) of section 237. His Lordship analyzed and dissected the three clauses (i), (ii) and (iii) and gave in a tabular form the various inferences enumerated therein. According to his Lordship, it is absolutely essential that there should exist such circumstances as would suggest an inference of the enumerated kind. Any action not based on such circumstances would be invalid. Even though the formation of opinion is subjective, "the existence of circumstances relevant to the inference as the sine qua non for action must be demonstrable. If the action is questioned on the ground that no circumstances leading to an inference of the kind contemplated by the action might be exposed to interference unless the existence of circumstances is made out". It an action by the executive is challenged, it was not enough for the executive to say that circumstances existed which would lead to an inference of the kind mentioned in the various sub-clauses of clause (b). The executive must give clue to what those circumstances are because 'the circumstances must be such as to lead to conclusions of certain definiteness". .........If the circumstances appointed are such that no inference of the kind stated in section 237(b) can at all be drawn the action would be ultra vires the Act and void". After having given this exposition of the legal position Hidayatullah, J. as the Lordship then was found on an analysis of the facts as disclosed in the affidavits that such circumstances did not exist in that case and that the act of the Chairman was in the nature of a "fishing expedition". After having given this exposition of the legal position Hidayatullah, J. as the Lordship then was found on an analysis of the facts as disclosed in the affidavits that such circumstances did not exist in that case and that the act of the Chairman was in the nature of a "fishing expedition". "No doubt, the section confers a discretion but it sets its own limits upon discretion by stating clearly what must be looked for in the shape of evidence before the drastic act of investigation into the affairs of a company can be taken. The affidavits which were filed in answer to the petition do not disclose even the prima facie existences of these circumstances. On the other hand he emphasized only that there was mismanagement and losses which necessitated 'deeper probe'. In other words, the act of the Chairman was in the nature of a fishing expedition and not after satisfaction that the affairs of the company were being carried on even prima facie with the intent of defraud or that the persons incharge were guilty of fraud misconduct". These are the grounds on which Hidyatullah, J. struck down the order of the Chairman, Company Law Board. 23. Bachawat, J. also allowed the appeal and set aside the impugned order, but his Lordship did so on slightly different grounds. He considered the material circumstances which the Chairman of the Company law Board claims, in his affidavit, to have considered and then held that those circumstances by themselves could not reasonably suggest that the business of the company was being conducted to defraud the creditors, members, and persons or that the management was guilty of fraud towards the company and its members. His Lordship held that if the Chairman had applied his mind to the relevant facts he could no have formed the opinion which, he says, he had formed. Therefore, the Chairman according to his Lordship must have formed the opinion without applying his mind would be in excess of his powers and could not sustain the order under section 327(b). His Lordship held that if the Chairman had applied his mind to the relevant facts he could no have formed the opinion which, he says, he had formed. Therefore, the Chairman according to his Lordship must have formed the opinion without applying his mind would be in excess of his powers and could not sustain the order under section 327(b). It is clear that though his Lordship did not in clear and specific terms pose the question as to how far the subjective opinion of the Chairman under section 237 (b) was open to judicial review, his Lordship did, in fact, scrutinize the circumstances on which the opinion was alleged been formed and then come to the conclusion that no reasonable man could in those circumstances have Came to that opinion. His Lordship did not accept without scrutiny or question the assertion made in the Chairman's affidavit that he had formed an opinion as required under section 237(b). Shelat, J. in his judgment formulated, among other things, the following two questions for determination; (i) Is it correct to contend that though under clause (b) of section 237 the opinion of the relevant authority is subjective there must exist circumstances set out in the clause which are conditions precedent to the formation of the opinion; and, (ii) Assuming that this is not so, can the Court in cases where the authority discloses the circumstances on which the opinion is formed examine those circumstances and see if they are relevant for an opinion as to fraud or an intent to defraud ? It may be in this connection, be pointed out that two constructions of clause (b) of section 237 had been suggested before the Supreme Court by Counsel appearing on both sides. According to one construction, though the opinion is subjective the existence of circumstances set out in clause (b) is a condition precedent to the formation of such opinion and, therefore, even if the impugned orders were to contain a recital asserting the existence of those circumstances the Court can go behind that recital and determine whether they did, in fact, exist. On the other construction, it was argued that clause (b) was incapable of such dichotomy and that not only the opinion was subjective but that the entire clause was made dependant on such opinion and the authority must come to an opinion on materials before it that there exist circumstances suggesting fraud or intent to defraud. The words "opinion" and suggesting", according to this argument, clearly indicate that the entire function was subjective so that even the existence of the circumstances is a matter of subjective opinion and since the Legislature entrusted this function to the authority, the Court cannot go behind the opinion and ascertain whether the relevant circumstances existed or not. 25. In answering these questions Shelat, J. examined the principles enunciated in the case of (7) Shibnath Banerjee, AIR 1943 F.C. 75 : 72 Indian Appeal 241; (8) Atmaram Vaidya's case AIR 1951 SC 157 , (9) Sibbanlal Saksena's case, AIR 1954 SC 179 ; (10) State of Bombay v. K.P. Krishnan, AIR 1960 SC 1223 ; (11) Dr. Akshaibar Lal v. Vice Chancellor, Baneras Hindu University, AIR 1961 SC 19; (l2) Rameswar v. District Magistrate, Burdwan, AIR 1964 SC 334 ; Estate and Trust Agency (1927) Limited v. Singapore Improvement Trust, AIR 1937 PC 265; (14) Ross Clunis v. Papadopoullos, 1958 (1) WLR 546; (15) Nakhuda Ali v. M.F. Des Javurathe, 1951 AC 66; (16) K. Villukunnel v. Reserve Bank of India, AIR 1962 SC 1371 ; and then made the following observations with regard to section 237(b) :–– "Could the Legislature have left without any restraints or limitations the entire power of ordering an investigation to the subjective decision of the Government of the Board? There is no doubt that the formation of opinion by the Central Government is a purely subjective process. There can also be no doubt that since the Legislature has provided for the opinion of the Government and not of the Court such an opinion is not subject to a challenge on the ground of propriety, reasonableness or sufficiency. But the Authority is required to arrive at such an opinion from circumstances suggesting what is set out in sub-clauses (i), (ii) and (iii). If these circumstances were not to exist, can the Government say the same thing where the circumstances relevant to the clause do not exist? The Legislature no doubt has used the expression 'circumstances suggesting'. But the Authority is required to arrive at such an opinion from circumstances suggesting what is set out in sub-clauses (i), (ii) and (iii). If these circumstances were not to exist, can the Government say the same thing where the circumstances relevant to the clause do not exist? The Legislature no doubt has used the expression 'circumstances suggesting'. But that expression that the circumstances need not be such as would conclusively establish an intent to defraud or a fraudulent or illegal purpose. The proof of such an intent or purpose is still to be adduced through an investigation. But the expression 'circumstances suggesting' cannot support the construction that even the existence of circumstances is a matter of subjective opinion. That expression points out that there must exist circumstances from which the Authority forms an opinion that they are suggestive of the crucial matters set out in the three sub-clauses. It is hard to contemplate that the Legislature could have left to the subjective process both the formation of opinion and also the existence of circumstances on which it is to be founded. It is also not reasonable to say that the clause permitted the Authority to say that it has formed the opinion on circumstances which in its opinion exist and which in its opinion suggest an intent to defraud or a fraudulent or unlawful purpose. It is equally unreasonable to think that the Legislature could have abandoned even the small safeguard of requiring the opinion to be founded on existent circumstances which suggest the things for which an investigation can be ordered and left the opinion and even the existence of circumstances from which it is to be formed to a subjective process.......... There must therefore exist circumstances which in the opinion of the Authority suggest what has been set out in sub-clauses (i), (ii), or (iii). It is shown that the circumstances do not exist or that they are such that it is impossible for anyone to form an opinion therefrom suggestive of the ground of not application of mind or perversity or on the ground that it was formed on collateral grounds and was beyond the scope of the statute". 26. After coming to this conclusion Shelat, J. does not stop there. 26. After coming to this conclusion Shelat, J. does not stop there. He holds further that even if the entire clause (b) had been subjective and the clause did not necessitate the disclosure of circumstances, where the circumstances are, in fact, disclosed, the Court can consider whether they are relevant circumstances from which the authority could have formed the opinion that they were suggestive of the things set out in clause (b). His Lordship found that on the materials disclosed it could not be contended that the circumstances were suggestive of the things mentioned in clause (b). On this ground his Lordship held the order to be beyond the scope of clause (b) and struck it down. 27. I might as well point out here the ratio of the minority judgment of Sarkar, C. J. and Mudholkar, J. as it appears from the judgment of the latter. Their Lordship accepted the other construction put up on section 237 (b) according to which clause (b) is incapable of a dichotomy and the subjective process embraces the formation of an opinion that circumstances suggestive of any of the matters comprised sub-clauses (i), (ii) and (iii) exist. Their Lordships pose this question for answer : if it be considered that the formation of an Opinion by the Board was entitled to be subjective, what could be the mutter about which the Board was entitled to form an opinion? The opinion must necessarily concern the existence or non-existence of facts suggesting the things mentioned in the several sub-clauses of clause (b). The words 'circumstances' and 'suggesting' cannot, in the opinion of their Lordships be dissociated without making it impossible for the Board to form an 'opinion' at all. The formation of the opinion must, therefore, be as to the existence or non-existence of the circumstances mentioned just now. Their Lordships, however, make only one reservation : the opinion must, of course, not have been arrived at mala fide. The order could be successfully challenged if it were made mala fide. On this construction their Lordship held inter alia, that the opinion to be formed under section 237(b) is apart from the reservation mentioned subjective. If however, the ground are disclosed by the Board the Court can examine them for considering whether they are relevant. The order could be successfully challenged if it were made mala fide. On this construction their Lordship held inter alia, that the opinion to be formed under section 237(b) is apart from the reservation mentioned subjective. If however, the ground are disclosed by the Board the Court can examine them for considering whether they are relevant. On the facts if the case their Lordships found that the company had failed to show that the order had been mala fide and so the attack on the order failed. 28. Before passing on to the decision in the case of Rohtas Industries Limited, AIR 1969 SC 707 let us pause here for a moment and try to understand that precisely is the spoke and effect of the decision in Barium Chemicals. It is important to bear in mind that the statutory provisions with which we are concerned in the Case of Barium Chemicals Limited, i.e. to say the provisions of section 237 (b) confer the relevant power if in the opinion of the Central Government there are certain circumstances of a type indicated in the statute. Section 19D of the FER Act with which we are concerned in the instant case does not the words 'in the opinion of.' That section confers the power to search or to authorize a search if the authority concerned has 'reason to believe' something that is specified in the Act. In this connection, it may be remembered that the Privy Council had in case of Vimlabai Deshpandey & Anr. (L.R.) 73 Indian Appeal, 144, maid a distinction between the word 'satisfied' standing be itself and the same word to which a qualifying adverb such as 'reasonably' or 'honestly' was attached.' The Judicial Committee followed the House of Lords decision in Shearer v. Shields (supra) in holding that the presence of the word reasonable' made the act liable to judicial scrutiny. From that point of view, the fact that section 19D of the FER Act introduces the word 'reasonable' while section 237 (b) of the Companies Act adds no such qualifying adverb or adjective to the words in the opinion of should make a lot of difference. From that point of view, the fact that section 19D of the FER Act introduces the word 'reasonable' while section 237 (b) of the Companies Act adds no such qualifying adverb or adjective to the words in the opinion of should make a lot of difference. In fact, even if it were possible to construe section (b) to mean that the opinion was altogether a subjective process and it was not for the Court to go beyond the statement of the authority that the relevant opinion had been formed, it would have been possible to argue that section 19D of the FER Act has to be construed differently, for, it includes the qualifying word 'reasonable'. Shelat, J., however, in Barium Chemicals Limited v. Company Law Hoard makes no distinction between the effect of words like 'reason to believe' and the words like 'in the opinion of'. His Lord ship while dealing with the case of Villukumel v. Reserve Bank of India, AIR 1962 SC 1371 observes : "Therefore, the words, 'reason to believe' or 'in the opinion of' do not always lead to the construction that the process of entertaining 'reason to believe' or 'the opinion' is an altogether subjective process not lending itself even to a limited scrutiny by the Court that such a 'reason to believe' or 'opinion' was not formed on relevant facts or within the limits or as Lord Radcliffe and Lord Reid called, the restraint of the statute as an alternative safeguard to rules of natural justice where the function is administrative". 29. This obliteration of the distinction between the implication of 'reason to believe' and in the opinion of a distinction sustained by both the Judicial Committee of the Privy Council and the House of Lords has, in my opinion, been brought about by the Supreme Court in the context of Article 19 of the Constitution. This is very clear upon a close analysis of the judgment of Shelat, J. who after categorically asserting that the expression 'circumstances existing' in section 237 of the Companies Act 'cannot support the construction that even the existence of circumstances is a matter of subjective opinion' comments in a passage which I have already cited in extenso that it is "unreasonable to think that the legislature could have abandoned even the small safeguard of requiring the opinion to be founded on existent circumstances". (Italicizing is mine). 30. (Italicizing is mine). 30. There is no doubt however, that the judgment in the case of Barium Chemicals Ltd. standing by itself does not dearly resolve what has been described as ,the problem of "subjectivity" by Venkatarama Ayyar, J. This is so because of the differing opinions of the learned Judges who constituted the Bench deciding that case. It is dear that Shelat, J. and HidayatulJah, J. both insist that the existence of the circumstances suggesting the matters set out in the three sub-clauses of section 237(b) is not to be left to the subjective opinion of the authority. At the same time it is equally clear that both Sarkar, C. J. and Mudholkar, J. thought that section 237(b) is entitled subjective and that it is only when the grounds are disclosed by the Board, that the Court can examine them for considering whether they are relevant. Bachawat, J. in his judgment went on different grounds supporting neither the views of Hidayatullah and Shelat, JJ. nor the views of Sarkar, C. J. and Mudholkar, J. Indeed, Bachawat, J. does not clearly indicate the stand that his Lordship took on the question of 'subjectivity'. His Lordship found that the material circumstances which emerged from the affidavit of the authority concerned were such that no reasonable person who had given proper consideration to those circumstances could have formed the opinion that they suggested a fraud of the type mentioned in the impugned order. Hence His Lordship quashed the order on the ground that the Chairman had apparently passed an order without applying his mind to the facts. As we shall presently see Bachawat, J. clarified his Lordship's stand in the later Case of Rohtas Industries Limited. It is because of this division of opinion between the learned Judges who constituted the Supreme Court Bench in the ease of Barium Chemicals Limited, that Mr. Roy Chowdhury appearing for the respondents, argued that this decision of the Supreme Court taken as a whole cannot be invoked in support of either the proposition that section 237(b) is entirely subjective or in support of the contrary proposition. 31. The Supreme Court decisions in Rohtas Industries Limited v. S. D. Agarwal, AIR 1969 SC 707 , however, leaves no scope for doubt as to what was the majority view on this question of "subjectivity". 31. The Supreme Court decisions in Rohtas Industries Limited v. S. D. Agarwal, AIR 1969 SC 707 , however, leaves no scope for doubt as to what was the majority view on this question of "subjectivity". Hedge, J. in the judgment which he delivered for himself and Sikri, J. has indicated in unmistakable terms that the existence of circumstances suggesting the things mentioned in the three sub-clauses of section 237(b) of the Companies Act, 1956 is a condition precedent for the Government to form the required opinion and if the existences be challenged, the Courts are entitled to examine whether those circumstances where really existing when the order in question was made. Hedge and Sikri, JJ. took the view taken by Hidayatullah and Shelat, JJ. in the case of Barium Chemicals Limited. Though it was argued vehemently for the appellants that the views of Bachawat, J. were also essentially the same as those of Hedge and Sikri, JJ., in my opinion, the views of Bachawat, J. are different. Every so, irrespective of Bachawat, J.'s view, it is no longer open to say that the majority view in the case of Rohtas Industries Limited cannot be ascertained. In my opinion, therefore, the majority decision of Rohtas Industries Limited is to be taken as the latest Supreme Court view on the matter and is complete by binding on me. Besides, if I may say so with utmost respect, the conclusions to which Hedge and Sikri, JJ. in this case and Shelat and Hidayatullah, JJ. have come in the earlier Barium Chemical's case are almost inescapable in the context of the constitutional provisions as to fundamental rights. In view of the importance of the decision in Rohtas Industries' case, for our purpose, I now address myself to a fuller discussion of the judgments in that case. 32. The question that arose in the case of Rohtas Industries Ltd., was whether an order passed by Government of India in the Ministry of Commerce and Industries in exercise of the power s conferred by sub-clauses (i) and (ii) of clause (b) of section 237 of the Companies Act, 1956 was liable to be struck down its not having been made in accordance with law. By that order Government had appointed a particular person as Inspector to investigate the affairs of the Rohtas Industries Ltd. for a particular period and to report thereon to Government indicating, inter alia, all irregularities and contraventions of the provisions of the Companies Act. It was contended by the Company that Central Government had no materials before it from which it could have come to the conclusion that the business of the Company was being conducted with intent to defraud its creditors, members or other persons or that the persons concerned in the management of its affairs had been guilty of fraud, misfeasance or other misconduct. It was further contended that without coming to such a conclusion, Government had no jurisdiction to pass the order. The validity of the order was challenged on this ground in a petition made before the Patna High Court. Certain facts were placed before the Court by an affidavit of the then Secretary to the Government of India in the Ministry of Finance, Department of Company Affairs. The High Court of Patna dismissed the petition on the ground that the opinion formed by the Central Government under section 237(b) of the Companies Act, 1956 was not open to judicial review and the declaration contained in the impugned order to the effect that Central Government had formed the required opinion was conclusive. The Company then went up on appeal to Supreme Court. The Supreme Court allowed the appeal and rejected the findings of the Patna High Court. Hegde, J. who as I have already said, delivered the majority judgment made an analysis of various decisions which dealt with statutory provisions similar to those of section 237(b) of the Companies Act because, as his Lordship observed, some of the judicial dicta found in these decisions are difficult of reconciliation. Hegde, J. who as I have already said, delivered the majority judgment made an analysis of various decisions which dealt with statutory provisions similar to those of section 237(b) of the Companies Act because, as his Lordship observed, some of the judicial dicta found in these decisions are difficult of reconciliation. His Lordship started by examining, in the first instance; the decisions relied on by the learned Attorney General in support of his contention that "the power conferred on the Central Government under clause (b) of section 237 in a discretionary power and the opinion formed, if in fact an opinion as required by that section has been formed, as well as the basis on which that opinion has been formed are not open to judicial review", that is to say, "no part of section 237(b) is open to judicial review and the matter is exclusively in the discretion of the Central Government and the statement that the Central Government had formed the required opinion is conclusive of the matter". Here are the decisions on which the learned Attorney General relied :–– (16) State of Madras v. C.P. Sarathy and Another, (1953) SCR 632 : AIR 1953 SC 53 ; J.K. Villukunnel v. Reserve Bank of India, AIR 1962 SC 1371 ; (17) Hubli Electricity Company Ltd. v. Province of Bombay, LR 76 I.A. 57; (18) Robinsons v. Ministry of Town and Country Planning, (1947) 1 KB 702; (19) Point of Avr. Collieries Ltd. v. Lloyd George, (1943) 2 All ER 546 33. Hedge, J. then referred to the decisions cited before their Lordships by Counsel for the company who contended that clause (b) of section 237 prescribed two requirements, i.e., (1) the requisite opinion of the Central Government and (2) the existence of circumstances suggesting the things mentioned in the sub-clauses and though the opinion to be formed by the Central Government is subjective, the existence of circumstances set out in clause (b) is a condition precedent to the formation of such opinion and therefore, recital in the impugned order about the existence of those circumstances does not preclude the Court from going behind the recitals and determining whether they did, in fact, exist. The decisions relied on in support of these propositions were as follows :–– (20) Susannah Sharp v. Waksfield, (1891) AC 175; (21) Padfield and Ors. The decisions relied on in support of these propositions were as follows :–– (20) Susannah Sharp v. Waksfield, (1891) AC 175; (21) Padfield and Ors. v. Minister of Agriculture, Fisheries and Food, (1968) All ER 604; (22) Commissioners of Customs and Excise v. Cure and Deeley Ltd., (1962) 1 QB 340; (23) Roncarelli v. Duplessis, (1959) SCR (Canadian Law Reporters) 121; (24) Read v. Smith, (1959) Neweezland Law Reports 996; Barium Chemical's case AIR 1967 SC 295 . 34. After discussing all these cases, Hedge, J. stated clearly that their Lordships (namely, Hegde and Sikri, JJ.) agreed with the conclusion that had been reached by Hidayatullah and Shelat, JJ. in the Barium Chemicals' case to the effect that the existence of circumstances suggesting that the company's business was being conducted in the manner indicated in sub-clause (i) or that the persons mentioned in sub-clause (ii) were guilty of fraud or misfeasance or other misconduct towards the company or towards any of its members, is a condition precedent for the Government to form the required opinion and if the existence of those conditions is challenged, the Courts are entitled to examine whether those circumstances were existing when the order is made. Hedge, J. went on to observe : "In other words the existence of the circumstances in question is open to judicial review though the opinion formed by the Government is not amenable to review by the Courts". Hedge, J. found that the required circumstances did not exist in that case and in the result set aside the impugned order. 35. I shall presently analyze the decision of Bachawat, J. But before doing so I consider it important, to avoid confusion, to emphasize that irrespective of what the views of Bachawat, J. are, the views of Hegde and Sikri, JJ. who gave the majority judgment of the Supreme Court in Rohtas Industries Ltd. are completely binding on me and it is not permissible for us either to side-track or Hedge those views. 36. Bachawat, J. has, after setting out the words of section 237(b) stated emphatically that the relevant matter is the opinion of the Central Government and that "the condition precedent to the exercise of power under section 237(b) is the opinion of the Government and not the existence of the circumstances suggesting one or more of the specified matters. 36. Bachawat, J. has, after setting out the words of section 237(b) stated emphatically that the relevant matter is the opinion of the Central Government and that "the condition precedent to the exercise of power under section 237(b) is the opinion of the Government and not the existence of the circumstances suggesting one or more of the specified matters. To hold that the factual existence of such matters is a condition precedent to the exercise of the power is to rewrite the section". Clearly enough, the views of Bachawat, J. as expressed in this case are contrary to the views of Hidayatullah, and Shelat, JJ. in Barium Chemicals' case and to the majority views of Sikri and Hegde, JJ. in this case of Rohtas Industries. Bachawat, J. relied on the decision of the Privy Council in the case of Hubli Electricity Company Ltd., 76 Indian Appeal 57 in support of his view that where the opinion of an administrative agency is condition precedent to the exercise of a power the relevant matter is the opinion of the agency and not the grounds on which the opinion is founded. In this connection, his Lordship also relies on the case of Ross Clunis v. Papadopoullos, (1958) 2 All England Report 23. Bachawat, J. rules out any scope for judicial review or scrutiny in such cases; his Lordship only qualifies his view by saying that the opinion which is the relevant matter in all such cases is some time displaced as a relevant opinion if it could be shown that such opinion could not be formed by any sensible person on the materials before him. The reason that his Lordship suggests for this is "that the Court may then infer that the authority either did not honestly form the opinion or that in forming it, it did not apply its mind to the relevant facts". It is in pursuance of this principle that his Lordship after scrutinizing the materials placed before the Court by Central Government and the parties came to the finding that there was no material before the Government on which Government could have formed the opinion that there were circumstances suggesting fraud etc. as mentioned in the impugned order. It is on these considerations that his Lordship was "constrained to hold that it formed the opinion without applying its mind to the materials before it. as mentioned in the impugned order. It is on these considerations that his Lordship was "constrained to hold that it formed the opinion without applying its mind to the materials before it. The opinion so formed is in excess of its powers and cannot support the order under section 237(b)". In the result, Bachawat, J. agreed to the order made by Hegde and Sikri, JJ. though on grounds different from what prevailed with the latter. 37. Mr. Roy Chowdhury, appearing on behalf of the respondents relied strongly on the judgment of Bachawat, J. Mr. Roy Chowdhury, in my opinion, is right in his contention that Bachawat, J.'s views support to a very great extent, if not wholly, the contentions that he has urged before us. I am totally unable to accept the argument of Counsel for appellants that Bachawat, J.'s views also support the appellants' case and are in essence the same as the views of Hegde and Sikri, JJ. At the same time, I have not the slightest doubt in my mind that the views of Hegde and Sikri, JJ. which represent the majority view of the Supreme Court are totally against the contentions of Mr. Roy Chowdhury . 38. As I have already said the decision of Supreme Court in Rohtas Industries' case has finally and definitively put a seal upon the question of 'subjectivity'. So long as that decision stands it is useless for me to look to other decisions for inspiration. A very large number of decisions were placed before us by both Mr. Roy Chowdhury and Mr. Mitter on this aspect of the case. Some of these decisions have been discussed and considered by the Supreme Court in the Barium Chemicals' case as well as in the Rohtas Industries' case. I shall presently refer to some of these decisions for other purposes but I do not think they are of much help to us any more on the limited question of subjectivity. 39. I should, however, like to paus and deal with one contention of Mr. Roy Chowdhury at his stage. He contended that section 237 of the Companies Act, 1956 and section 19D of the FER Act and completely different in nature and that a decision on the construction of section 237 of the companies Act cannot be of any use for construing section 19D of the FER Act. Mr. Roy Chowdhury at his stage. He contended that section 237 of the Companies Act, 1956 and section 19D of the FER Act and completely different in nature and that a decision on the construction of section 237 of the companies Act cannot be of any use for construing section 19D of the FER Act. Mr. Roy Chowdhury argued on these lines : where Legislature provides only for formation of a reasonable belief without imposing any 'circumscribing limit' on the formation of such belief, the only test is whether Companies Act, 1956 the various inferences enumerated in detail in the sub-clauses (i), (ii) and (iii) of clause (b) of the section are the limits prescribed by the Legislature to the opinion, that has to be formed before the relevant authority could not under the section. Mr. Roy Chowdhury points out that in the judgment of Hidayatullah, J. (as his Lordship then was) his Lordships after stating that the formation of an opinion will have to be honest states that the 'next requirement' is that 'there are circumstances suggesting etc. The inference which are to be suggested by the circumstances have then been analyzed and set out in detail by Hidayatullah, J. and described as grounds of the opinion. His Lordship observes that these grounds limit the jurisdiction of the Central Government. Mr. Roy Chowdhury lays a lot of emphasis on this particular expression of the judgment of Hydayatullah, J. and insists that the judgment is to be explained by reference to this peculiarity of the provision of section 237(b) of the Companies Act, 1956. There are, he says, two aspects of the matter one relates to the formation of the opinion and the other relates to the existence of circumstances as grounds for the opinion which limit the jurisdiction. Therefore, where Hidayatullah, J. says 'the existence of circumstances relevant to the inference as 'the sine qua non for action must be demonstrable', his Lordships refers to the second aspect of the section which in an earlier paragraph his Lordships described as the 'next requirements', This Mr. Roy Chowdhury argued, is a fester which is absent in section 19D of the FER Act. According to Mr. Roy Chowdhury argued, is a fester which is absent in section 19D of the FER Act. According to Mr. Roy Chowdhury the language of section 19D does not leave any room for releasing any 'jurisdictional limits' imposed upon the officer who is to have a particular 'reason to believe' before exercising the power under that section. Mr. Roy Chowdhury tried to bring out his point also by comparing section 19D of the FER Act with section 147 of the Income Tax Act, 1961. Section 147 of the Income Tax Act, it will be remembered is also a statutory provision which confers certain powers on the Income Tax Officer if the officer has 'reason to believe' about something. The section is in the following terms :–– "Section 147, if.–– (a) the Income Tax Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Income Tax Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax the escaped assessment for that year, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income Tax Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assessee or re-assessee such income or re-compute the loss or the depreciation allowances etc." 40. Mr. Roy Chowdhury argued that if section 147(a) had merely contained the words the Income Tax Officer has reason to believe that in one chargeable to tax has escaped assessment for that year' then the section would have been like section 19D of the FER Act. But Mr. Roy Chowdhury points out, the Income Tax Act has circumscribed it by inserting the words 'by reason of the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Income Tax Officer or to disclose fully or truly all material facts necessary for his assessment for that year'. These words are described by Mr. Roy Chowdhury as the 'legislative limits' or 'legislative restraint" put upon the formation of belief. These words are described by Mr. Roy Chowdhury as the 'legislative limits' or 'legislative restraint" put upon the formation of belief. Speaking with reference to 147(b), Mr. Roy Chowdhury says that similar 'legislative limits' are imposed in that sub-section also by the words 'in consequence of information in his possession'. So far as section 19D of the FER, Act is concerned there are according to him, no legislative, J. in Barium Chemicals' case or which are there in the provisions of clause (a) or clause (b) of section 147 of the Income Tax Act, 1961. Undoubtedly, section 19D of the FER, Act in common with section 237 of the Companies Act or section 147 of the Income Tax Act also requires that the 'reason to believe' though subjective must be honestly formed. But, the second requirement in section 19D which is at all comparable to the limits contained in section 237 of the Companies Act is indicated by the words 'documents which in his opinion are useful or relevant etc.' This second requirement is the only legislative limit upon formation of the relevant belief in section 19D of the FER Act and it is also subjective. It is on these grounds, he argues, that section 19D of the FER Act is not to be treated on the same offting as section 237(b) of the Companies Act. 41. Arguing on the same lines Mr. Roy Chowdhury contended that section 19D of the FER Act, is more a kin to the statutory provision which Privy Council had to construe in the Hubli Electricity’s case, 76 Indian Appeal 57. In that case the relevant statutory provision of the Indian Electricity Act, 1910 was in the following terms : "The Provincial Government may, if in its opinion the public interest so requires, revoke a licence in any of the following cases, namely, (a) where the licensee in its opinion Provincial Government makes wilful and unreasonably prolonged default in doing anything required of him by or under this Act". It will be remembered that the Privy Council held that the language of the sub-section which contains the above provisions "leaves no room for the relevance of a judicial examination as to the sufficiency of the grounds on which the Government acted informing an opinion". It will be remembered that the Privy Council held that the language of the sub-section which contains the above provisions "leaves no room for the relevance of a judicial examination as to the sufficiency of the grounds on which the Government acted informing an opinion". "Further, the question on which the opinion of the Government is relevant is not whether a default has been wilful and unreasonably prolonged but whether there has teen a wilful and unreasonably prolonged default. On that point the opinion is the determining matter and, if it is not for good cause displaced as a relevant opinion, it is conclusive". The opinion of Government both regarding the requirement of public interest as well as regarding wilful and reasonably prolonged default were subjective. Mr. Roy Chowdhury submitted that the particular sub-section of the Indian Electricity Act, 1910 which the Privy Council construed is skin to section 19D of the FER Act which we are considering. Neither section according to him contains anything which can be described as 'limits' imposed by the Legislature on the formation of opinion by the provincial Government. 42. In order to re-inference this argument Mr. Roy Chowdhury compared section 19D of the FER Act with sections 19A, 19B, and 19C of the same Act. Section 19A(1) provides that if any officer of enforcement authorized in this behalf by the Central Government.........has reason to belief that any person has secreted about his person any documents which will be useful for or relevant to any proceedings under this Act, he may search that persons. Section 19A(1) provides that if any officer of enforcement authorized in this behalf by the Central Government.........has reason to belief that any person has secreted about his person any documents which will be useful for or relevant to any proceedings under this Act, he may search that persons. Section 19B provides that if any officer of enforcement similarly authorized "has reason to belief that any person in India or within Indian Customs waters has been guilty of an offense punishable under this Act, he may arrest such person ......"And section 19C provides that where an officer of enforcement similarly authorized" has reason to believe that any aircraft, vehicle or animal in India or any vessel in India or within Indian Customs waters has been, is being or is about to be used in the commission of an offence under this Act or that any documents which will be useful for or relevant to any proceedings under this Act is secreted therein, he may at any time stop any such vehicle or animal or vessel, or in the case of an aircraft compel it to lead" and then carry out searches of the aircraft, vehicle or vessel etc. According to Mr. Roy Chowdhury section 19D provides for a special kind of subjectivity for the 'reason to believe' mentioned in that section as compared to the 'reason to believe' that has to precede action under section 19A, or 19B or 19C. Mr. Roy Chowdhury argues that the 'reason to believe' in section 19A is circumscribed by clear limits introduced by the words" that any person has secreted about this person any documents will be useful for or relevant to any proceeding under this Act". Similarly, he says in section 19B the 'reason to believe' is circumscribed by the words" than any person in India or within the Indian Customs waters has been guilty of an offence punishable under this Act". Likewise, again, in section 19C the 'reason to believe' is circumscribed by the words "that any aircraft, vehicle or animal in India or any vessel in India......used in the commission of an offence under this Act, or that any documents which will be useful for or relevant to any proceeding under this Act is secreted therein...". These limits or restrain included in sections 19A, 19B and 19C, show according to Mr. These limits or restrain included in sections 19A, 19B and 19C, show according to Mr. Roy Chowdhury, that the belief required in those sections is not subjective. In the case of section 19D, however, the presence of the words........."in his opinion" in the whole expression indicating the object of belief, namely, that 'any documents will be useful for or relevant to any proceedings under this Act are secreted in any place' differentiates, in Mr. Roy Chowdhury's submission, that section completely from sections 19A, 19B or 19C. 43. I have given my most anxious throughouts to this argument of Mr. Roy Chowdhury, and I regret I am unable to accept his contentions. I suffer under no illusion regarding the difficulty of the question. I remember that Hegde, J. in his Lordship's judgment in the case of Rohtas Industries Limited (supra), has referred to the difficulty of reconciliation of the various juridicial dicta found in decisions both in India as well as in other Commonwealth countries in regard to the scope of provisions which are analogous to section 237(b) of the Indian Companies Act, 1956. I specially remember Hegde, J.'s hint that even the decision of the Supreme Court in Barium Chemicals' case (supra) illustrates the difficulty. I shall, however, briefly indicate the reasons why I feel that there is no intrinsic difference between the effect of section 19D of the FER Act and section 237(b) of the Indian Companies Act, 1956 on the limited question of subjectivity. Once I come to that position, I am, I must say, bound to follow the guidelines in the decision of Hegde and Sikri, JJ. in the case of Rohtas Industries Ltd. 44. When the statutes confer on executive officers special powers which are to be exercised upon the formation of a particular belief or on the formation of a particular opinion the status also indicates the content of such "belief" or such 'reason'. In the case of section 237(b) of the Companies Act, 1956 the content of the opinion which Central Government has to form before action can be taken under that section is indicated by the phrase "there are circumstances suggesting etc". In other words, the existence of the circumstances is the content of the opinion and the various sub-clauses indicate the nature of the circumstances. In other words, the existence of the circumstances is the content of the opinion and the various sub-clauses indicate the nature of the circumstances. Therefore, though in ascertaining whether there is existence of the circumstances we cannot proceed without looking at sub-clauses (i), (ii) and (iii), the 'opinion' in question is as to the existence of the specified circumstances. According to the majority decision of the Supreme Court in the case Rohtas Industries Ltd. and also according to the judgment of Hidayatullah, J. (as his Lordship then was) and Shelat, J. in the Barium Chemicals' case it is this existence of the circumstances that must be proved as a demonstrable fact, for, such existence is construed as a condition precedent to the exercise of the power. 45. In the case of section 147 of the Income Tax Act the content of the reason to believe is shown in sub-section (a) of that section by the words "by reason of the submission or failure......income chargeable to tax has escaped assessment...", and in sub-section (b) by the words" that income chargeable to tax has escaped assessment for any assessment year". Incidentally, there is a further condition in sub-section (b) that this 'reason to believe' must be a consequent of information in the possession of the income tax officer. The propriety of or legality of exercise of power under section, 147, Income Tax Act will depend on whether the relevant content of "reason to believe" as said down in that section is objectively proved. The same proposition holds true in the case of sections 19A, 19B, 19C as well as 190 of the FER Act. In section 19A, the condition precedent to the exercise of the power conferred by that section is also a reason to believe and the content of the belief is that any person has secreted about his person away documents which will be useful for or relevant to any proceedings under this Act". Unless there are objective facts indicating such secretion of documents by the person concerned, there will be no power to search under section 19A. Similarly, the content of belief in regard to the expression 'reason to believe' in section 19B is any that person in India ...has been guilty of an offence punishable under the FER Act. Unless there are objective facts indicating such secretion of documents by the person concerned, there will be no power to search under section 19A. Similarly, the content of belief in regard to the expression 'reason to believe' in section 19B is any that person in India ...has been guilty of an offence punishable under the FER Act. That content will have to be established as an objective fact before the exercise of the power to arrest can be justified. In section 19C of the FER Act, the content of belief is that an aircraft, vehicle or animal or vessel has been used in the commission of an offence under the Act. This act has to be objectively established in order to justify the exercise of the power conferred by this section to stop and search the conveyances. Section 19D also has to be construed exactly on the same lines as specifying the content of belief as the fact that "any documents which in his opinion will be useful for or relevant to any proceeding under this Act are secreted in any place". The use of the expression in his opinion as an element of the content shows that the usefulness for or relevance of the documents concerned to a proceeding under the Act is a matter of opinion of the officer concerned. To this extent, of course, the content of belief also may be partially subjective. I 'say may be' –– because there is difference of opinion also on that point in various decisions. Even so, that is not the only content of the belief. In fact, the real content of the belief is that (i) some documents are secreted in a place and (ii) that there are certain proceedings relating to an offence under the FER Act. So far as this fact of secretion and the fact of proceeding under the FER Act are concerned it is not left to the subjective opinion of the officer who has been given the power to search or authorize the search of the premises. Mr. Roy Chowdhury is quite correct in saying that there is some different in the nature of the content of the beliefs required is sections 19A, 19B and 19C and the nature of the content of belief of section 19D. The content of belief required in section 19D has two elements. Mr. Roy Chowdhury is quite correct in saying that there is some different in the nature of the content of the beliefs required is sections 19A, 19B and 19C and the nature of the content of belief of section 19D. The content of belief required in section 19D has two elements. First, it is of belief that certain documents are secreted in a place; secondly, it is a belief that these documents are useful for or relevant to certain proceedings under the FER Act. It is significant that so far as the first element is concerned, the statute, does not say that 'the documents are in the opinion of the officer concerned, secreted in a place.' It states categorically that the belief must be as to the fact that documents are secreted. But as soon as the question arises as to the nature of the documents that are secreted it is left to the subjective opinion of the officer concerned and it is enough if the officer concerned has the opinion that these documents will be useful for or relevant to proceedings under the Act. One of the elements is subjective while the other elements is not so. 46. It is true, as Mr. Roy Chowdhury argued that the statutory provision of Indian Electricity Act, 1910 which came to be construed by the Privy Council in tile Hubli Electricity case, 76 Indian Appeal 57 resembles to a very great extent section 19D of the FER Act. The relevant provisions on the Indian Electricity Act, 1910 gives the power of revoking a licence to Government in certain circumstances. The conditions precedent to such revocation are mentioned : first in the opinion of the Provincial Government public interests should require such revocation. The use of the words 'in its opinion' makes this requirement as to public interest subjective. Secondly, revocation is to be allowed in specified cases, namely, where the licenses in the opinion of the provincial Government makes wilful and unreasonably prolonged default in certain things. Therefore, as to the making of the default also the opinion of the provincial Government is perhaps decisive. Secondly, revocation is to be allowed in specified cases, namely, where the licenses in the opinion of the provincial Government makes wilful and unreasonably prolonged default in certain things. Therefore, as to the making of the default also the opinion of the provincial Government is perhaps decisive. I say "perhaps" deliberately for according to the construction adopted by the Privy Council in the Hubli Electricity case and also adopted by Bachawat, J. in Rohtas industries case (supra) expression "in the opinion of" connotes subjectivity though the approach of the Supreme Court towards this question is as we shall presently set quite different. According to the Privy Council the element of subjectivity enters into the statutory provision at least in two places and qualifies the entire content of belief. This is a feature which the particular section of the Electricity Act shares in common with section 19D of the FER Act to some extent and Mr. Roy Chowdhury was not slow in pointing out this resemblance. But what Mr. Roy Chowdhury overlook is the fact that the entire content of belief in section 19D is not controlled by the expression 'in the opinion' and that the opinion is decisive only as to the relevance and usefulness of the documents in regard to certain proceeding. The expression 'in the opinion of' is not wide enough to bring within its ambit also the fact of secretion of the documents. That means, even we follow the Privy Council and not the Supreme Court the conditions contained in section 19D and FER Act are not entirely a matter of subjective opinion. 47. Perusing here for a moment let us compare section 19D of the FER Act with section 105 of Customs Act, 1962 which is in the following terms :–– "If the Assistant Collector of Customs...has reason to believe that any goods liable to confiscation or any documents or things which in his opinion will be useful for or relevant to any proceedings under this Act are secreted in any place, he may authorize any officer to customs to search or may himself search for such goods, documents or things". I have no difficulty in accepting Mr. Roy Chowdhury's contention that this particular section is more or less analogous to section 190 of the FER Act. I have no difficulty in accepting Mr. Roy Chowdhury's contention that this particular section is more or less analogous to section 190 of the FER Act. It is significant that section 105 of the Customs Act also contains two element which are subjective, namely, the belief in certain things and, secondly, the opinion about certain documents and things being useful or relevant to any proceedings and under the Customs Act. But it is quite clear that even in section 105 of the Customs Act and the real content of the reason to believe relates to secretion of certain goods that are liable to confiscation or of documents or things in a place and the facthod of certain proceedings under the Act. It is important to notice that the only subjective element included within the content is as to the usefulness or relevance of the document or things to the proceeding under the Act and that even the element as to liability to confiscation of the goods which are believed to be secreted has not been made subjective so that it will not be enough for the assistant collector of customs to say that his belief was about goods which he thought would be liable to confiscation. 48. It is necessary for me to indicate at this stage one further aspect of the Supreme Court decisions in Barium Chemicals’ Limited and Rohtas Industries Limited. I have already said that the distinction that often used to be made formerly between the effect of the two expressions "if in the opinion of etc." and "if an officer as reason to believe" seems to have been obliterated by the Supreme Court. The relevant words in section 237 of the Indian Companies Act which was the statute considered in these two Supreme Court decisions were : "in the opinion of" and the Supreme Court, as we have shown in our analysis, has clearly decided that though the formation of the opinion may be subjective the existence of content of the opinion is justifiable and must be objectively proved. When the words are 'if the office has reason to believe' the need for the content of the believe to be proved as existence is even stronger, for, even according to the earlier decisions like the decision of Privy Council in Vimlabai's case the addition of the word 'reason' destroys any element of subjectivity that might otherwise attach. Secondly, it is important in this connection to remember that approach of the Privy Council in the case of Hubli Electricity Company is certainly different from the approach of the Supreme Court in Barium Chemicals and Rohtas Industries Ltd. As I have already shown, Bachawat, J. followed more closely the line of construction favoured by the Privy Council in the Hubli Electricity Company's case. I have already shown how even by the rule of construction followed in the Hubli Electricity Company's case it is not possible to contend that the whole of section 19D is subjective. The utmost that can be said upon an application of the rule applied by the Privy Council is that the usefulness or relevance of the document about which the Director of Enforcement is to have a reason to believe in section 19D is subjective. Even by that standard it is not possible to contend that the fact of secretion of documents and the fact of existence of proceedings under the FER Act are subjective. The application of the rule of construction laid down by the Supreme Court will only strengthen the case of the appellants, for, it is as clear as anything that the two decisions of the Supreme Court referred to above have put the last nail on the coffin of 'subjectivity'. Mr. Roy Chowdhury contended at one stage that the Director of Enforcement or any other appropriate officer exercising power under section 19D of the FER Act could act on information. As a corollary to this contention he further argued that the officer concern would himself be the sole judge of the reliability of the information. As to the correctness of his first contention that the officer concerned would be entitled to act on information, I do not think that there will be much doubt. The controversy arises as to the quality and nature of the formation which would warrant such action on his part. As to the correctness of his first contention that the officer concerned would be entitled to act on information, I do not think that there will be much doubt. The controversy arises as to the quality and nature of the formation which would warrant such action on his part. It is difficult for us to accept the corollary contention that was sought to be argued before us that the officer alone would judge the reliability or the adequacy of the information that would lead to the exercise of power. No doubt, in the first instance, it is the officer who has to make a decision regarding the truth or credibility of the information. Since the discretionary power under section 19D is vested in the officer. Who else could judge as to the credibility of the information on which he was to act? To say this is not, however, the same thing as to say that the Court is not competent to go beyond his judgment and test whether the information was such as would induce a reasonable man to come to the requisite belief. In fact, it is more or less well-recognized that even where the "reason to believe" is subjective the exercise of power by the authority concerned will be liable to be struck down if one can show that on the information that was available to the authority concerned no reasonable man would have exercised the power. It will be remembered that even in the case of Rohtas Industries Ltd. where the learned Attorney General was arguing that the power conferred under section 237(b) of the Companies Act, 1956 is a discretionary power and "the opinion formed, if in fact an opinion as required by that section has been formed, as well as the basis on which that opinion has been formed are not open to judicial review", the learned Attorney General did not go to the length of disputing the position" that if we come to the conclusion that no reasonable authority would have passed the impugned order on the material before it then the same is liable to be struck down". In fact, in that case, even Bachawat, J. who held strongly that the Court has no power to review the facts as an appellate body or substitute its opinion for that of Government, felt no difficulty in striking down the impugned order on the ground that there was no material before Government on which Government could have formed the opinion that there were circumstances suggesting fraud etc. and that Government had formed that opinion without applying its mind to the material before it. 49. There is another branch of Mr. Roy Chowdhury's argument which I find difficult to uphold. Since Mr. Roy Chowdhury spent considerable time in elaboration of this argument, I feel I must deal with it here in some detail. Mr. Roy Chowdhury argued that even if it be held that the "reason to believe" in section 19D of the FER Act is justiciable and not completely subjective, the officer concerned need not disclose the grounds of belief, i.e., to say, the facts which gave him reason to believe the thing mentioned in section 19D. In particular it was argued, that the source of information, i.e. to say, the name of the informer should not, in any event, be disclosed. The main argument which Mr. Roy Chowdhury advanced in support of this contention is that such a disclosure would hamper the investigation in aid of which the search and seizure are made and would, therefore defeat the very purpose of the Act. The promise on which this branch of Mr. Roy Chowdhury's argument was based is formed by a group of decisions dealing with section 34 of the Income Tax Act, 1922. These decisions are : (25) Daulatram Rawatmal v. Income Tax Officer, 38 ITR 301; (26) Daulatram Rawatmal v. Income Tax Officer, unreported judgment in appeal from Original Order No. 209 of 1959 (Calcutta High Court); (27) Rungta Engineering & Construction Co. Ltd. v. Income Tax Officer, Central Circle XIII, AIR 1960 Calcutta 619; (28) K. S. Rashid & Sons and Ors. v. Income Tax Officer, AIR 1961 SC 1190; (29) S. Narayanappa & Ors. v. The Commissioner of Income Tax, Bangalore, AIR 1967 SC 523 ; (30) Sankarlingam Nadar v. The Commissioner of Income Tax, 48 ITR 314; (31) The Income Tax Officer, Alleppey v. S. Veeriah Reddiar, 64 ITR 70. 50. v. Income Tax Officer, AIR 1961 SC 1190; (29) S. Narayanappa & Ors. v. The Commissioner of Income Tax, Bangalore, AIR 1967 SC 523 ; (30) Sankarlingam Nadar v. The Commissioner of Income Tax, 48 ITR 314; (31) The Income Tax Officer, Alleppey v. S. Veeriah Reddiar, 64 ITR 70. 50. In Daulatram Rawatmal v. Income Tax Officer, 38 ITR 301, the Income Tax Officer had served of reassessment under section 34(IA) of the Income Tax Act, 1922 upon the partners of a firm on the ground that he had reason to believe that income of the previous years falling within September, 1939 and March 31, 1948 had escaped assessment and amounted or was likely to amount to Rs. 1 lakh or more. When the petitioner asked the Income-Tax Officer for information as to the materials on which the Income Tax Officers 'belief' as well as the 'satisfaction' of the Central Board of Revenue two requisite conditions for issuing the relevant notice were based, the Income Tax Officer refused to disclose the materials. An application was then made to the Calcutta High Court for order compelling the Income Tax Officer to disclose those materials. It was contended on behalf of the Income Tax Officer, first, that the 'belief' and 'satisfaction' requisite in section 34(IA) of the Income Tax Act, 1922 were subjective and that, in any event, the disclosure of the materials would frustrate the object for which reassessment proceedings had been initiated. The officer, however, expressed his willingness to produce all relevant materials for inspection only by the Court. Sinha, J., as his Lordship then was, held that the question as to whether the Income Tax Officer had reason to believe the income amounting to Rs. 1 lakh or more had escaped assessment was justifiable and was not wholly deponent upon the subjective satisfaction of the Income Tax Officer, his Lordship held further that upon a challenge being thrown, it was incumbent on the officer to satisfy the Court that his belief was based upon such facts as would introduce a reasonable person to arrive at the conclusion which had been reached by him. This implied that the Income Tax Officer was bound to disclose to the Court the particulars of information upon which he had acted and if the Court felt that disclosure of those materials at that stage would prejudice the proceedings initiated against the assessee, then such disclosure should not be made to the assessee. His Lordship states, however, that the Court could order that the reasons should be disclosed at a later stage, i.e., after the books and documents called for by the Income Tax Officer had been produced. His Lordship came to the further finding that or the facts of that case it would be prejudicial to the Revenue Authorities to disclose all the materials upon which they were acting to the petitioner and that it would be enough if the Income Tax Officer disclosed only the main headings of escaped income without giving away the particulars at that stage, Sinha, J. in his judgment laid great stress on the fact that if at the initial stage of the proceeding is the revenue authorities are compelled to disclose the reasons of their action to the assessee, the assessee "will be put on his guard and in most cases the very object of reassessment will be frustrated. The books will be removed and/or destroyed and evidence generally, which would enable the Income Tax Officer to establish that the original assessment was not complete, would disappear". From this his Lordship came to the conclusion that the assessee was not at that stage entitled in law to a disclosure of the materials on which the Income Tax Officer acted. That is why his Lordship further held that though the Income Tax Officer was obliged to show them to the assessee at that stage. Sinha, J. observed :–– If the law is that at this stage the assessee is not entitled to such information or disclosure, then it is obvious that in this application the assessee wishes to achieve the same end by an indirect process. If by merely coming to the Court and challenging the notice, it would be incumbent on the Income Tax Officer to make public the reasons and the documents relating to it, then indeed, there is no point in serving that the assessee was not entitled to know the same at this stage. That object could be achieved in any case by simply making an application to Court. That object could be achieved in any case by simply making an application to Court. In my opinion, the law cannot possibly enable the assessee to do something indirectly which he cannot do directly, and no such interpretation should be given to a provision of law which would entirely destroy the object for which it was promulgated. 51. Mr. Roy Chowdhury relied strongly on the second part of Sinha, J.'s judgment in which his Lordship held that if the disclosure of the materials was likely to defeat the reassessment then the officer concerned was not bound to make the disclosure. 52. In an unreported judgment in the appeal from the above decision of Sinha, J. Daulatram Rawatmall’s case (Appeal from Original Order No. 209 of 1959). Bose C. J. and Debabrata Mookherjee, J. dismissed the assessee's appeal and upheld the decision of Sinha, J. though they went on slightly different grounds. Before this judgment of the Appellate Court was delivered on August 1, 1961, the Supreme Court decision in the case of Calcutta Discount Company v. ITO, District-I, AIR 1961 SC 372 : 41 ITR 199 had already been published. Relying upon this decision of the Supreme Court, the Counsel appearing for the appellant-assessee argued before the Appellate Court that it is obligatory upon the Income Tax Officer in the event of a challenge being thrown by the assessee to make a full disclosure of all the material facts for justifying his belief as to the existence of the condition precedent for the issue of a notice under section 34(IA) of the Income Tax Act, Bose C. J. rejected this argument by pointing out that the case before the Supreme Court was different in facts. In the Supreme Court case, notices under section 34 of the Indian Income Tax Act had been issued and the assessee had already furnished returns in compliance with the notices before he applied for the issue of an appropriate writ or order directing the Income Tax Officer not to proceed with the assessment. This made considerable difference in the situation. The returns having already been filed by the assessee it was not open to the Income Tax department to say that their proceedings would be hampered by premature disclosure of the materials in their hands. 53. This made considerable difference in the situation. The returns having already been filed by the assessee it was not open to the Income Tax department to say that their proceedings would be hampered by premature disclosure of the materials in their hands. 53. In Rungta Engineering and Construction Company's case AIR 1960 Calcutta 619, it was contended on behalf of an assessee against whom notice under section 34(IA) of the Income Tax Act had been filed that in such a case of justice demands that the Income Tax Officer should disclose to the assessee the materials upon which his beliefs is based before the assessee files his return and produces his books so that in making a fresh return the assessee may consider his position and may not incur penalties for further non-disclosure. Bachawat, J. who delivered the judgment of the Appellate Court rejected this contention and pointed out that the notice under section 23(IA) only initiated a quasi-judicial enquiry in course of which the assessee was entitled to appear and produce his evidence. His Lordship observed : "In that enquiry the Income Tax Officer will be bound to disclose to the assessee the materials on the basis of which he seeks to find that the assessee's income to the extent of rupee; one lakh or more has accepted assessment during the relevant years. Natural justice demands full disclosure of all the materials which the Income Tax Officer seeks to use against the assessee in course of that enquiry, so that the assessee has sufficient opportunity to meet the case made against him. That stage of the enquiry will arise after the assessee files his return and produce its account books. It is not desirable that the assessee should be informed of those materials at this stage". 54. Mr. Roy Chowdhury relied on the Decision in Rungta's case for two purposes. First, be argues, this decision is an authority for the proposition that the source of information did not be disclosed. He relied on Bachawat, J.'s statement that "the working of section 34(IA) will be wholly impossible if we are to hold that Income Tax Officer is bound to disclose that source of his confidential information or the name of the information". Secondly Mr. He relied on Bachawat, J.'s statement that "the working of section 34(IA) will be wholly impossible if we are to hold that Income Tax Officer is bound to disclose that source of his confidential information or the name of the information". Secondly Mr. Roy Chowdhury relies on the decision in support of his contention that full disclosure was to be made only at the stage of adjudication which is to take place after the completion of the investigation and not at a point of time when the investigation is still proceeding. Mr. Roy Chowdhury elaborates his second point by pointing out that under the scheme of the FER Act there is a distinct stage of adjudication which is dealt with under section 23D and 23E of the Act. Section 19D deals only with the stage of investigation and the Act provides that within a period of one year from seizure the officer concerned will have to complete his investigation and find out if there has been any contravention on the provisions of the FER Act. That why, it is argued, the officer concerned has been given the power to retain the document seized by him in his custody for one year after the search under Section 19G of the Act. Mr. Roy Chowdhury also points out that the proviso to section 23(3) of the Act shows that the Act itself provides for an opportunity in certain specified situations. He further points out that section 23D which deals with the power to adjudicate clearly provides that the person against whom an enquiry is made as to whether he has committed a contravention, shall be given a reasonable opportunity of being heard. The adjudication proceedings themselves are regulated by statutory rules promulgated under section 27 of the Act. Namely, the adjudication proceedings and Appeal Rules, 1957. Rule 3 of these Rules lays in great details the manner in which opportunity has to be given to a person against whom adjudication proceedings are initiated. Mr. Roy Chowdhury sought support from Bachawat, J's decision in Rungta Engineering case to the effect that all disclosures were to be made by the Income Tax Officer at the stage of the quasi-judicial enquiry and argued that the investigation stage and the adjudication stage must be clearly differentiated and the question of opportunity would arise only with reference to the stage of adjudication. 55. 55. In the case of K. S. Rashid and Sons & Ors. v. Income Tax Officer, AIR 1964 SC 1190 : 52 ITR 355 the question arose whether an assessee served with a notice under section 34(IA) of the Income Tax Act, 1922 would be entitled to be given a copy of the reasons which have to be recorded by the Income Tax Office for the issue of the notice. The point was not, however, pressed before Supreme Court by Mr. Setalvad who appeared for the assessee and the Supreme Court's attitude on this question will appear from the pithy comment that Gajendragadkar, C.J. makes by using one word "rightly" in speaking of Mr. Setalvad's decision to abandon the point before the Supreme Court. 56. In this case of S. Narayanappa & Ors. v. The Commissioner of Income Tax, Bangalore, AIR 1967 SC 523 , the Supreme Court followed the earlier decision of the Supreme Court in Calcutta Discount Ltd. v. Income Tax Officer, AIR 1961 SC 372 held that (i) the expression 'reason to believe' in section 34 of the Income Tax Act" does not mean a purely subjective satisfaction on the part of the Income Tax Officer's, (ii) that the belief must be held in good faith and cannot be a mere pretence and (iii) that it is open to the Court to examine the question whether the reasons for the belief have a rational connection or a relevant bearing to the formation of the belief and are not to the purpose of the section. At the same time the Supreme Court also held that if, in fact, there were reasonable grounds for the Income Tax Officer to believe that there had been any non-disclosure as regards any fact which could have a material bearing on the question of under-assessment that fact would be enough to give jurisdiction to the Income Tax Officer to issue the notice under section 34 and whether the grounds are adequate or not is not a matter for the Court to investigate. In other words, whereas the existence of the belief can be challenged by the assessee the sufficiency of the reasons for the belief cannot be so challenged and is not, therefore, a justiciable issue. 57. In other words, whereas the existence of the belief can be challenged by the assessee the sufficiency of the reasons for the belief cannot be so challenged and is not, therefore, a justiciable issue. 57. In the case of Sankarlingam Nadar v. Commissioner of Income Tax, 48 ITR 314, the Madras High Court examined for itself the memorandum submitted by the Income Tax Officer to the Commissioner of income tax for approval of the initiation of the proceedings under section 34 and was satisfied that the statutory requirement of reasonable belief had been fulfilled in so far as it was rooted in information in the possession of the Income Tax Officer. 58. The Supreme Court decision in Income Tax Officer, Alleppey v. S. Veeriah Reddiar, 64 ITR 70 was also a case under section 34 of the Indian Income Tax Act, 1922. In that case the complaint of the petitioner assessee was that the Income Tax Officer had no reason to believe that any income had escaped assessment or had been under-assessed and that the notice had been issued without any bona fide. The notice was quashed by the division bench of the Kerala High Court on the ground that though the Income Tax Officer was satisfied that there was an escape of income for assessment, he had not formed the belief that this escape of income was by reason of the omission or failure on the part of the respondent to disclose fully and truly all material facts necessary for the assessment. The Supreme Court set aside this decision mainly on the ground the notice. The Supreme Court, however, called for the relevant files and looked into them. After looking into the files the Supreme Court was satisfied that the notice issued under section 34 (IA) was not valid. 59. These decisions do not, in my opinion, help Mr. Roy Chowdhury for more reasons than one. First, the scope and intent of section 34(IA) of the Income Tax Act, 1922 are totally different from those of section 19D(1) of the FER Act. In the case of former, the assessee is only told that a proceedings which is effect would be re-opening of an old proceedings was to take place and the assessee is given an opportunity to filed his returns afresh. In the case of former, the assessee is only told that a proceedings which is effect would be re-opening of an old proceedings was to take place and the assessee is given an opportunity to filed his returns afresh. The Income Tax Officer cannot obviously taken any action against the assessee and make a reassessment without disclosing the materials in his hand which presumably would be the grounds of the belief requisite under that section. The only point is : could be assessee ask the officer to show his hands before the filing of the fresh returns? Thus, it was held in Daulatram Rawatmall's case, is not warranted by the statute as it would defeat the very purpose of the statute. This position, it was further held, could not be changed by the assessee by the simple device of making an application before the High Court in its writ jurisdiction. Secondly, it is to be remembered that even the decision in Calcutta Discount Company Ltd., AIR 1961 SC 372 had not come out when Sinha, J. delivered his judgment in Daulatram's case. Many more days were to pass before the decisions in Barium Chemicals Ltd. (supra) and Rohtas Industries Ltd. (supra) would be available. Even Supreme Court and that is the most significant point about this decision even Sinha, J. had no hesitation in holding that the belief and satisfaction required by the section were not subjective but were liable upon challenge to a scrutiny of the Court. Such scrutiny cannot be possible unless the grounds of belief 'or' satisfaction are disclose to the Court. Besides, both in Rungta Engineering case AIR 1960 Calcutta 619 : 48 ITR 315 as well as in the case of Daulatram Rawatmall, 38 ITR 301 the challenge thrown out by the assessee was not as to the existence of the reasons. The assessee did not say ; "you have no reason at all", what the assessee said was this "what are the reasons which make you think that there has been a failure of assessment or non-assessment? Give me those reasons because I have a right to know them before I answer your question". This claim on the part of the assessee to have the reasons from the Income Tax Officer is what was rejected by the Calcutta High Court in either case. Give me those reasons because I have a right to know them before I answer your question". This claim on the part of the assessee to have the reasons from the Income Tax Officer is what was rejected by the Calcutta High Court in either case. The distinction has been well-brought out in the judgment of the Court of Appeal in Daulatram Rawatmall's case. In dealing with the appellant-assessee's plea that since the matter was justiciable, the reasons, where they exist, must be made known to all concerned. Bose, C. J. made a reference to the judgment of Bachawat, J. in the case of Rungta Engineering Company (supra) and observed that the decision of Bachawat, J. which had been rendered on 19th May, 1960 was bound to stand modified by the later decision of the Supreme Court in the case of Calcutta Discount Company Ltd.; AIR 1961 SC 372 . His Lordship further observed that since the Supreme Court had held in that case that a challenge to the validity of proceedings initiated on notice issued under section 34 need not be postponed until the assessment proceedings have been completed or carried to the appellate Tribunal, it was "difficult to hold that proper stage in other case for discovery of the materials on which the Income Tax Officer's belief is based, is reached only after the returns have been filed". His Lordship rejected the assessee's plea that no proper returns could be made without prior disclosure by the department and in the same time held that "where it is alleged and the Court is persuaded that the conditions precedent to exercise of jurisdiction under that section have not been fulfilled, that is to say, no reasons exist for the belief that income liable to tax has escaped assessment, and consequently none recorded, and the sanction of the Central Board of Revenue not obtained, disclosure cannot be resisted". (Understanding in mine) His Lordship rejected the assessee's petition in that case because apart from a vague and omnibus assertion that the Income Tax Officers' action was wrong, illegal, unwarranted etc., "there was no unambiguous challenge to jurisdiction to take action under section 34(IA) of the Act". 60. Mr. Roy Chowdhury relied for this aspect of his case on certain other cases which may be classified into three groups. 60. Mr. Roy Chowdhury relied for this aspect of his case on certain other cases which may be classified into three groups. The first group comprises income tax cases dealing with sections other than section 34 of the Income Tax Act, 1922, namely, the case of (32) Surajmal Nagarmal & Ors. v. Commissioner of Income Tax, AIR 1961 Cal 578 cases under section 37(2) of the Indian Income Tax Act, 1922 and (33) Seth Gurmukh Singh & Ors. v. Commissioner of Income Tax, Punjab, 12 ITR 393 a case dealing with the powers of an Income Tax Officer under sub-section (3) of section 23 of the Income Tax Act, 1922. The second group comprises certain cases under section 178(A) of the Sea Customs Act, namely, (34) Samathu Chetty's case AIR 1962 SC 316 ; (35) Kohli's case, AIR 1962 SC 1559 and (36) Nathmal Jalan's case 70 CWN 348. The third group consist of cases under section 105 of Customs Act, namely, (37) Ansuman Lath v. Dy. Supdt. of Central Excise, 71 CWN 814; (38) Durga Prasad's case AIR 1966 SC 1209 , and (39) Gopi Kishan's case AIR 1967 SC 1298 . These cases, in my opinion, are to be construed in the context of the particular statutes to which they relate and also to the facts of those cases. In case of the three Supreme Court decision in the case of Calcutta Discount Company, AIR 1961 SC 372 : 41 ITR 199. In the case of Barium Chemicals' Ltd., AIR 1967 SC 295 in particular the Rohtas Industries case, AIR 1969 SC 707 , it is now impossible to hold that in a case of this nature an officer need not disclose his reasons to believe on the ground that such disclosure might in certain circumstances prejudice the investigation. 61. Mr. Roy Chowdhury at one stage argued that this point about the propriety of refusing disclosure on the ground that such disclosure would prejudice the investigation had not been taken in any of the reported cases where the Court had held that there should be disclosure. This, of course, is not correct. In the case of (40) Deputy Secretary, Ministry of Finance & Ors. v. Shahu Jain Ltd., 73 CWN 446 this point had been clearly urged on behalf of Government and rejected by the Appellate Court of the Hon'ble Court. This, of course, is not correct. In the case of (40) Deputy Secretary, Ministry of Finance & Ors. v. Shahu Jain Ltd., 73 CWN 446 this point had been clearly urged on behalf of Government and rejected by the Appellate Court of the Hon'ble Court. In paragraph 4 of Mitra J.'s judgment at page 449 of the report it is clearly mentioned that it had been argued on behalf of Government of India that "if the materials, on which the information of the Central Government was formed, were disclosed at this stage the very purpose and object of the investigations would be defeated". Mitra, J. then observed in paragraph 19 at page 456 of the report. "The appellants declined to disclose any materials, which could prima facie at any rate have justified the formation of opinion as required by the statute. That being the position the order directing the investigation and the subsequent order extending the time to submit the report by the inspectors cannot but he held to be ultra vires section 237(b) of the Act." 62. The argument that disclosure may prejudice investigation hold as much in regard to the investigation under section 237 of the Indian Companies Act, as to investigations under the FER Act and aid of which a search and seizure under section 19D is made, if the law requires disclosure, it is futile to argue that this will hamper investigation. 63. Even Mr. Roy Chowdhury admitted that section 19D of the FER Act is more or less akin to section 105 of the Custom Act, 1962. The latter section was considered in the case of Gopi Kishan, AIR 1967 SC 1298 and the Supreme Court had no hesitation in rejecting the contention that the reason to believe in the existence of the facts mentioned in section 105 is subjective. This is why Subba Rao, C. J. stated categorically. "Though under the section the Asstt. Collector of Customs need not give the reasons, if the existence of belief in questioned in any collateral proceedings he has to produce relevant evidence to sustain his belief". This is why Subba Rao, C. J. stated categorically. "Though under the section the Asstt. Collector of Customs need not give the reasons, if the existence of belief in questioned in any collateral proceedings he has to produce relevant evidence to sustain his belief". The contention that the materials on the basis of which a search order would be made cannot be disclosed to the person against whom proceedings are contemplated on the ground that such disclosure would frustrate the very purpose of the Act and would be prejudicial to national interest can be answered only in the language of Shelat, J. who in (40) P. L. Lakhan Paul v. Union of India, AIR 1967 SC 1507 was dealing with a similar contention that grounds of detention cannot be disclosed to a, detenu even though there is a challenge to the detention order made under the Defence of India Rules, 1962. Shelat, J. observed : "The answer to this contention is simple. In some cases, though such cases would be few, such disclosure to the larger interest of the country. But the proper remedy against such a consequence is not to the deny the element right of representing the case to the persons whose liberty is being deprived bet by providing a rule whereunder the authority is suitable cases can claim privilege against such disclosure". 64. Following this principle enunciated by Shelat, J. we do not think there is any escape from the proposition that if disclosure is required by law one cannot avoid it by saying that it is embarrassing to do so. The power of search and seizure is a very important power and there can be no question that unless such powers are given to the executive with reasonable limitations imposed on the use of the power the statute providing for such power will become unconstitutional. The conditions precedent which the Legislature requires to be satisfied before the exercise of such power are, therefore, matters of great importance. Since the matter is not subjective and is subject to judicial scrutiny, it is obligatory on the respondents to prove that the conditions precedent had been satisfied before the issue of authorizations for search and seizure. The disclosure that is necessary for an adequate judicial scrutiny is, therefore, unavoidable. Since the matter is not subjective and is subject to judicial scrutiny, it is obligatory on the respondents to prove that the conditions precedent had been satisfied before the issue of authorizations for search and seizure. The disclosure that is necessary for an adequate judicial scrutiny is, therefore, unavoidable. If the officers who issue authorizations for search and seizure do not disclose enough materials to satisfy the Court that they had the requisite 'reason to believe' they do so at their own peril. If they find it impossible to discharge the onus bringing on vital records they must bring them out. It can, however, happen only in very exceptional circumstances that disclosure of some prima facie materials which would satisfy the judicial scrutiny will jeopardize the entire investigation under taken by the officers. As we shall see later on, in this particular case, there is very little substance in the plea made out by the respondents that disclosure would hamper their investigation and would frustrate the purpose of the Act. There is, however, one exception to this rule. That exception arises when the executive officers concerned claim privilege. In this case, the respondents did not at any stage raise the question of privilege. In any event, it is not easy to establish the claim of privilege. This claim can be sustained only in very special circumstances. The Supreme Court has in the case of (41) State of Punjab v. Sachi Sukhdev Singh, AIR 1961 SC 493 discussed the manner in which this claim has to be made and also the circumstances in which such a claim can be sustained, It is not, however, necessary for us to go into this question here for the simple reason that the respondents did not make a claim of privilege in this case. In fairness to Mr. Roy Chowdhury however, we must point out that the offered make all necessary disclosures to us provided the appellants are not allowed to have a look at the documents disclosed. This we were not prepared to do. We did not think it proper to use materials behind the back of one of the parties we thought that would be clearly contrary to the rules of natural justice. 65. Though I have already taken a lot of space for consideration of the first issue as to the justiciability of the conditions precedent in sub-section (i) of section 19D. We did not think it proper to use materials behind the back of one of the parties we thought that would be clearly contrary to the rules of natural justice. 65. Though I have already taken a lot of space for consideration of the first issue as to the justiciability of the conditions precedent in sub-section (i) of section 19D. I cannot yet part with this topic before briefly referring to a few more cases on which the contesting parties placed great reliance. 66. Mr. Mitter strongly relied on two decisions of this High Court namely, Deputy Secretary, Ministry of Finance v. Shahu Jain Limited, 73 CWN 446 and (42) New Central Jute Mills Company Ltd. v. Deputy Secretary, Ministry of Finance, 73 CWN 557. In the first of these two cases, namely, the case of Shahu Jain Limited, an order had been made appointing Inspectors for investigation into the affairs of Shahu Jain Ltd. under section 237 of the Companies Act. Upon the order, being challenged by the company in an application in the writ jurisdiction of this Court, it was contended on behalf of the respondents that the existence of circumstances set out in sub clauses, (i) and (ii) of clause (b) of section 237 was a matter to be left to the entirely subjective satisfaction of the Central Government. When this matter was heared the Supreme Court decision in Rothas Industries Ltd. had not yet come out though the decision in Barium Chemicals Ltd. was available. The Court of Appeal of this Hon'ble High Court found on the affidavits that appellants had refused to disclosed materials suggestive of the matters set out in the various sub-clauses of section 237(b). The appellants, their Lordships held, drew a veil tightly around them and thought that the veil could neither be pierced nor lifted to see if materials which the statute required as a pre-condition to the making of an order under section 237(b) of the Act actually exist. Their Lordships held that formations of opinion was a matter of subjective satisfaction of the Central Government but the materials leading to the formation of such opinion must exist and if challenged in Court must be proved to exist. It was further held that if such materials do not exist the action of the Central Government in directing investigation would be ultra vires the statute. It was further held that if such materials do not exist the action of the Central Government in directing investigation would be ultra vires the statute. Incidentally, their Lordships consider the opinion of Hidayatullah, J. (as his Lordship then was) and Shelat, J. to be the majority view of the Supreme Court as expressed in Barium Chemicals Ltd, v. Company Law Board. Though, if one can say so with almost respect, there is some doubt about the proposition that there was any majority view on this question of subjectivity in that case there is now no room for doubt after the decision in Rohtas Industries Ltd. that, according to the Supreme Court, the existence of the materials which lead to the formation of opinion mentioned in section 237 must exist and must be proved to have so existed. 67. The judgment in New Central Jute Mills Company Ltd., 73 CWN 557 was delivered at a point of time when the Supreme Court decision in Rohtas Industries Ltd. was available. Naturally, their Lordships had no hesitation in holding that the circumstances from which the relevant authority was to form the requisite opinion under sections 235 and 237 of the Companies Act must exist in fact and must be proved to be existent, when challenged. 68. Mr. Mitter also relied on the Supreme Court decisions in the cases of (43) Pushkar Mukherjee & Ors. v. The State of West Bengal, AIR 1970 SC 852 ; (44) Motilal Jain v. Stale of Bihar & Ors., AIR 1968 SC 1509 and (45) Rameswar Lal Pakari v. State of Bihar, AIR 1968 SC 1303 . These are all cases in connection with the Preventive Detention Act, 1950. These decisions, in my opinion, are not strictly applicable to the present case. In all the preventive detention cases the person authorizing the detention has to furnish in details all relevant particulars to the advisory board of the Court so that the detains is in a position to make an effective representation regarding the charges against him. The Preventive Detention Act, 1950, provides for such a safeguard. On the other hand, section 19D, FER Act deals with the state of investigation when the facts in the hands of the enquiring officer are necessarily incomplete and indefinite. The Preventive Detention Act, 1950, provides for such a safeguard. On the other hand, section 19D, FER Act deals with the state of investigation when the facts in the hands of the enquiring officer are necessarily incomplete and indefinite. In a preventive detention case, any vagueness in the charges will defeat the detainee's statutory right of defending himself by representation before the advisory board will generally considers these charges. That is why, the principle of preventive detention cases can have no application to a case under section 19D of the FER Act. 169. Mr. Roy Chowdhury, on the other hand, relied strongly on the decision in (46) Mamchand & Co. v. Income Tax Commissioner, West Bengal, AIR 1969 Calcutta 431. I was myself as privy to that decision though the judgment was delivered by D. N. Sinha C.J. The decision was given in connection with a search and seizure made under the provisions of section 132(1) of the Income Tax Act, 1961. v. Income Tax Commissioner, West Bengal, AIR 1969 Calcutta 431. I was myself as privy to that decision though the judgment was delivered by D. N. Sinha C.J. The decision was given in connection with a search and seizure made under the provisions of section 132(1) of the Income Tax Act, 1961. Section 132 of the Income Tax Act provides that where the Director of inspection or the commission or the Commissioner, in consequence of information in his possession has reason to believe that "(a) any person to whom a summons under sub-section (1) of section 37 of the Indian Income Tax Act, 1922 or under sub section (1) of section 131 of the Income Tax Act, 1967 or a notice under sub-section (4) of section 22 of the Indian Income Tax Act 1922 or under sub-section (i) of section 142 of this Act was issued to produce or cause to be produced any books of account or other documents has failed to produce or cause to be produced suspect such books of account or documents or (v) may such person to whom a summons or notice as aforesaid his been or might be issued, will not or would not produce or cause to be produced any books of account or other documents which will be useful for or relevant to any proceeding under the Income Tax Act, 1922 or Income Tax Act, 1961 or (c) any person is in possession of money, bullion, jewellery or other valuable articles or thing represents either wholly or partly income or property which has not been disclosed for the purpose of either of the Income Tax Acts referred to above, the Director of inspection or the Commissioner may authorize any Deputy Director of inspection or Income Tax Officer to entire and search any building or place where he has reason to such books of account or other documents or money, bullion or jewellery to be kept, to breack open the lock of any door, box, locker, safe, almirah other recentable for the purpose of such search if the keys are not available seize any of these things found as a result of search, place marks of identification on any books of account or other documents". 70. 70. On 30th January, 1967 the Commissioner of Income Tax, West Bengal issued two warrants of authorization under section 132 of the Income Tax Act, 1961 read with Rule 112(i) of the Income Tax Rules, 1962 authorizing searching at various premises where Mamchand Agarwalla and some of his partners in M/s. Mamchand & Co. resided. There was also a similar warrant of authorization authorizing search at the office of a firm called Ram Swarup Mamchand, various Income Tax Inspectors and clerks conducted the search and seized a large number of documents. The legality of the search and seizure was challenged in an application under Article 226 of the Constitution. The application having been dismissed in the first instance by Mitra, J. there was an appeal against the decision of Mitra, J. The appeal was heard by a Bench constituted of Sinha, C. J. and myself. We dismissed the appeal & confirmed the order of Mitra, J. In dealing with that case we constructed the words 'reason to believe' in section 132 of the Income Tax Act and held that reason should exist though it was not for the Court to go into the adequacy of such reasons. We relied on the case of Narayanppa, 63 ITR 219 : AIR 1967 SC 523 . We also examined the question as to how much of the provision in section 132 (i)(b) was subjective and how much objective. Further we found on the facts of that case that the Commissioner had reason to believe that the assessee would not produce certain books of account or documents if called upon to do so and that he was further of the opinion that they were relevant for the purpose of an income tax proceeding. We also found after examining the facts of the case that there was, in fact, foundation for such belief. 71. Mr. Roy Chowdhury for the respondents strongly relied on this case before us. In my opinion, the facts in the case of Mamchand & Co. were entirely different from those in the instant case and our decision in that case was justified because of the facts and circumstances of the case. The following, for instance, are the special features of Mamchand's case which are not to be found in the instant case :–– (1) In Mamchand's case details relating to evasion of Income Tax Act by Mamchand & Co. The following, for instance, are the special features of Mamchand's case which are not to be found in the instant case :–– (1) In Mamchand's case details relating to evasion of Income Tax Act by Mamchand & Co. were given by the Commissioner of Income Tax in his affidavit who relied on facts as the foundation of his belief and disclosed those facts when challenged. (2) The Income Tax Commissioner had received written complaints from time to time about the various contraventions of law committed by Mamchand & Co. The substance of the complaints and even the source thereof were given in the affidavit of the Commissioner of Income Tax. In the present case, however, the Director of Enforcement has only referred to certain information on vague terms without disclosing either the contents of the information or the names of the persons who gage the information. (3) In the case of Mamchand & Co., the Commissioner of Income Tax had instituted enquiries of his own and after such enquiry was satisfied regarding the prima facie truth of the complaints he had received against Mamchand & Co. Such enquiries on the part of the Commissioner of Income Tax satisfied the suggestion made by Supreme Court in the Rothas Industries case (supra) that there should be no precipitate action and that there should be some probe by the officer authorizing the search and seizure. No such initial probe of enquiry by the Director of Enforcement seems to have been made in this case at least there is nothing on record to show that he had. (4) Section 132 of the Income Tax Act and Rule 112 of the Income Tax rules are not strictly speaking in part material with section 19D of the Foreign Exchange Regulation Act. In the context of section 132 of the Income Tax Act, a likelihood of books and documents not being found was enough to lay the foundation for issue of a warrant of search. In the case of Mamchand & Co. the Commissioner of Income Tax had, in fact, sworn an affidavit that Mamchand & Brothers had defaulted previously in the matter of production of books and documents. (5) In the case of Mamchand & Co. the complaint against Mamchand's & Co. was of a specific offence, namely, that they were manufacturing duplicate sets of accounts and resorting to forgeries for that purpose. (5) In the case of Mamchand & Co. the complaint against Mamchand's & Co. was of a specific offence, namely, that they were manufacturing duplicate sets of accounts and resorting to forgeries for that purpose. It was in that context that the authorization or search had been given in that case. In the instance case there is only a very vague allegation about tile contravention of the foreign exchange regulation Act. No definite or specific offence has been alleged. (6) In Mamchand's case there was a written authorization and there were written instructions to the officers who were entrusted with the conduct of the search and seizure and such instructions were also disclosed to Court at the time of hearing. These instructions were made a part of the affidavit of the Commissioner of income tax so that they could scrutinize the instructions. (The paper book of Mamchand's case was produced before us at the time of hearing of the present appeal in support of this contention and our attention was drawn to the written instructions set out at pages 132-34 of the paper book). In the instant case the instructions to the search party have been held back. (7) In Mamchand's case all details regarding the nature of documents that were sought to be seized by the search party were clearly indicated in the instructions that were issued to the search party. As the precise purpose for which documents were required had been specified the officers who conducted the search knew all the documents that were really required to be seized. The position in this case is entirely unknown because the instructions have not been disclosed before the Court and the Court has no opportunity to come to a decision on this point. (8) In Mamchand's case the affidavit of the Commissioner of income tax can did set out all the facts that were in the possession of the Commissioner of income tax. He also placed all the documents relating to the search and seizure for the scrutiny of the Court. In the instant case every thing has been held back on the ground of public interest. He also placed all the documents relating to the search and seizure for the scrutiny of the Court. In the instant case every thing has been held back on the ground of public interest. The above contract in the facts and circumstances of the two cases brings to a focus the real deficiency in the order which was passed by Kaul under section 19D of the FER Act in this case and which we shall presently seek to bring out in this judgment. 72. The same contract also brings to a focus the real distinction between a case where the existence of reason to believe about certain facts is objectively established and a case where such existence does not stand the test of judicial scrutiny. The whole thing however, is to my mind a question of degree shall not a matter of qualitative distinction. Further, though it is not possible to lay down any hard and fast principle regarding the limits of the judicial scrutiny to which the whole question is subject I do not see why a general commonsense principle cannot be enunciated. In my opinion, in such cases the materials that have to be furnished by the officer concerned to show that he had the requisite reasons to believe in the things specified in the Act must not be so vague as to defeat scrutiny by the Court. At the same time, they need not be so specific as to defeat the purposes of the Act. This principle, in my opinion, was perfectly satisfied in Mamchand's case where the Commissioner of income tax disclosed not only a wealth of facts but also such specific particulars not only a wealth about the offences that they could be almost pinpointed. Even the instructions that he had given to the officers who had been deputed for the search and seizure were annexed to the Affidavits filed by the Revenue Authorities. The specific offences were all mentioned in the instructions and there was a clear indication about the nature of the records to be seized. In fact, in that case the facts that were disclosed to the Court showed clearly that the materials on which action had been initiated were extremely urly. We shall presently see that the action of the income tax Commissioner in Mamchand's case bears a strong contract to the action of Kaul in the present case. In fact, in that case the facts that were disclosed to the Court showed clearly that the materials on which action had been initiated were extremely urly. We shall presently see that the action of the income tax Commissioner in Mamchand's case bears a strong contract to the action of Kaul in the present case. But we shall come to that aspect of the case a little later. 73. We now come to the third issue, namely, as to what are the conditions precedent which have to be satisfied before the power to authorize a search and to seize documents can be exercised by the appropriate officer under the provisions of section 19D(1) of the FER Act. The context of the belief which has to be held under section 19D(1) before such power can be exercised has been stated in the following language; that any documents which in his opinion will be useful for or relevant to any proceedings under this Act are secreted in any place. Two minor points of controversy arise out of this requirement. One relates to the meeting of the word 'secreted' and the other relates to the question as to how far the respondents can rely on facts which came to their knowledge after the issue of the search warrant or authorization in support of the issue of the search warrant. 74. As to the meaning of the word 'secreted' the real controversy was whether the documents have to be actually secreted or whether it would be enough if, in the facts and circumstances of the case, the documents are of such a nature as are likely to be secreted. There is, of course, the third possibility that documents may consist of two groups :––one of which are, in fact, secreted and the other group are likely to be secreted. Mr. Mitter for the appellants urged that secreted means 'actually secreted', while Mr. Roy Chowdhury argued that it would be enough if the officer authorizing the search has reason to believe that documents are likely to be secreted'. In our opinion to give practical meaning to the provisions of section 19D there is no escape from construing the word 'secreted' to mean both as 'secreted' as well as likely to be secreted'. Roy Chowdhury argued that it would be enough if the officer authorizing the search has reason to believe that documents are likely to be secreted'. In our opinion to give practical meaning to the provisions of section 19D there is no escape from construing the word 'secreted' to mean both as 'secreted' as well as likely to be secreted'. Since the reasons to believe are justifiable and have to be produced before a Court of law and substantiated upon a challenge in any collateral proceedings it is obvious that the narrow construction put up on 'secreted' as referring to things which are actually secreted would defeat the very purpose of the section. If the documents are well and truly secreted, how can officers prove the fact of such secretion? How can they even produce before the Court concrete and tangible evidence in support of a belief that the documents are secreted? In our opinion, we must construe section 19D to mean that if the officer competent to authorize a search has reason to belief that documents are likely to be secreted that would be enough for the purpose of jurisdiction to issue a search warrant. In Durga Prasad's case AIR 1966 SC 1209 the Supreme Court had to interpret section 105 of the Customs Act which, will be remembered, is closely similar to the language of section 19D of the FER Act. Under that section the assistant collector of customs is to have reason to believe that certain goods or documents or things are secreted in any place before he can authorize the search for the goods, documents or things. It was argued before the Supreme Court that the word 'secreted' is used in the sense of being hidden or concealed and unless the officer concerned had reason to believe that any document was so concealed or hidden, a search could not be made for such a document. Ramaswami, J. delivering the judgment of the Supreme Court, rejected this contention and observed. In our opinion, the word 'secreted' must be understood in the context in which the word is used in the section. In that context, 'it means, documents which are kept not in the normal or usual place with a view to conceal them' or it may even mean 'documents or things which are likely to be secreted'. In our opinion, the word 'secreted' must be understood in the context in which the word is used in the section. In that context, 'it means, documents which are kept not in the normal or usual place with a view to conceal them' or it may even mean 'documents or things which are likely to be secreted'. In other words, documents or things which a person is likely to keep out of the way or to put in a place where the officer of law cannot find it. It is in this sense that the word 'secreted' must be understood as it is this sense that the word 'secreted' must be understood as it is used in section 105 of the Customs Act". In my view, it is not possible to put on a narrow construction upon the word 'secreted' and to take it to mean only concealed. In any event, I am now bound to give the extended meaning that has been given to this word in Durga Prasad's case and take the work to mean (i) kept in and out of the way which is not its normal place or (ii) likely to be secreted. 75. We come now to the question as to whether 'post authorization facts' may be pleaded by the officer issuing the authorization when the validity of such authorization is challenged. It was argued on behalf of the appellants that since the search warrant can be issued only upon the competent officer having reason to believe in certain things, the belief must be entertained prior to the issue of the authorization and if the authorization itself is challenged it will not be permissible to rely on facts which came to the knowledge of the officer after he had issued the authorization. This contention of the appellant is by and large valid. If the existence of certain facts or circumstances be a condition precedent to the exercise of the power under section 19D of the FER Act, i.e., to say, if the officer concerned must believe and must have reason to believe about those facts before he sings the authorization, it is just commonsense that the belief and the reason to believe must precede in point of time, the actual issue of the authorization. It also follows logically that the issue of an authorization cannot be supported by merely referring to certain facts or certain things which are discovered as a result of the search carried out and the basis of the authorization which is challenged. Two other consequences ensure from this proposition. First, the results of a search cannot invalidate the search if it is otherwise valid, i.e., to say, if the issue of the search warrant or authorization can be justified by demonstrating that the conditions precedent had been fulfilled. Secondly, the findings of the search cannot make a search valid when the authorization was issued without complying with the conditions. Mr. Mitter goes a step further and argues that when an authorization is challenged before the Court and subjected to judicial scrutiny, the Court will be debarred from looking any facts and materials gathered after the issue of the authorization. For the sake of convenience, those materials were described by both parties before us under the convenient name of post authorization facts or materials." In this particular case, for example, Mr. Mitter contended strongly that we should refuse to consider the materials that appear from the affidavits of Guha, Omkarnath Chattopadhayaya and Paul because they represent "post authorization materials". I do not think it requires any elaborate argument to establish the proposition that conditions precedent have to be satisfied before the authorization can be issued. If any authority were required for this, we could look for such authority in various Supreme Court decisions. In (47) The Collector of Malabar v. Erimal Ebrahim Hajee, 1957 SCR 1970 was a case in which the Collector exercised powers under section 48, Madras Revenue Recovery Act, 1864 and had an assessee arrested and confined in Jail. There was a challenge to the jurisdiction of the Collector. The Supreme Court held that the Collector must have some material upon which he bases his belief the assessee was a defaulter and was wilfully withholding power or has been guilty of fraudulent conduct in order to evade payment. The Supreme Court satisfied itself from the affidavits that were filed that there was some material upon which the Collector could base his belief. The point has been more clearly and specifically emphasized in the case of Durga Prasad v. Superintendent (Prevention) Central Excise, Nagpur & Anr., AIR 1966 SC 1209 . The Supreme Court satisfied itself from the affidavits that were filed that there was some material upon which the Collector could base his belief. The point has been more clearly and specifically emphasized in the case of Durga Prasad v. Superintendent (Prevention) Central Excise, Nagpur & Anr., AIR 1966 SC 1209 . That case, it will be remembered, was a case of search under section 105 of the Customs Act. Banerjee, J. in the judgment under appeal in the instant case, has taken this decision to be one in which the Supreme Court has used subsequent facts in justification of the order of search. With respect we do not agree. We believe Ramaswami, J. who delivered the judgment of the Supreme Court has been misunderstood. His Lordship clearly stated : "......it is essential that before this power is exercised, the preliminary conditions required by the section must be strictly satisfied that is the officer concerned must have reason to believe that in any documents or things which in his opinion are relevant for any proceeding under the Act, are secreted in the place searched" (emphasis is mine). It is abundantly clear from this that the Supreme Court also insists that the conditions precedent must be satisfied before the exercise of the power. A slight misunderstanding is apt to arise because in one portion of his judgment Ramaswami, J. referred to a paragraph from the affidavit of the Superintendent of the Capital Excise which speaks of some documents that were recovered from the living apartments and from the safe of the petitioner. The Solicitor-General had referred to this portion of the affidavit at the time of argument and Ramaswami, J. mentions this in trying to explain the connection of the word "secreted". His Lordship nowhere says that what I have described as 'post authorization facts' would be enough to justify before a Court the issue of search warrant under section 105 of the Customs Act. Had his Lordship done so there would have been direct conflict with what he stated in the very next paragraph viz. that it was essential that the preliminary conditions should be satisfied "before the power is used." 76. Had his Lordship done so there would have been direct conflict with what he stated in the very next paragraph viz. that it was essential that the preliminary conditions should be satisfied "before the power is used." 76. The Supreme Court has in its recent decisions in the case of Barium Chemicals' Ltd., AIR 1967 SC 295 and also in the case of Rohtas Industries, AIR 1969 SC 707 made it quite clear that the existence of circumstances referred to in section 237(b) of the Companies Act at the date of the order was important (See in particular, paragraphs 39 and 40 of the report in the Rohtas Industries case). 77. I must, however, indicate a reservation which, in my opinion ought to be made in enunciating a principle in this matter. Though I find no difficulty in accepting the contention that when there is a challenge to the jurisdiction to issue a search warrant, the authority concerned must came out with facts to show that before he issued the warrant there had, in fact, been materials which had led him to believe that documents would be secreted, I am not prepared to accept the contention that "pest authorisation facts" have to be ignored completely and that the, Court has no right to look at them at all. In my opinion, one has to take a practical view about these things. It is true indeed that where the jurisdiction of the officer to issue a search warrant is challenged it is no good for him to establish his jurisdiction by reference to facts or materials which were discovered during or after the search. At the same time I do not see why the officer concerned cannot after showing that he had reasons to believe before issuing the search warrant, i.e., to any after establishing the primary facts for the exercise of his jurisdiction, point out, in corroboration of his stand-point, to materials which were actually discovered as a result of the search. Why cannot an officer say "look, you are challenging my statement that I had good reasons to believe that documents are secreted. I have shown you the facts which constituted the reasons for the belief that I formed. Now, look at what I actually found when the search was made. Does not all this show that my grounds were quite reasonable"? I have shown you the facts which constituted the reasons for the belief that I formed. Now, look at what I actually found when the search was made. Does not all this show that my grounds were quite reasonable"? In this view of the matter, I think it is permissible to look at "post-authorization facts" though it will be permissible to rely on such materials alone for a justification of the issue of search warrant. 78. This is also the stage where I should dispose of one other minor point of controversy. Sub-section (i) of section 19D of the FER Act in describing the objects of search had described them as any documents "which is his opinion will be useful for or relevant to any proceedings under this Act." The question is : does this word "proceedings" indicate only such proceedings under the Act as have already been initiated or does it also include proceedings which are contemplated? Mr. Mitter at one stage tried to argue faintly that the section refers only to actual and pending proceedings. He contended that usefulness or relevancy of a document cannot be adjudged except in the context of a pending proceeding in respect of an offence that can be pin-pointed by the use of specifications and particulars. I have no hesitation in rejecting this contention. As section 19D only provides for a method of carrying out an enquiry or investigation it is obvious that the proceedings may be either actual or contemplated to put a limited construction upon this sub-section and to take it as referring only to actual proceedings is, in my opinion, to make the whole section useless and nugatory. In a different context we shall, in this judgment, have occasion to reject a contention that was advanced on behalf of the appellants by Mr. Mitter that the enquiry contemplated under section 19D is really an investigation at the stage of actual adjudication. We shall in that connection analyze different provisions of the FER Act and show why the power of search given under section 19D relates to a stage of enquiry when the officers of Enforcement look for materials which they will use in connection with adjudication of offences under the Act. Consistently with that opinion we hold that the proceedings referred to in sub-section (1) are also contemplated proceedings. Consistently with that opinion we hold that the proceedings referred to in sub-section (1) are also contemplated proceedings. I may mention here that in Durga Prasad's case AIR 1966 SC 1200. Ramaswami, J. while dealing with the authorization under section 105 of the Customs Act speaks of "either pending or contemplated proceedings" (see paragraph 14 of the report at page 1216). 79. Reverting to the subject of conditions precedent we are now in a position to sum up the condition as laid down in section 19D of the FER Act. The condition that has to be fulfilled is only this that before issuing the authorization of search and seizure the officer concerned must have reason to believe that some documents are secreted or likely to be secreted and that these documents in question will in his opinion, be useful for or relevant to any proceedings under the FER Act which are either pending or contemplated. 80. The next question is whether the respondents have furnished sufficient materials to satisfy the Court that the conditions precedent to the exercise of the power authorizing a search under section 19D of the FER Act had been fulfilled before the actual issue of the authorization orders. Mr. Roy Chowdhury has raised a preliminary objection to the consideration of this question on the ground that there was no proper challenge made out by the appellants in their original petition. He sought to make his point by comparing the challenge in the instant case with the challenge that had been thrown out in the case of Calcutta Discount Company, 41 ITR 191 or in the case of Sahu Jain, 73 CWN 446 in the case of New Central Jute, 73 CWN 557. He argued that when a challenge is thrown to an exercise of power under sections analogous to section 19D of the FER Act, it is not sufficient to say that the relevant officer did not have the reason to believe required under the statute, the petitioner should make out a prima facie case to show that the officer concerned could have no materials for formation of an honest opinion or a reasonable belief or that the officer concerned was actuated by mala fide in the exercise of power. It was pointed out by Mr. It was pointed out by Mr. Roy Chowdhury that in the case of Sahu Jain for instance, the respondent-company which in that case was challenging the exercise of power by the appellant Deputy Secretary, Ministry of Finance made specific allegations that the Central Government did not and could not form any opinion as allege. Further the respondent gave facts to show that the conduct of its business was such as left no room for the kind of "satisfaction" which was a condition precedent to the exercise of the power and that no member of the company had made a complaint to Government. The charge of mala fide was also shown from the fact that the notice was devoid of particulars. Various specific and concrete instances were given regarding the mala fide of the Government with particulars in support of such allegations. Mr. Roy Chowdhury contended that only because the challenge had been in that case with such specific particulars, that the Government was placed under an obligation to meet the challenge. Mr. Roy Chowdhury also pointed out that in the case of New Central Jute Mills Company Ltd. v. Deputy Secretary, Ministry of Finance, 73 CWN 557 one of the grounds for which the Court of Appeal set aside the judgment of Banerjee, J. was that the fact on which Banerjee, J. had relied as indicative of fraud on the part of the company concerned did not actually amount to fraud. Mr. Roy Chowdhury argued that compared to the two petitions in the case of Sahu Jain as well as in case of New Central Jute Mills Company Ltd. the grounds that are set out in proof of mala fide on the part of the Director of Enforcement in the instant case are very meagre and very slender. 81. I do not consider this objection of Mr. Roy Chowdhury to be of any substance. The appellants' challenge against the authorization is, as we have already said, on three fronts : first, as to the existence of the conditions precedent, secondly, as to the proper compliance with the procedural safeguards provided for in sub-section (2) of section 19D of the FER Act and lastly, as to the bona fide of the order of authorization. We are, for the present, concerned only with the first challenge. We are, for the present, concerned only with the first challenge. This challenge is to be found in paragraphs 6, 7, 8, 9 and 10 of the petition. Briefly the challenge is that T. N. Kaul, the authorizing officer did not have any reason to believe about the secretion of documents which in his opinion will be useful for or relevant to any proceedings under the Act. The appellants have denied that they have even committed or tried to commit any offence under the FER Act and have also denied that they have secreted any of their documents. In support of their statement that they have not secreted any documents they say, first, that documents are all in their usual place and, secondly, there has been no case where the respondents have asked for any documents and the appellants have failed or refused to furnish them with such documents. As for their denial about violation of the provisions of the FER Act this being a purely negative fact, the appellants could do nothing more than assert their innocence. As for their denial about violation of the provisions of the FER Act this being a purely negative fact, the appellants could do nothing more than assert their innocence. The appellants have, however, sought to prove their basic complaint that the search was in the nature of a fishing enquiry by making out the following points :–– (a) the authorizations were vague; (b) the recital in the authorization show that Kaul had not formed the opinion, he says he had formed (c) the authorizations merely cite the language of the section and are more or less in identical terms; (d) the manner in which the search was carried out by making practically whose sale seizure of a very large number of documents without any scrutiny or discrimination shows that the officers concerned were merely roving for materials and did not have any specific information to guide them in their search; (e) the officers who carried out the search could not be in a position to exercise any judgment in the matter of searching seizing the documents because there was neither the time nor the opportunity to instruct those officers; (f) the search warrants do not indicate in the remotest manner the nature of the documents intended to be seized; (g) the search was a general raid and made out without any application of mond; (h) officers who carried out the search came from various departments and were, therefore incapable of forming an opinion as to which book, paper or documents, would be useful for or relevant to proceedings under the FER Act; (i) the seizure memos show the capricious and renaom nature of the search; (j) finally, there is no evidence to show that T. N. Kaul has recorded the grounds of his alleged belief or that he has anywhere specified the documents for which the search was to be made. 82. From this it is clear that the appellants have made out a very specific and clear challenge as to the existence of the conditions precedent. We shall presently see that they have also challenged the order of authorization in very clear terms on the ground that the procedural safeguards provided for in sub-section (2) of section 19D of the FER Act have not been observed. We shall presently see that they have also challenged the order of authorization in very clear terms on the ground that the procedural safeguards provided for in sub-section (2) of section 19D of the FER Act have not been observed. The second challenge is one which is more or less a question of law and it is not even the respondents' case that they have complied with the procedure which, according to the appellants, is prescribed by sub-section (2). There is, of course, the further allegation of mala fide. In these circumstances, I do not think that there is any substance at all in Mr. Roy Chowdhury's complaint that the appellants have not made out a proper challenge against the authorization. 83. We now turn to the case that has been made out by the respondents in answer to the challenge thrown out by the appellants as to the existence of the conditions precedent mentioned in sub-section (1) of section 19D. This answer is to be found mainly in the affidavit dated 22 December, 1969 of T. N. Kaul und also in certain supporting affidavits of D. K. Guha, O. N. Chattopadhyaya and B. N. Paul respectively. The main reply, of course, is contained in the affidavit of T. N. Kaul. In any case, since it was Kaul who issued all the authorizations for search and seizure, we much look for the answers to the challenge mainly in the affidavit of Kaul. Kaul makes a general denial of all the different charges the substance of which I have set out just now. In particular, he says that he had definite information in his possession that offences under and/or violation of Foreign Exchange Laws of the country had been or were being committed. Kaul seeks to indicate the nature of these offences in certain sub-paragraphs of paragraph 6 of his affidavit. His statement in those sub-paragraphs are, in fact, the only indication that we have had of the facts or materials which gave him reason to believe about the things specified in section 19D. It is, therefore, quite clear that the fate of this aspect of the case turns round paragraph 6 of Kaul's affidavit. His statement in those sub-paragraphs are, in fact, the only indication that we have had of the facts or materials which gave him reason to believe about the things specified in section 19D. It is, therefore, quite clear that the fate of this aspect of the case turns round paragraph 6 of Kaul's affidavit. Hence, I take the liberty of reproducing the various sub-paragraphs of that paragraph verbatim as hereunder : "(a) The petitioner No. 1 makes illegal gains of Foreign Exchange under arrangement and/or agreement with foreign companies and/or concerns. Such illegal gains of Foreign Exchange are accumulated outside India. (b) One of the methods for achieving object (a) is to reflect in the invoice the price of imported materials at a higher figure and/or price than the price at which such materials are obtainable direct from the foreign suppliers and/or manufacturers. (c) For purposes (a) and (b) above, arrangements were made with certain American Companies, the names of which companies were known to me at the time of and before issuing authorization which names, however, it will not be in public interest to disclose at this stage. I am ready and willing to disclose the same to this Hon'ble Court, if and when called upon. (d) Approximately about 5 per cent. of the actual cost of purchase abroad is retained outside India in foreign currency. No permission has been taken or any disclosure made in respect of the same. (e) There are indications that the total amount of foreign exchange accumulated outside India in suspected contravention of the said Act as indicated herein will not be less than Rs. 2 crores. (f) Against rupee import licences, imports are made from free currency areas in breach of the licences, directions and notifications thereunder, and in the process unauthorized purchase of free currencies is made. From the point of view of national economy this results in a very considerable progressive and systematic debasement of the value of the Indian to name-lenders in foreign countries through whom the transactions are put through. (g) Brij Mohan Birla is the Chairman of the petitioner No. 1 and was a Chairman (he is still a shareholder) of East India Products Company Limited, on English Company having its office in London. (g) Brij Mohan Birla is the Chairman of the petitioner No. 1 and was a Chairman (he is still a shareholder) of East India Products Company Limited, on English Company having its office in London. The said English company acted as buying agents for the Birlas and purchases were made for the Birlas or made through the said English Company in United Kingdom and the Continent. The invoice prices of the said English Company charged to the Birla concerns in India including the petitioner No. 1 were more than the actual cost for which the goods could be imported into India directly from the foreign suppliers and/or manufacturers. The petitioner No. 1 had been accumulating foreign exchange abroad through the said English Company. (h) Only some instance of the suspected offences under the said Act have been indicated in the preceding sub-paragraph. From the information in my possession prior to and at the time of issuing the authorization, I had reason to believe (which belief was reasonable in the fact and circumstance of the case) that documents which in my opinion would be useful for or relevant to proceedings under the said Act are secreted in the premises specified in the said authorization. The said belief which I held and still hold had been amply borne out from the documents seized. The said documents are still under scrutiny and very important and relevant evidence of the suspected offences had been discovered and is still being discovered and further relevant and material evidence is also likely to be discovered and full magnitude of the offences will emerge after completion of the scrutiny." 84. I propose to examine the various statement of Kaul in the above sub-paragraphs in some detail. In sub-paragraphs (a), (b) and (c) Kaul says that he had definite information that the appellant company was making illegal gains of foreign exchange under arrangement with foreign companies and accumulating the illegal gains outside India. Kaul does not give either the source of the information or any other particulars about the information from which the Court can consider whether such information could lead to the formation of a reasonable belief about offences against the FER Act. Kaul does not also indicate the arrangements and does not disclose the names of the foreign companies with which those arrangements are made. Kaul does not also indicate the arrangements and does not disclose the names of the foreign companies with which those arrangements are made. Kaul merely says that the arrangements were for the purpose of making illegal gains. Kaul goes on after this to mention in subparagraph (a) that the accumulation retained outside India by the company in foreign currency amount to a sum which would be not less than 2 crores, Kaul then makes certain allegations in sub-paragraphs (f), (g) and (h) which are slightly more specific. We shall deal with the separately for, it is not clear from the affidavit whether the allegations made in sub-paragraph (f), (g) and (h) of paragraph 6 are in confirmation or corroboration of the allegations made in subparagraphs (a), (b), (c), (d) and (e) or whether they are independent allegations. It is only in sub-paragraphs (f) and (g) that on attempt has been made to give certain specific particulars or details about the information on which Kaul acted and they require in my opinion, an independent treatment. As far as the allegations made in sub-paragraphs (a) to (e) are concerned there can be little doubt that they are in the most general terms. It is not possible for anybody to meet those charges or allegations. It is true that this is not the stage where the respondents are under and obligation to communicate to the appellants the information in their possession in such details as would enable them to meet the charges. That can come only as a subsequent stage and the FER Act has provided for that stage in section 23D of that Act. But even it is stage, since the appellants have challenged the existence of power under section 19D and since the existence of such circumstances is liable to judicial scrutiny it is incumbent on the respondent to give at least details and such particulars as would enable the Court to decide whether (a) the respondents are acting bona fide and (b) whether there were in fact such circumstances as would lead to the formation of a belief in the mind of the authorizing officer that certain documents were being secreted and that such documents would be relevant to or useful for certain pending or contemplated proceedings in respect of offences under the FER Act. Can it be said from the averments made by Kaul in sub-paragraphs (a) to (e) that they furnish enough materials for our satisfactions that Kaul had reason to believe of the nature we have just now indicated? In my opinion, it is impossible to say that they do. The allegations are in the most general and vague terms. They merely assert that the company makes illegal gains with the help of some foreign companies. This is a kind of airy and insubstantial allegations which nobody can probe. Not one specific instance has been given where the company has made an illegal gain. If the company has been, as we are told, systematically making illegal gain, surely there must have been several transactions in course of which these gains have been made. It is difficult for us to give evidence to the proposition that disclosure of some particulars about a few such transactions would have hampered the investigation that is being carried out by the respondents. That is exactly had Mr. Roy Chowdhury was persuading us to believe. We did not understand Mr. Roy Chowdhury to say and indeed, he did not at any time say that the company has made the stupendous amount of illegal gain which, the respondents say, it has made, by one single transaction and that since conclusive evidence about all the details of this solicitary transaction are not yet in the hands of the investigating officers, it would not be safe or prudent for them to indicate by premature disclosure what are the lacunae in that evidence. In fact, this is not the case made out anywhere in the several affidavits filed on behalf of the respondents. Kaul definitely speaks of "one of the methods" of making such illegal gains. He also speaks of certain American Companies of "purchases" and of "accumulation". The inevitable conclusion is that the illegal gain has been made by a series of transactions made with a number of foreign companies in connection with a large number of purchases The fact that the respondents have seized a colossal number of documents relating to a very large number of transactions over a period of years can leave us in no manner of doubt that it is not the respondents' case that there has been only one transaction or even that the transactions are a few in number. Would it be unreasonable in that case to expect that the respondents would adduce some specific facts and particulars in respect of at least one such transactions, if not a few to satisfy the Court that they had materials which gave them reasons to believe about the commission of the alleged offences and consequently about the secretion of documents relating to these offences. Instead of doing that the respondents have remained content by making an allegation in the most general terms. In my opinion, there is some substance in the complaint of Mr. Mitter that Kaul has merely repeated the words of the statute in his order of authorization. It is significant that apart from "over invoicing" which is a well-known method of accumulating foreign exchange in a foreign country, Kaul has not specified any other offence in these sub-paragraphs. Indeed, Kaul has not even used the word "over-invoicing". The words that he has used in sub-paragraph (b) need not necessarily imply that the charge is one of "over-invoicing". Mr. Mitter for the appellants contended strenuously and, in my opinion, with some justification "that particular "method" explained in sub-paragraph (b) does not necessarily indicate the method of committing an offence under the FER Act. It will be remembered that the method mentioned in sub-paragraph (b) was of reflecting" in the invoice "the price of imported materials at higher figure and/or price than the price at which such materials are obtainable direct from the foreign suppliers and/or manufactures". If a purchaser acquires from United Kingdom certain goods by paying £ 500, where he could have purchased the same goods for say £ 450, can it be said, that such a purchase would amount to an offence ? Purchase in a market is often a matter of bargaining. Goods may be obtainable at a lower price and yet actually obtained at a higher price : A purchase of the type I have mentioned would not connote an offence under the FER Act, it would connote only a "loss" in the matter of bargaining. Besides, the appellant company has proved by evidence which seems to me to be almost unimpeachable that the company used to buy goods through buying agents to whom they were in the habit of paying commission with the permission of the Government of India as well as of the Reserve Bank of India. Besides, the appellant company has proved by evidence which seems to me to be almost unimpeachable that the company used to buy goods through buying agents to whom they were in the habit of paying commission with the permission of the Government of India as well as of the Reserve Bank of India. Therefore, if the buying agents charge a higher price than what they had actually paid for procuring the goods, it would not be open to objection by the Reserve Bank of India so long as the excess is within the permissible limits. One would look in vain in Kaul's affidavit even for a hint that he was aware that the company's buying agents were entitled to put in the invoice a higher price for the goods by way of commission. I am saying this not in proof of any proposition that the company has not made any illegal gains, I am saying this merely to show tint the statement made in sub-paragraph (b) is perfectly consistent with legal transactions and, standing by itself, that statement should not furnish grounds for belief that an offence under FER Act had been or was being committed. I shall presently deal with the facts regarding the buying agents and the commission paid to them in greater detail. It is enough just now to indicate the vague nature of the statements made by Kaul in sub-paragraph (a) quantifying the illegal gains does not, in my opinion, add any concreteness to the allegations; the allegation still remain value. I find it impossible from these general statements to come a finding that Kaul had reason to believe about the various facts which are conditions precedent to his exercise of the powers under section 19D. Judicial scrutiny is not possible in the vacuum without further facts, particulars and date. Similarly the mention of "certain American Companies" without names and particulars does not make these statements any the less vague. It was incumbent, in my opinion, upon Kaul to mention at least some of the names of these American Companies and to give us some concrete details about the arrangements made with these companies. I find it difficult to visualize how the disclosure of some minimum materials regarding one or some of these arrangements and even the production of some selected documents by Kaul would have jeopardized the entire investigation. 85. I find it difficult to visualize how the disclosure of some minimum materials regarding one or some of these arrangements and even the production of some selected documents by Kaul would have jeopardized the entire investigation. 85. Let us now turn to sub-paragraphs (f) and (g) of paragraph 6 which attempt at least to provide on the surface a semblance of specificity regarding the nature of offences about which Kaul claims to have had information in his hands. Even these sub-paragraphs on a little examination are found to be equally vague and equally inadequate to provide any scope for judicial scrutiny. 86. In sub-paragraph (f) of paragraph 6 Kaul speaks of certain breaches of licences and the provisions of the FER Act and the Rules, Regulations, Directions and Notifications thereunder. There is no mention of the sections of the FER Act of the specific Rules or Regulations or Notifications which are alleged to have been violated. Again, not one specific instance of the alleged breaches has been referred to. If the respondents had information in their hands that certain transactions have been carried out in breach of certain import licences, it is difficult to imagine why the respondents are not in a position to give one specific case of such a breach. If we had been shown even one import licence and the manner in which that import licence has been violated that would have lent plausibility to the story of the respondents and we would have then been more inclined to accept the respondents' statement that there are more of such instances of breach of the licences. 87. In this sub-paragraph there are references to imports from free currency areas and also a mention of "unauthorized purchase of free currencies" as well as "unauthorized payment to name lenders in foreign countries through whom the transactions are put through". These references do not give any concrete shape to any allegation or allegations that Kaul may have in his mind. All the same the appellants have made certain statements regarding their imports from free currency areas in an attempt to meet what they think, are the allegations that Kaul has in mind. The reply is to be found in sub-paragraphs (e), (f) and (g) of paragraph 9 of the affidavit filed on behalf of the appellants by Sunder Lal Bhatter. All the same the appellants have made certain statements regarding their imports from free currency areas in an attempt to meet what they think, are the allegations that Kaul has in mind. The reply is to be found in sub-paragraphs (e), (f) and (g) of paragraph 9 of the affidavit filed on behalf of the appellants by Sunder Lal Bhatter. The reply in substance is as follows :––The company has in the normal course got to apply to the appropriate authorities for licence to import materials and equipment required by it. Government by reason of their exchange policy as well as of the shortage of foreign exchange is compelled to grant permission to the appellants who in common with other manufactures import a portion of the required materials and equipment from rupee currency arrears which are mainly Eastern European Countries. "The importer has no choice in the matter". The except from Eastern European Countries. "The importer has no choice in the matter". The export from Eastern European Countries is usually handled by either the Government or Government agencies of such countries over whom the appellant company does not and cannot possibly have any control. The orders are placed by the company with the countries for which the rupee import licences are granted by Government. The company establishes letters of credit in its favour and then receive bills of lading, invoices and certificates of origin from those countries. The shipments are made by the exporting countries after observing all necessary formalities and after the arrival of the goods the customs authorities made a through check and allow the goods to be cleared only when they are satisfied that the provisions of the relative licences have been complied with. It is on these specific grounds that the appellants deny that they have made any of their imports in breach of the licences or the provisions of the FER Act of or of the Rules, Regulations or Notifications. The appellants also deny that there has been any 'unauthorized purchase of free currencies" of any debasement of the Indian rupee on the exchange market. It has been further mentioned in Bhatter's affidavit that even in cases where some of the "rupee countries" in their turn buy goods from foreign countries 2nd then ship the goods to India, the company has not or cannot have any control over the same. It has been further mentioned in Bhatter's affidavit that even in cases where some of the "rupee countries" in their turn buy goods from foreign countries 2nd then ship the goods to India, the company has not or cannot have any control over the same. It is also pointed out that "Government of India have from time to time granted import licences to many concerns including the petitioners and Government undertakings for an importation of diverse materials from rupee countries although the Government fully knew that such materials were never manufactured in the said rupee countries and that the same would be exported by the rupee countries only against their purchase from free currency countries." The appellants contended that "the policy of the Government in doing so was to enable the Government in increase rupee trade so that no foreign exchange may be involved". In my opinion, a bald statement that Kaul had information in his hands that the company was making purchase from free currency areas on the strength of rupee licences and the by doing so the company was committing offences under the FER Act or debasing foreign exchange does not help us in any way to ascertain whether the conditions precedent mentioned in section 19 D(1) of the FER Act had been satisfied. 88. We now turn to Kaul's allegation in sub-paragraph (g) of paragraph 6 of his affidavit. Of all the allegations made by Kaul this one appears to be slightly specific it refers at least to the nature of offence and disclose the name of a particular English Company as an accomplice or the appellant company in the commission of the alleged defence. A little analysis will, however, show how, for lack of further particulars, this is just as vague and indefinite as all the other allegations of Kaul. Let us recall what is the substance of this allegation, it is stated that the East India Produce Company Ltd. which acts as the buying agents for the Birlas charges in the invoice a price higher than the actual cost for which the goods could be imported directly from the foreign manufacturers. Kaul adds that the appellant-company had been accumulating foreign exchange abroad through the said English Company. Kaul adds that the appellant-company had been accumulating foreign exchange abroad through the said English Company. It is further stated that Brij Mohan Birla is the Chairman of both the appellant company as well as the East India Produce Company Ltd. Kaul says that he was ready and willing to disclose to the Court and produce records in support of his allegation that the appellant-company was accumulating foreign exchange through the English Company. He is not however, prepared to disclose the same to the petitioners at this stage on the ground that this will prejudice and hamper the investigation. The appellants answer to this allegation is as follows :–– (a) there is no secrecy about B.M. Birla being the Chairman of the appellant company and a shareholder of East India Produce Company Ltd. Likewise, there is no secrecy at all about the said English Company acting as a buying agent of the appellant-company in United Kingdom and the Continent. It is denied, however, that the invoice prices of the East India Produce Company Ltd. charged to the petitioner-company were more than the actual cost for which goods could be imported. 89. After having carefully considered the allegation made in sub-paragraph (g) I am afraid that even this allegation does not help the Court to scrutinize the claim of Kaul that he had the requisite reason to believe. The only additional specific information that has been given in this paragraph is the name as the company through which the alleged invoicing is done. As I have already said before, since accumulation is done through a large number of transactions it is impossible for us to visualize how the investigations can be hampered if the date of one single transaction are produced before us for our scrutiny. It is significant that in this case also the allegation does not disclose an offence. The East India Produce Company Ltd. was appointed as a purchasing agent by the petitioner-company with the express permission of the Reserve Rank of India. The Reserve Bank of India also knew that the purchasing agent would be entitled to a commission and the amount of commission was also fixed with the approval of the Reserve Bank of India. The East India Produce Company Ltd. was appointed as a purchasing agent by the petitioner-company with the express permission of the Reserve Rank of India. The Reserve Bank of India also knew that the purchasing agent would be entitled to a commission and the amount of commission was also fixed with the approval of the Reserve Bank of India. Therefore, if the purchasing agent charges the appellant-company a higher price on the invoice that the price for which the goods could be imported directly by manufacturer or producer it cannot be said that this by itself would amount to an offence under the FER Act. A buying agent always makes a profit. Nobody can expect a buying agent to purchase things at a price and then sell the something to its principal at the same price. It is just commonsense that a buying agent must retain his commission. To say, therefore, that a buying agent by retaining an amount which is in excess of the cost price of the materials outside India commits an offence under the FER Act is to reduce the whole Act to absurdity. One can understand that the Reserve Bank or the Government would in certain circumstances insist that the buying agent should not be allowed to retain any commission in excess of a proportion indicated by the Reserve Bank or Government. But in the instant case, as we shall presently see, the very company which is named by Kaul appears to have been appointed the buying agent of the appellant-company with the permission of the Government of India and to the knowledge of the Reserve Bank of India. We shall also presently see that the buying agents have been permitted to retain a margin over the cost price incurred by them in the Continent or in the U. K. as their commission. In my opinion, the appellants are correct in contending, as they do in paragraph 9 of the affidavit of Bhatter, that if the allegations of the deponent were correct the appointment of its buying agent and payment of any commission to them would ipso facto amount to a violation of a foreign exchange clause. In my opinion, the appellants are correct in contending, as they do in paragraph 9 of the affidavit of Bhatter, that if the allegations of the deponent were correct the appointment of its buying agent and payment of any commission to them would ipso facto amount to a violation of a foreign exchange clause. If goods are not imported directly from the foreign suppliers and/or manufacturers but through agents who charged a commission on the purchased price, the prices charged to the company in India must be higher then what would have been charged in the event of direct purchases. There is nothing on the records to show that the respondents had any evidence or information as to any excess amount charged by the purchasing agents apart from the commission to which they were legally entitled. As the respondents have withheld from us any information as to the amounts which are alleged to have been actually surcharged by the buying agents and since the appellants have themselves in their turn given us solid evidence to show that both the Government and the Reserve Bank of India had sanctioned payment of some commission to this buying agent it creates a very strong and almost an irresistible suspicion in our mind that Kaul has nothing better to show us in support of his authorization order than the extra amounts charged by East India Produce Company Ltd. as commission. As I have said before if, it had been otherwise Kaul could have easily shown us evidence of at least one instance of accumulation of foreign exchange by over-charging of price on the invoice. I repeat that we find it impossible to believe; that the production of one document or one price of evidence would have hampered the respondent's investigation particularly when they have all the documents already in their possession. 90. Considered in the context of the permission given to the appellants to appoint buying agents with the knowledge of the Reserve Bank of India this allegation cannot possibly be any ground for the formation of a reasonable belief that the appellants were violating the FER Act. 90. Considered in the context of the permission given to the appellants to appoint buying agents with the knowledge of the Reserve Bank of India this allegation cannot possibly be any ground for the formation of a reasonable belief that the appellants were violating the FER Act. In fact, it is difficult to resist the impression after reading Kaul's affidavit and the other affidavits that are on record that most probably the enforcement Directorate were misinformed and were misled by an information that had reached them to the effect that the purchasing agents of the appellant company were retaining some money as commission outside India and that on this false clue alone the entire Enforcement Directorate were galvanized into a spate of activities that resulted in the stupendous search operation that have given rise to the present proceedings. This, of course, is more of less in the nature of all speculation, but when we have been given no concrete materials by the Enforcement Directorate and the only concrete facts or materials which they have given refer only to the retention by the EIP Company of some excess over the cost price of goods, the suspicion becomes not only strong out almost irresistible, but suspicion apart the fact, remains that this allegation standing by itself is not by any means concrete or objective enough to help us in scrutinizing the validity of Kaul's action in terms of section 19D of the FER Act. 91. We have so far left out only one sub-paragraph of paragraph 6 of Kaul's affidavit, namely, sub-paragraph (h). We did so for reasons which will come out presently as we deal with that subparagraph. In sub-paragraph (h) Kaul does not add any fresh allegation : he merely states that he has indicated some instance of the suspected "offences" in the preceding sub-paragraphs. It is clear that Kaul has nothing better to show in support of his claim that he had the requisite 'reason to believe' prior to or at the time of issuing the authorization than what he has indicated in sub-paragraphs (a) to (g) of paragraph 6 of his affidavit. It is clear that Kaul has nothing better to show in support of his claim that he had the requisite 'reason to believe' prior to or at the time of issuing the authorization than what he has indicated in sub-paragraphs (a) to (g) of paragraph 6 of his affidavit. As I have already shown, though he mentions two types of transactions they are not instances of offences and, in any case, even if a very charitable and liberal interpretation is given to his statements, one fails to find such particulars in those allegations as would enable the Court to scrutinize the circumstances which, according to Kaul, led to the formation of his belief. Kaul, however, claims in sub-paragraph (h) that the belief which he held has been amply borne out from the documents seized. He claims to have discovered "very important and relevant evidence of the suspected offences" and he assures that full magnitude of the offences will emerge after the completion of his scrutiny. I have already dealt with the controversy about the extent to which the materials discovered after the issue of authorization can be used in support of the claim of the competent authority that he had the requisite 'reason to believe'. Such materials, I have said, may be available only as corroboration. From a strictly legal point of view, materials which have been described by both parties as "post-authorization materials', i.e., those which came into the hands of Kaul after he had already issued the authorization cannot support the authorization which preceded the discovery of the materials. But when at time of judicial scrutiny the issue of the authorization has already been justified by the disclosure of materials which the competent authority had in his hands before issuing the authorization, he can strengthen his case by setting out other materials which he discovered later on as corroborative affirmation of the correctness of his belief. If, however, independently of all the materials that are discovered subsequently, the competent authority cannot justify the issue of his authorization, the use of post-authorization materials to achieve the same object is not permissible. If, however, independently of all the materials that are discovered subsequently, the competent authority cannot justify the issue of his authorization, the use of post-authorization materials to achieve the same object is not permissible. In my opinion, therefore, since Kaul has not furnished any materials upon the scrutiny of which we can come to the conclusion that he had the necessary 'reason to believe', it is not open to him to rely on the materials which were discovered as a result of the search. Besides, Kaul's attitude with regard to the disclosure of even those materials which he has discovered as a result of the search, makes, in my opinion, the case of the respondents far worse than it would have been otherwise. I have come to this conclusion for two reasons, First, it is not questioned by the respondents that a very large number of documents has been seized by them in course of the search that they have carried out at different places. According to the appellants the number of documents seized is four lakhs. As we have not seen the documents it is not possible for us to say whether this number refers to each individual file or to the letters and papers contained in the different files. But a search list has been annexed to the petition which leaves us in no manner of doubt that the number of documents now in the possession of the respondents is, to say the least, colossal. Kaul says that he has already found in these documents very important and relevant evidence of the suspected offences. Why does he not select one, if not a few, of these documents and produce it in support of his case. It passes my comprehension as to how the disclosure of one such document will hamper the entire investigation. There is yet another reason, why I find this part of Kaul's case to be thoroughly unsatisfactory. Kaul has relied on certain allegations made in the affidavits of some of his officers who conducted the search operation; these are unquestionably "post-authorization materials". There cannot be slightest justification for not disclosing at least these particulars for the scrutiny of the Court. Here are the reasons why I say so :–– 92. Kaul has relied on certain allegations made in the affidavits of some of his officers who conducted the search operation; these are unquestionably "post-authorization materials". There cannot be slightest justification for not disclosing at least these particulars for the scrutiny of the Court. Here are the reasons why I say so :–– 92. In sub-paragraph (c) of paragraph 50, Kaul says on the basis of certain allegations to be found in the affidavit of Omkar and D.K. Guha that a number of documents showing an over-loading of prices for goods imported from abroad had been thrown away, and found in a 'crumpled-up' condition in an open space in the factory-premises of the appellants. In the affidavit of Guha and Omkar some further particulars about these documents are available. Guha for instance, says in sub-paragraph (d) of paragraph 9 of his affidavit that the documents thus seized in a "crumpled-up" condition on 11th October, 1969 contain evidence of serious over-invoicing of goods imported by the company on the basis of invoices, prepared by American East India Corporation in New York, a company under the management of the Birlas. The documents, we are told, show that one E. Connelly who "masquerades" as the President of the East India Corporation is nothing better than an employee of the Birlas serving them for more than 25 years and that the said American East India Corporation is no better than a branch office of the Birlas in New York. Speaking of the same documents, Omkar in sub-paragraph (b) of paragraph 5 of his affidavit says that the documents show that the American East India Corporation, New York which is a subsidiary of the East India Produce Company, London whose shares are held by members of the Birla family as well as a few companies controled by the Birlas, charged 4% to 5% above the price paid by the American Company to the actual suppliers of goods imported by the appellant company from U.S.A. These documents an: also alleged to show that some of the Indian agents of such suppliers from the United States were persuading the American East India Corporation to split up the extra price between themselves. With regard to these allegations also the respondents were not prepared to disclose the documents which they say they found in a "crumpled-up" condition on 11th October, 1969. With regard to these allegations also the respondents were not prepared to disclose the documents which they say they found in a "crumpled-up" condition on 11th October, 1969. This is an attitude which we find it difficult to appreciate. Even if we concede that the respondents are justified is not disclosing their hand to the petitioners by producing either the documents on which Kaul relied at the time of issuing the, authorisations or, even, the documents which they have seized in course of the searches and which they think, will be relevant and useful in the contemplated proceeding bow can a refusal to disclose be justified in respect of these few documents seized on 11th October, 1969? The respondents by saying that the documents had been thrown away and found in a "crumpled-up" condition in an open space in the appellant company's factory premises are obviously trying to suggest that the appellants were special efforts to secrete these documents. That obviously implies that the petitioners knew that these particular documents would be of an incriminating nature and should not be allowed to fall into the hands of the respondents. Obviously, therefore the appellants knew fully well the contents of these documents. In that view of the matter, what could be the point of not producing these particular documents in an attempt to substantiate the statements of Kaul? We asked Mr. Roy Chaudhury again and again how could the disclosure of these documents possibly affect or prejudice the investigation of the respondents. Apart from a repetition of the assertion that this would hamper the investigation of the respondents, we heard no argument or reason from Mr. Roy Chowdhury in support of this contention. There are certain other documents which also the appellants are supposed to have made a deliberate attempt to secrete. Omkar tells us in his affidavit that certain books of accounts and documents pertaining to foreign exchange were found concealed in and behind the drawers of A.C. Bhargava, the Assistant Additional Manager of the factory who has his office on the second floor of the administrative building. We are told that in the usual course of things these books of things these books of accounts and documents should have been kept in the Accounts Department located in the first floor of the said building. We are told that in the usual course of things these books of things these books of accounts and documents should have been kept in the Accounts Department located in the first floor of the said building. To this the appellants have, of course, replied that the discovery of certain documents in Bhargava's drawer does not show concealment, for Bhargava in the usual course of administration would handle these documents and there is nothing surprising in the fact that certain books of accounts and documents were found in his drawer. The appellants further point out that the entries in the search memo do dot mention that the documents and books were recovered from behind the drawers of Bhargava. This is a feature which appears only in a subsequent letter. I do not, however, consider it important to take note of what the appellants say regarding these documents in denial of the allegations of Omkar. I shall assume that the insinuation made by Omkar is correct and that Bhargava or some officers of the appellants had made a deliberate attempt to conceal these particular documents. But this assumption postulates an awareness on the part of the appellants of the contents of the documents and also of their criminal nature. Since the appellants are already aware of the nature of these documents why cannot the respondents produce at least some of these documents for the inspection of the Court so that we could satisfy ourselves that the respondents' complaints, allegations and suspicious are not completely airy and unsubstantial? Guha in his affidavit went to the length of alleging that these particular books of accounts and documents show that duplicate sets of statements and accounts had been maintained in respect of the transactions with, some of the foreign companies and that there are indications to the effect that all receipts into and payments from the company's accounts held abroad have not been incorporated in the books of accounts maintained in India by the appellant company (vide paragraph 9(a) of D.K. Guha's affidavit). This is certainly a very clear and concrete allegation and if the Court had been shown even some specimen of the duplicate sets of accounts that would have gone a long way to persuade us to accept the respondents allegation and insinuations. This is certainly a very clear and concrete allegation and if the Court had been shown even some specimen of the duplicate sets of accounts that would have gone a long way to persuade us to accept the respondents allegation and insinuations. It is absurd, to suggest that showing of a few specimens of duplicate accounts would have prejudiced the investigation particularly in a case where, according to the respondents' own showing the appellants were fully aware of the contents of the documents. The stubborn refusal of the respondents to disclose even a single specimen of these documents for the scrutiny of the Court is thoroughly, inexplicable except on the hypothesis that the disclosure of these documents will not bear out the contention of the respondents. It is needless to say that the appellants have vehemently denied these allegations of maintaining duplicate or incomplete accounts. 93. Kaul also says in one place that he had been informed by Omkar that torn papers, letters, invoices and statements connected with supplies from overseas countries were discovered from the 'back side of the office premises' and also from the drain on the northern side of the Ramsita Temple which is about 2000 yards away from the main office' building of the company at Uttarpara. Kaul has expressed surprise that certain important papers regarding the Auto-Agency of Bombay have been discovered during the search from the open space behind the administrative building. Kaul states that these particular papers would support serious allegations with regard to deliberate over invoicing of import made by the appellant company Kaul says, further, on the basis of an information given to him by the respondent Bholanath Pal that in course of the search at the residence of Jhunjhunwalla, Bholanath found that a number of documents were being burnt and that Bholanath went and seized the fragments of burnt documents. Kaul states that he has seen some of the burnt fragments and that he has reason to believe that they are important account papers. The criticism that I have already, made that, there could have been no possible danger in disclosing such documents regarding the relevances of which the appellant are, on Kaul's own showing, keenly aware, applies equally with regard to the alleged account papers sought to be destroyed by burning at the residence' of Jhunjhunwalla as well as the documents retrieved from the drain near the Ramsita Temple. 94. At the risk of repetition I summarise five specific allegations made by kual on the basis of "past authorisation material" which were reported to him by the officers who conducted the search and seizure of documents. These allegations are as follows. 1. Certain papers which are crumpled-up into balls were seized on 11th October, 1969 by Omkar Nath. These papers show overinvoicing of goods by American East India Corporation of New York by the charging of 4% to 5% above the actual cost price of materials purchased by them from American on behalf of the appellant company. 2. Documents relating to foreign exchange were found concealed in the drawers of A.C. Bhargava. These documents show the maintenance of duplicate sets of accounts. 3. Certain torn papers, letters, invoices and statements connected with overseas supplies brought through Khem Chand Raj Kumar were found on the northern side of the Ramsita Temple situate in the factory premises of the appellant company. 4. Certain papers regarding Auto-Agency of Bombay were discovered in the open space behind the administrative building. 5. Certain documents were found in the process of being burnt at the residence of Rajendra Prasad Jhunjhunwala by B.N. Paul at the time of search. 95. I have already commented that these allegations suffer from the serious defect that they all refer to materials discovered during the search, that is to say, after the authorisation had been issued. Strictly speaking, therefore, these allegations cannot be invoked to substantiate Kaul's claim that he had requisite ‘reason to believe' before issuing the authorisations under section 19D of the FER Act. I have also already made my comments on the complete lack of justification on the part respondents in not producing' some concrete evidence for our scrutiny and satisfaction at least with reference to these specific allegations. I repeat, the respondents did not have the slightest justification for withholding these papers, which, they insinuate, were being deliberately secreted by the appellants during the search so that even on the respondents' own showing the appellants had full knowledge of their contents. It remains for me to point out that apart from Item (2), none or these allegations set out above make out any offence against the FER Act. It remains for me to point out that apart from Item (2), none or these allegations set out above make out any offence against the FER Act. Item (1) refers to the American Company charging 4% to 6% above the cost at which goods were procured in America very probably relates to the commission charged by this company. The appellants have given us full date to show that the American East India Corporation had been appointed by the company as their buying agents in the U.S.A. and other countries. The appellant company had authorised this American Company by a Special resolution to charge commission at 5% of the CIF invoice price for purchase of stores and 2½ % of CIF invoice price for purchase of plant and machinery. We have been shown a copy of the special resolution in the Annual Report of the appellant company (Ext. Y). The special resolution is in the following terms :- “(i) Whereas the American East India Corporation, an associate of Messrs Birla Brothers Private Limited, the Managing Agents of the company, maintain an office in New York in the United States of America and other countries outside India for purchase and sale of goods including stores, plant and machinery etc. and also have dealings and business connections with parties all over the United States of America and other countries outside India and their operations are on a very large scale and whereas their expenses of maintaining their office amount approximately to £ 2,50,000 per annum and whereas expenses which can be attributed to the work to be done, for and on behalf of the company, would depend on the value of purchase effected through the said company in relation to their total turnover in each year, and whereas the said American East India Corporation have been acting as buying agents for and on behalf of the company in the United States of America and other countries outside India. Now it is hereby resolved that American East India 'Corporation, continue to act as buying agents of the company for purchase of stores, plant and machinery, etc., in the United States of America and other countries outside India for a period of three years with effect from 1st September, 1967 and that they be paid commission as follows : (a) For purchase of stores, etc. 5% of the CIF invoice price. 5% of the CIF invoice price. (b) For purchase of plant and machinery 2½%the CIF Invoice price. Provided that if anything to be done in pursuance of the above arrangement requires the permission of the Central Government or 'the Reserve Bank of India as the case may he the same will be done in accordance with such permission". 96. There is also an explanatory statement with regard to this Special Resolution in the following terms:-- "Item 7(i). The American East India Corporation who are associates of Messrs Birla Brothers Private Limited, the Managing Agents of the Company, were appointed buying agents of the company, inter alia, to make purchase of plant, machinery and stores, etc., in the United States of America and other countries outside India for and on behalf of the company, vide Special Resolution dated 6th September, 1965, for a period of 3 years from 1st September, 1965, on the terms and conditions stated in the said resolution. The Company Law Board however, modified the terms and approved the appointment for 2 years only. Accordingly, their appointment will expire on Ist September, 1967. Your Directors consider it desirable for the company to continue their appointment as buying agents on the terms as stated in the resolution. This resolution seeks your approval to the renewal of their appointment". 97. The Special Resolution and the Note leave us in no doubt whatsoever that the American East India Corporation has been acting as the buying agents of the appellant-company since 1st September, 1965 with the knowledge of the Government and the Reserve Bank of India. The appointment of the buying agent in American (as well as in England) is reflected in the Balance Sheet of the appellant company. In the fact of these materials, we are not prepared to say in the absence of further specific facts that a mere allegation that the American East India Corporation charges 4 % to 5 % over the cost price of the goods supplied by them would supply good reason to believe that it is guilty of over-Invoicing. 98. Item Nos. 3, 4 and 5 of the allegations do not also by themselves amount to officers. They only suggest a suspicious way dealing with documents. Item No. (2) speaks of duplicate sets of accounts which may be plausible evidence in proof of some illegal transactions done on behalf of the appellant company. 98. Item Nos. 3, 4 and 5 of the allegations do not also by themselves amount to officers. They only suggest a suspicious way dealing with documents. Item No. (2) speaks of duplicate sets of accounts which may be plausible evidence in proof of some illegal transactions done on behalf of the appellant company. But since we have not been shown one single document or one single sheet of paper in regard to this allegation we are not prepared to accept the contention of the respondents regarding this item. I would like to make another observation the respondents have described various offences in abstract terms which if they have really been committed by the appellant company would be shocking. But though a mere description of offences with references to the language of the statute or by describing the modus operandi of such offences may create indignation in our minds, un Jess they are found to have the minimum objective basis we should not allow our imagination to run away-and to' consider mere allegations as solid proof of the offences, described. It is significant that when the defendants have described the offences in broad, general and abstract terms they have hint at specific offences. But as soon as they have passed from abstractions and generalities to specific particulars, their allegations become singularly inoffensive and do not even amount to offences under the FER Act. 99. In this view of the matter, in my opinion, the respondents have failed completely to satisfy us that before Kaul issued the authorisations or warrants for search and seizure under section 19D of the FER Act he had any reason to believe that documents which would be relevant to or useful in connection with contemplated proceedings against the appellant company under the FER Act and secreted or likely to be secreted in the premises which were ordered to be searched. 100. Before I part with this aspect of the case I should refer to one particular allegation which appears from Omkar Nath's affidavit. He says that on the basis of certain documents seized from the factory premises of the appellant company he arrested William David Jones who is the appellant No.4 in these proceedings under section 19B of the Foreign Exchange Regulation Act. He says that on the basis of certain documents seized from the factory premises of the appellant company he arrested William David Jones who is the appellant No.4 in these proceedings under section 19B of the Foreign Exchange Regulation Act. It is alleged that Jones was involved in an alleged unauthorised payment of foreign exchange to a non-resident company amounting to £29,439.11-0 and that Jones had entered into an illegal agreement calculated to evade the provisions of section 21 of the FER Act. This allegation has been dealt with by Bhatter in his affidavit in paragraphs 86 and 87. Bhatter after denying that there has been any breach of any provision of the FER Act has come out with certain facts to meet the rather vague suggestion made in Omkar Nath's allegation. He says that the allegation regarding £29,439.11-0 refers to two debits made by Messrs British Motor Corporation Limited. According to him, in about 1963 and 1964 the appellant company placed orders with the British Motor Corporation for supply of certain types of motor parts for cars manufactured by the appellant company in collaboration with the said English company. The collaboration we are told, had been approved by the Government of India. The English Company was advised to manufacture the parts in question and to ship them within a stipulated period against valid import licences, The English company, however, did not supply the full ordered quantities within the stipulated period and the appellants made arrangements to manufacture them indigenously. A dispute arose between the appellant company and the English company who were claiming the value of the parts which they had manufactured specially for the appellant company and which had become absolute for their purpose. We are told that W.D. Jones persuaded the English company not to press their claims for items which would be used or sold by them and at the same time denied the liability of the appellant company. The English company, however made out two invoices on 31 January, 1968 amounting to £23, 492.8-5 and £5,947-2-7 and "arbitrarily and unilaterally" debited the account of the appellant company which account was being maintained with the prior permission of the Reserve Bank of India. While making these debits the English company stated on the face of the invoices that they are waiting for the shipping instructions. While making these debits the English company stated on the face of the invoices that they are waiting for the shipping instructions. This fact, Bhatter claims, clearly indicated that there was no intention on the part of either the said English company or of the appellants to do anything unauthorised, for shipping instructions would or could be only given with reference to valid import licences. We have been told that the appellant company was not fully aware of these debits and had asked the English company to send them copies of the relevant invoices so that they could know what these debits represented, The appellant company claims to have received copies of the debits only in September, 1969. The appellants deny that they had agreed to the unauthorised payment of £29,439-11.0. Bhatter has denied also the other allegations. I have set out in detail the facts related by Bhatter in connection with this allegation made out by Omkar Nath not for the purpose of making any comment on the merits of the case. In fact, this being the subject of a criminal proceeding which is still sub-judice it would be, I think, improper on my part to make any comment on the merits. I have referred to these facts only to show that Bhatter has made an attempt to give full and detailed explanation with reference to specific facts and particulars in regard to the vague suggestion made by Omkar Nath in his affidavit. In any case, whatever may be the merits of this allegation of Omkar Nath it is nobody's case that these materials were a part of the materials before Kaul when he issued the authorisations. 101. We now come to sub-section (2) of section 19D of the FER Act. In that sub-section the provisions of the Code of Criminal Procedure 1898 (hereinafter referred to as the Code) in so far as they relate to searches have been made applicable to the searches under sub-section (1) of section 19D. There are two qualifying clauses. First, those provisions are to be applied 'so far as may be'. Secondly, the application is subject to one modification that sub-section (5) of section 165 of the Code shall have effect as if for the word "Magistrate', wherever it occurs the words 'Director of Enforcement' or ‘other officers exercising his powers' were substituted. There are two qualifying clauses. First, those provisions are to be applied 'so far as may be'. Secondly, the application is subject to one modification that sub-section (5) of section 165 of the Code shall have effect as if for the word "Magistrate', wherever it occurs the words 'Director of Enforcement' or ‘other officers exercising his powers' were substituted. Various questions have been raised over the exact effect of the two qualifications. To understand the rival contentions it is necessary to set out the provisions of section 165 of the Code. They are as follows:- Section 165(1). Whenever an officer in charge of a police station or a Police Officer making an investigation has reasonable grounds for believing that anything necessary for the purposes of an investigation into any offence which he is authorised to investigate may be found in any place within the limits of the police station of which he is in charge, or to which he is attached, and that such thing cannot in his opinion be otherwise obtained without undue delay, such officer may, after recording in writing the grounds of his belief and specifying in such writing, so far as possible, the thing for which search is to be made search, or cause search to be made, for such thing in any place within the limits of such station. (2) A Police Officer proceeding under sub-section (1) shall, if practicable, conduct the search in person. (3) If he is unable to conduct the search in person, and there is no other person competent to make the search present at the time, he may after recording in writing his reasons for so doing require any officer subordinate to him to make the search, and he shall deliver to such subordinate officer an order in writing specifying the place to be searched and, so far as possible, the thing for which search is to be made; and such subordinate officer may thereupon search thing in such place. (4) The provisions of the Code as to search-warrants and the general provisions as to searches contained in section 102 and section 103 shall so far as may be, apply to a search made under this section. (4) The provisions of the Code as to search-warrants and the general provisions as to searches contained in section 102 and section 103 shall so far as may be, apply to a search made under this section. (5) Copies of any record made under sub-section (1) or subsection (3) shall forthwith be sent to the nearest Magistrate empowered to take cognizance of the offence and the owner or occupier of the place searched shall on application be furnished with a copy of the same by the Magistrate. Provided that he shall pay for the same unless the Magistrate for some special reason thinks fit to furnish it free of cost. 102. Under section 165, four conditions are imposed: (i) the Police Officer must have reasonable ground for believing that something necessary for the purposes of an investigation of an offence cannot be obtained otherwise than by making a search. without undue delay; (ii) he should record in writing the grounds of his belief and specify in such writing as far as possible the things for which the search is to be made; (iii) he must conduct the search, if practicable in person; and; (iv) if it is not parcticable to make the search himself, he must record in writing the reasons for not making the search personally and shall thereafter authorise a subordinate officer to make the search after specifying in writing the place to be searched, and, so far as possible, the thing for which search is to be made. 103. One of the stiffest legal battles was fought by the contesting parties in this appeal over the question as to whether the provisions of section 165 of the Code apply to searches envisaged under section 190 of the FER Act and, if so to what extent. In particular, it has been debated vehemently whether sub-section 165 is at all applicable. Likewise, questions have arisen whether sub-sections (1) and (3) arc applicable. There is, besides, the broad question as to what is the effect of the phrase 'so far as may be'. Finally, there is the more important question as to what is the direct of violation or non. fulfilment of the various conditions which are brought into play by this sub-section. 104. There is, besides, the broad question as to what is the effect of the phrase 'so far as may be'. Finally, there is the more important question as to what is the direct of violation or non. fulfilment of the various conditions which are brought into play by this sub-section. 104. According to the appellants the provisions of the Code of Criminal Procedure regarding search and seizure are essential safeguards against excessive inroads upon thecitizens' fundamental rights and are, therefore, vital provisions the absence of which would make sub-section (1) of section 19D illegal and ultra vires the Constitution. Mr. Mitter argued that though the power to authorise search and seizure is to be found in sub-section (1) of section 19D of the FER Act. Section 19D itself does not contain any procedural safeguards. But by reason of the provisions of sub-section (2), section 19D makes the provisions of the Code relating to search and seizure applicable to search and seizure under this section and thereby engrafts the procedural safeguards in an indirect manner. Thus, though subsection (1) does not in express terms require the recording of reasons, sub-section (2) of section 19D makes it an obligation by introducing the safeguard contained in sub-section (5) of section 165 of the Code which in trun imports provisions of sub-sections (1) and (3) of section 165 of the Code. Without these safeguards introduced by sub-section (2), the provisions of sub-section (1) of section 19D would according to Mr. Mitter, became vulnerable as unreasonable restrictions and, hence, ultra vires the Constitution of India. It was further contended by Mr. Mitter that the respondents had not observed any of the formalities laid down in sub-sections (1), (3) and (5) of section 165 of the Code and the searches and seizures that they carried out are, therefore, illegal, arguing upon this basis. Mr. Mitter further contended that since the searches and seizures were illegal, it is incumbent on the respondents to restore everything that was seized in course of such illegal searches to the appellants. Further he argued the documents and materials which the respondents have procured by these illegal searches would not be available to them for use against the appellants in any Proceedings. 105. Mr. Further he argued the documents and materials which the respondents have procured by these illegal searches would not be available to them for use against the appellants in any Proceedings. 105. Mr. Roy Chowdhury on the other hand argued that these provisions arc not applicable in the case of search and seizure under the FER Act, that even if they are so applicable, the safeguards are procedural and whatever may be the effect of their violation, it will not prevent the authorities who seized the goods from making use of the seized documents. Mr. Roy Chowdhury further argued that there has been, in fact, no violation of the provisions. 106. The main difficulty, of course, arises because of the manner in which the Legislature in framing section 19D of the FER Act has incorporated the provisions of an earlier Act by a general reference to the nature of the provisions of that Act. If the framers of the Act had bodily inserted the provisions of the Code which they wanted to apply to searches under this Act or, if, at least, they had in unmistakable language specified the sections which would be applicable and the extent to which they would be so applicable we would have been spared the agency of considerable doubt and uncertainty which, I confess, I have gone through in deciding these questions. I am reminded, in this connection, of the celebrated judgment of Mathew, J. in (48) Knill v. Towse, LR 24 QBD 186, where the learned Judge speaking of this kind of legislation observed as follows :- "The difficulty has arisen not from anything inherent in the subject itself, which is simple enough, and might be quite simply treated, but from the mode of legislation new usual in these matters. Sometime, whole Acts of Parliament, sometimes grounds of clauses of Act of Parliament, entirely or partially sometimes portions of clauses are incorporated into later Acts, so that the interpreter has to keep under his eye, or, if he can, bear in his mind, large masses of by gone and not always consistent legislation in order to gather the meaning of recent legislation. There is very often the further provision that these earlier statutes are incorporated only so far as they are not inconsistent with the statute into which they are incorporated; so that you have first to ascertain the meaning of a statute by reference to other statutes, and then to ascertain whether the earlier Acts qualify only or absolutely contradict the later ones, a task sometimes of great difficulty, always of great labour a difficulty and labour generally speaking wholly unnecessary". 107. The second difficulty arises because there is no direct decision of the Supreme Court to guide us in this matter. For that matter, we have no decision of any other High Court on sub-section (2) of section 19D. There are, however, six judgments of the Supreme Court on analogous matters. Each party sought to seek support from these decisions in their own way. The way the decisions have been used by the contesting parties in support of their respective contentions have made the interpretation of this section a matter of considerable difficulty. I shall deal with the six Supreme Court decisions I have just referred to in a chronological sequence and as I deal with each decision I shall also indicate, in brief, the manner in which each party makes use of the decision or, at least, seeks to distinguish it. 108. The case of (49) State of Rajasthan v. Rehman, AIR 1960 SC 250 was a case under the Central Excises and Salt Tax Act, 1944. Upon receiving information that one Sulled and his son Rehman had cultivated tobacco but had not paid the excise duty payable thereon, the Deputy Superintendent of Central Excise at Bharatpur went to the house of Rehman on a particular day at 2 p.m. with a view to search his house to find out whether he had in fact stored tobacco there. Rehman and one Dhamman obstructed the making of the search with the result that the Deputy Superintendent fell down and received certain injuries. Rehman and Dhamman were prosecuted and Rehman was convicted under section 353 of the Indian Penal Code. On appeal the Additional Sessions Judge found that on the materials available before him, the search had not been conducted in accordance with the provisions of section 165 of the Code of Criminal Procedure and remanded the case for fresh enquiry. Rehman and Dhamman were prosecuted and Rehman was convicted under section 353 of the Indian Penal Code. On appeal the Additional Sessions Judge found that on the materials available before him, the search had not been conducted in accordance with the provisions of section 165 of the Code of Criminal Procedure and remanded the case for fresh enquiry. On remand, the Munsiff-Magistrate found that the search had been made by the Deputy Superintendent without recording the "reasons" as he should have done under section 165 of the Code. On this ground the Munsiff-Magistrate held that Rehman in obstructing him from making the illegal search did not commit any offence, Rehman was acquitted on the basis of this finding. On appeal the High Court confirmed the order of acquittal whereupon the State of Rajasthan took the matter up to the Supreme Court. Two contentions were urged before the Supreme Court on behalf of the State of Rajasthan. First, it was contended that the Central Excises and Salt Tax Act and the Rules frames thereunder and the Code of Criminal Procedure maintained a distinction between the power to make a search and the manner of making it. As the Deputy Superintendent of Central Excise in person had exercised his power to make a search only to gather information about the tobacco stored in Rehman's house for imposing excise duty and not to make any investigation for the purpose of prosecuting the respondent the mode of search prescribed under section 103 of the Code was to be followed and not the mode prescribed under section 165. Secondly, it was argued that even if section 165 of the Code applied, that section confers a power of jurisdiction on a Police Officer to make a search and also prescribes the procedure to be followed in making the search. The recording of the reasons relates to jurisdiction and, therefore, since the Excise Officer derives his power to make the search under Rule 201 of the Central Excise Rules he need not have followed the procedural part of section 165 of the Code. The Supreme Court rejected both these contentions. To appreciate the decision of the Supreme Court it is necessary to refer briefly to the provisions of the relevant Act and Rules of that case and also to the analysis of the sections and Rules made by the Supreme Court. The Supreme Court rejected both these contentions. To appreciate the decision of the Supreme Court it is necessary to refer briefly to the provisions of the relevant Act and Rules of that case and also to the analysis of the sections and Rules made by the Supreme Court. Under section 18 of the Central Excises and Salt Tax Act, all searches made in that Act or the Rules made thereunder shall be carried out in accordance with the provisions of the Code relating to searches under it. Section 37 empowers the Central Government to make Rules for carrying into effect the purpose of the Act and in particular to make Rules authorising and regulating the inspection or search of a place. The Central Government had framed certain Rules in exercise of the power conferred by section 37. Rule 201 authorises the Central Government to empower any officer of any department under its control to enter and search at any time by day or night any land, building, enclosed place, premises, vessel, conveyances or other places upon or in which he has reason to believe that excisable goods are processed, sorted, stored, manufactured of carried in contravention of the provisions of the Central Excise Act or the Rules. It is manifest "from the aforesaid provisions that an officer empowered by the Central Government can only make a search when he has reason to believe that excisable goods are processed, sorted, stored, manufactured or carried in contravention of the provisions of the Act or the Rules". The object of the search was therefore, to ascertain whether there is a contravention of the provisions of the Act or the Rules and since the contravention of the provision was an offence under the Act, Rule 201 "enables various officers to make a search only for the investigation of an offence". The Supreme Court thereafter makes an analysis of the provisions of sections 47, 48, 51 and 52 in Chapter V and sections 100, 101, 102 and 103 of Chapter VII. section 153 of Chapter XII and, lastly, all the sections in Chapter XIV of the Code. These four groups of sections regulate the searches authorised under the Code. The Supreme Court thereafter makes an analysis of the provisions of sections 47, 48, 51 and 52 in Chapter V and sections 100, 101, 102 and 103 of Chapter VII. section 153 of Chapter XII and, lastly, all the sections in Chapter XIV of the Code. These four groups of sections regulate the searches authorised under the Code. Speaking of the fourth group of sections from Chapter XIV of the Code, the Supreme Court says that the power of search given under this chapter is incidental to the conduct of investigation which the Police Officer is authorised to make. After an analysis of the conditions of search contained in section 165 of the Code the Supreme Court observes: "As search is a process exceedingly arbitrary in character, stringent statutory conditions are imposed on the exercise of the power". The Supreme Court then goes on to remark that a comparative study of the provisions of the Criminal Procedure Code and those of Rule 201 of the Central Excise Rules indicates that searches made by a Police Officer during the course of an investigation of a cognizable offence can properly be approximated with the searches to be made by the authorised officer under Rule 201 of the Rules. According to the Supreme Court "there is also no reason why conditions, should be imposed in a matter of the search by the Police Officer under section 165 of the Code. but no such safeguard need be provided in the case of a search by the Excise Officer under the Rules. We think that the Legislature, by stating in section 18 of the Act that the Act that the searches under the Act and the Rules shall be carried out in accordance with the provisions of the Code relating to searches, clearly indicate that the appropriate provisions of the Code shall govern searches authorised under the Act and Rules. We, therefore, hold that the provisions of section 165 of the Code must be followed in the matter of searches under section 201 of the Rules". 109. With regard to the second contention the Supreme Court held that the recording of reasons does not confer on the officer jurisdiction to make search, though it is a necessary condition for making a search. 109. With regard to the second contention the Supreme Court held that the recording of reasons does not confer on the officer jurisdiction to make search, though it is a necessary condition for making a search. The jurisdiction or the power to make a search is conferred by the statute and not derived from the recording of reasons, that apart, section 18 of the Act in express terms says that searches shall be carried out in accordance with the provisions of the Code of Criminal Procedure. Section 165 of the Code lays down various steps to be followed in making a search. The recording of reasons is an important step in the matter of search and to ignore it is to ignore the material part of the provisions governing searches. If that is ignored, it cannot be said that the search is carried out in accordance with the provisions of the Code of Criminal Procedure; it would then be a search made in contravention of the provisions of the Code. 110. It is obvious that Mr. Mitter would reply strongly on this decision. Mr. Mitter pointed out the similarity between section 18 of the Central Excises and Salt Tax Act, 1944 and section 19D of the FER Act in so far as both these sections conferred the jurisdiction or the power to make a search independently of the Code and in both the sections such power is not derived from "recording" of reasons. The recording of reasons is however, an essential condition of making the searches to ignore which is, in the language of Subba Rao, J., to ignore the material part of the provisions governing searches. Mr. Roy Chowdhury recognised that the observations of Supreme Court in Rehman's case go completely against his stand and sought to distinguish it by pointing out that (a) the search under section 18 of the Central Excises and Salt Tax Act, 1944 and the Rules thereunder was a search wholly subject to the Criminal Procedure Code and was not subject to any limiting condition imposed by the "so far as may be" rule and that (b) even inquiries under that Act are to be made in accordance with the provisions of the Criminal Procedure Code. 111. 111. In the case of (50) Nil Ratan v. Lakshmi Narayan, AIR 1965 SC 1 the Enforcement Officer had seized certain documents under search warrants issued by the Chief Presidency Magistrate, Calcutta. A question arose as to whether the documents could be retained by the Enforcement Directorate beyond the statutory period of four months when no proceedings had been commenced against the person from whom the documents had been seized under section 23 of the FER Act. The Supreme Court was called upon to consider in that connection the scope and effect of the provisions of sub-section (3) of section 19 and the applicability to search warrants under those provisions of the Code of Criminal Procedure which relate to searches. We may note here that section 19D of the FER Act took the place of section 19(3) after the amendment of the Act in 1964. Among other things, the Supreme Court held that the provisions of the Code dealing with the circumstances in which and the authorities by which, search warrants can be issued do net apply in view of the specific provision for the issue of a search 'warrant in sub-section (3) of section 19 of the FER Act. The Supreme Court further held that only such provisions of the Code as deal with what is to be done after the issue of a search warrant, i.e. the provisions relating to the mode of conducting searches will be made applicable to searches under the FER Act. These provisions according to the Supreme Court are to be found in sections 101, 102 and 103 of the Code. 112. Mr. Roy Chowdhury placed great reliance upon this decision the net effect of which according to him is that the provisions of the Code do not apply either for creating jurisdiction to issue a search warrant or for deciding what should be done after the operation of search has been completed. Closely following the Supreme Court decision in this case Mr. Roy Chowdhury made out the following propositions. (a) Section 5 of the Code provides that all offences under any law other that the Indian Penal Code shall be investigated, enquired into, tried and otherwise dealt with according to the provisions contained in the Code but subject to any enactment for the time being in force regulating the manner or place of such investigation, enquiry, trial or dealing with such offences. The FER Act is a special Act. Section 19A provides for the necessary investigation into suspected commission of an offences under the Act by the Director of Enforcement, the Code does not apply to such investigation. (b) A search warrant under section 172 of the Sea Customs Act has the same effect as a search warrant issued under the Code. But the same is not the case with respect to search issued under sub-section 3 of section 19. (c) Sub-section (3) of section 19 imports the provisions of the Code only to provide how the searches are to be conducted because it is only with respect to this stage, i.e. the stage of actual search that no specific provision has been made in the FER Act. These provisions are sections 101, 102 and 103 of the Code. Since sub-section (3) of section 19 has been replaced by section 19D it is only sections 101, 102 and 103 of the Code which are attracted by sub-section (2) of section 19D. 113. Mr. Mitter distinguished this case by saying that this was a case decided under sections 19 and 19A of the FER Act as it stood before the amendments of 1957 and 1964. Under these provisions it was only a Magistrate who could issue the search warrant. Therefore, the provisions of section 165 were automatically excluded from operation in respect of this case. That is why Mr. Mitter says, the Supreme Court does not mention section 165 when the Supreme Court enumerates the lists of the sections of the Code relating to search and seizure which are to apply to a search under sections 19 and 19A. Mr. Mitter points out that under sub-section (3) of section 19 of the old Act, power had been given to a judicial officer. District Magistrate or a Presidency Magistrate etc. to issue a search warrant. Even so, he was to act on a representation in writing by a person authorised by the Central Government. Hence, there were three checks on the arbitrary exercise of power. The Magistrate who was to authorise the issue of a search warrant had to do so if he had reasons to believe certain things. Four things have been enumerated in sub-section (3) which are to be identical with the provisions of section 96(1) of the Code. Hence, there were three checks on the arbitrary exercise of power. The Magistrate who was to authorise the issue of a search warrant had to do so if he had reasons to believe certain things. Four things have been enumerated in sub-section (3) which are to be identical with the provisions of section 96(1) of the Code. These safeguards in the old sub-section (3) of section 19 are essential and of paramount importance. Even after providing for these safeguards in sub-section (3), that sub-section went on to provide another safeguard, namely, that the provisions of the Code relating to searches under that Code 'shall so far as the same are applicable apply to searches under this sub-section', In section 19D the drastic power of authorising a search and seizure has been given to an executive officer. The safeguards contained in the old sub-section (3) of section 19 have disappeared; the four alternative situations which gave rise to a power of general search under the old sub-section (3) of section 19 have been deleted. It was, therefore, all the more necessary that the procedural safeguards of section 165 should be brought in by what may be described as referential legislation. The powers of general search in old sub-section (3) of section 19 of the FER Act have now been deliberate1y omitted in reenacting section 19D. 114. The case of (51) Durga Prasad v. Gomes, AIR 1966 SC 1214 was one concerning a search and seizure carried out by the officers of the Central Excise in exercise of the power derived from Rule 126 L(2) of the Defence of India (Amendment) Rules, 1963 known as the Gold Control Rules and Sections 105 and 110 of the Customs Act, 1961. One of the contentions before the Supreme Court was that the power of search under section 105 of the Customs Act cannot the exercised unless the authorsiation specifies the document for which search is to made. The Supreme Court rejected this contention and held that the object of grant of power under section 105 of the Customs Act is not a search of particular document but of documents or things which may be useful or necessary for proceedings either pending or contemplated under the Customs Act. The Supreme Court rejected this contention and held that the object of grant of power under section 105 of the Customs Act is not a search of particular document but of documents or things which may be useful or necessary for proceedings either pending or contemplated under the Customs Act. At this stage it is not possible for the officer to predict or even to know in advance what document could be found in the search and which of them may be useful or necessary for the proceedings. It is only after the search is made 2nd documents found therein are scrutinised that their relevance or utility can be determined, To require, therefore, a specification or description of the documents in advance is to misapprehend the purpose for which the power is granted for effecting a search under, section 105 of the Customs Act. We are, therefore, of the opinion that the power of search granted under section 105 of the Customs Act is a power of general search." 115, Mr. Roy Chowdhury contended that since section 105(2) of the Customs Act is practically an image of sub-section (D) or section 19 of the FER Act, the Supreme Court decision in Durga Prasad's case may be invoked in support of the contention that the power conferred by section 19D of the FER Act is a power of general search and it wouldautomatically exclude a situation envisaged by section 165 of the Code which does not apply to a general search. In this connection, Mr. Roy Chowdhury relied further on the decisions of (52) Paresh Chandra Sen Gupta V. Jogendra Nath Roy Chowdhury & Anr., AIR 1927 Cal 93; (53) Sitaram Ahir & Ors. v. Emperor, AIR 1964 Patna 222 and (54) Ram Paryes Ahir & Ors. v. Emperor, AIR 1944 Patna 228, which are authorities for the contention that section 96 of the Code provides for general search so that provisions relating to special search as contained in section 165 of the Code do not apply in the case of general searches under section 96. According to Mr. v. Emperor, AIR 1944 Patna 228, which are authorities for the contention that section 96 of the Code provides for general search so that provisions relating to special search as contained in section 165 of the Code do not apply in the case of general searches under section 96. According to Mr. Roy Chowdhury, the Supreme Court judgment in Durga Prasad's case makes it impossible for section 165, which contains provisions for special search for specific things, to be applied to a general search under section 105 of the Customs Act, or by parity of reasoning, to searches under section 19D of the FER Act. 116. Mr. Mitter's answer to Mr. Roy Chowdhury's objection was that the case now here says clearly or by necessary implication that section 165 of the Code does not apply. 117. The case of R.S. Seth Gopikisan v. Assistant Collector of Customs and Central Excise, AIR 1967 SC 1298 raised the question whether the search of the premises of the appellant Gopikisan and the seizure of articles and documents found therein under authority of a search warrant issued under section 105 of the Customs Act was valid. Subba Rao, C.J. who delivered the judgment of the Supreme Court held among other things that section 105 of the Customs Act and section 165(1) of the Code of Criminal Procedure are, intended to meet totally different situations. The Supreme Court rejected the contention that since under section 165(1) of the Code the Police Officer has to record in writing the grounds of his belief before carrying out the search, the Assistant Collector of Customs exercising the power under section 105(2) of the Customs Act shall also in authorising a search record his reasons for doing so. The Supreme Court held that recording of reasons required under section 165(1) of the Code is a condition which can not be applied to a situation arising under section 105 of the Act" Subba Rao, C.J, goes on to observe : “It is not necessary in this case to particularise which of the other clauses or part of the clauses of that section (i.e., section 165 of the Code can be applied to a search under section 105 of the Act." The portion within parentheses has been added). Mr. Mr. Roy Chowdhury argued that in the case of section 105 of the Customs Act recording of reasons is now, by the authority of Gopikisan's case, obligatory though perhaps it is proper and advisable. Therefore, he contended, there is no question of there being any right of any person to get a copy of the record of such reasons. Secondly, it was argued that on the same authority things or documents which are to be searched and seized need not be specified and a broad indication in the search warrant is enough. Section 165 of the Code provides a real contract with these features, for under sub-section (1) of that section the Police Officer must record the reasons and must also record the specifications of the things to be searched. Further, under sub-section (3) of section 165 of the Code the Police Officer if he does not carry out the search himself is under' an obligation to record; (i) why he cannot carry out the search personally and (ii) his instruction to the officer to whom he delegates the power and duty of search in regard to the place, of search as well as in regard to the things to be searched for. It is quite clear according to Mr. Roy Chowdury, that section 165 is totally inapplicable to a search under section 105 of the Customs Act. In short, Mr. Roy Chowdhury argued more or less on the following lines :-Section 165(1) of the Code does not apply to a search under section 105 of the Customs Act. Likewise section 165(1) of the Code also does not apply. Therefore, it is impossible to apply sub-section (5) of section 105 of the Code to a situation arising under section 105 of the Customs Act. Since section 105 of the Customs Act is really an image of section 19D of the FER Act, by parity of reasoning, Section 165 of the Code is excluded from application to searches under section 19D of the FER Act. 118. Mr. Since section 105 of the Customs Act is really an image of section 19D of the FER Act, by parity of reasoning, Section 165 of the Code is excluded from application to searches under section 19D of the FER Act. 118. Mr. Mitter pointed out that in paragraph 9 of the judgment of Subba Rao, C.J. his Lordship after saying that the condition imposed in section 165(1) of the Code cannot be invoked and applied to a situation arising under section 105 of the Act observes: "It is not necessary in this case to particularise which of the other clause or part of the clause of that section can be applied to a search under section 105 of the Act." After making this statement his Lordship goes on to consider in paragraph 10 of the report the question as to whether section 105 of the Act confers an unguided and arbitrary power on the Assistant Collector of Customs". After discussing the scope and object of this section his Lordship observes: "No doubt the power can be abused. But that is controlled by other means. Though under the section the Assistant Collector of Customs need not give the reasons, if the existence of belief is questioned in any collateral proceeding, he has to produce relevant evidence to sustain his belief. That apart, under section 165(5) of the Code of Criminal Procedure, read with section 105(2) of the Act, he has to send forthwith to the Collector of Customs a copy of any record made by him. The Collector would certainly give necessary directions if the Assistant Collector went wrong, or if his act was guided by mala fides. But the more effective control on him is found in section 136(2) of the Act. "From this Mr. Mitter argues that Subba Rao, C.J. has stated clearly and in express language that section 165(5) applied. He also argues that Mr. Subba Rao has expressly stated that the officer concerned has to send the record made by him to the Collector of Customs. Since section 19D(2) of the FER Act and section 105(2) of the Customs Act contain this phrase in identical terms. Mr. He also argues that Mr. Subba Rao has expressly stated that the officer concerned has to send the record made by him to the Collector of Customs. Since section 19D(2) of the FER Act and section 105(2) of the Customs Act contain this phrase in identical terms. Mr. Mitter relied on this decision as an authority for the proposition that the officer of enforcement who authorises the search must record his reasons and also send the record immediately to the Director of Enforcement, and also for the proposition that section 165(5) of the Code applied. Mr. Mitter further argued that according to Subba Rao, C.J. out for these safeguards the provisions in section 105 of the Customs Act (which is more or less the same as section 19D of the FER Act) would have indicated an arbitrary power. That would have meant, the section would become vulnerable as ultra vires the Constitution. Mr. Mitter strengthened his argument by saying that Subba Rao, C.J. refers to section 136(2) of the Sea Customs Act which has also an effective control on the Assistant Collector of Customs. No such control is to be found in the FER Act. Therefore, according to Mr. Mitter, it is doubtly necessary that section 165 of the Code must apply to searches made under section 190. 119. The next case is that of (55) Commissioner of Commercial Taxes etc. v. Ramkishan Shrikishan, AIR 1968 SC 59 , The Supreme Court by that decision decided five cases, analogous facts. In one of these cases certain premises were searched and a suit case was seized and forcibly removed by officers of the Commercial Tax Department inspite of the fact that they were informed that the box did not contains paper or document belonging to the company and that the contents consisted merely of personal effects of one of the Managing Directors. The officers concerned had received information that one of the Directors of the company had removed a box containing secret accounts relating to the Company. The company made an application before the Madras High Court asking for a return of the article seized. Three contentions were urged. The officers concerned had received information that one of the Directors of the company had removed a box containing secret accounts relating to the Company. The company made an application before the Madras High Court asking for a return of the article seized. Three contentions were urged. First, the officers did not have the authority to search the premises and seize the account books; secondly, if section 41(4) of the Madras General Sales Tax Act was held to authorise the seizure and confiscation of goods it was beyond the legislative competence of the State Legislature; and, lastly, that if the various provisions in section 41 were capable of being construed as authorising search and seizure, provisions contained therein were unconstitutional in view of Article 19 (1)(f) and (g) of the Constitution. 120. Section 41 of the Madras General Sales Tax Act provided in sub-section (1) that an officer specially empowered in this behalf by the Government may require any dealer to produce before him the accounts, registers, records etc. and to furnish any other information relating to his business etc. and also that in sub-section (2) such accounts, registers, records maintained by a dealer in the course of his business as well as the things in his possession and the company's shops, godown, vessels or vehicles shall be open to inspection. There is a proviso added to sub-section (7) in the following terms: 'Provided that no accommodation (not being a place of business-cum-residence) shall be entered into and searched by such officers except on the authority of a search warrant issued by a Magistrate having jurisdiction over the area and all searches under this sub-section shall, so for as may be made in accordance with the provisions of the Code of Criminal Procedure, 1898’. (Underlining is mind). Sub-section (3) of that section further provides that if any officer has ‘reason to suspect’ that any dealer has attempted to evade the payment of any tax, fee, or other amount due from him under this Act, he may, for reasons to be recorded in writing seize such accounts, registers, records or other documents of the dealer as he may consider necessary. Paragraph 4 provided that the officer had power to seize and confiscate any goods found in any office, shop, godown, vessel vehicle or any other place of business or any building of the dealer but not accounted for by the dealer in his accounts, registers, etc. provided that before ordering the confiscation the officer has given the person affected opportunity of being heard. 121. For the purpose of present case, we are not concerned with the findings of the Supreme Court on the first two contentions of the company, we are concerned only with the observation of the Supreme Court on the third contention which had been accepted by the High Court of Madras. The High Court had struck down sub-sections (2), (3) and (4) of section 41 of the relevant Act on the ground that these were unreasonable restrictions on the right to hold property and to carry on trade. The main reasons which impelled the High Court to do so was that there was no safeguard provided in respect of searches made under those sub-section. According to the High Court of Madras, section 165 of the Code of Criminal Procedure did not apply to searches made under sub-section (2) which lays down that all searches under this sub-section shall, or far as may be, made in accordance with the provisions of the Code of Criminal Procedure, so far as may be, apply to all searches made under sub-section (2)’. Before the High Court of Madras, the parties as well as the Court assumed the section 165 of the code would not apply to searches made under sub-section (2). The Supreme Court, observes : ‘We cannot see any warrant for this assumption’. The Supreme Court observed : “The proviso clearly lays down that all searches made under this sub-section, so far as may be shall be made in accordance with the provisions of the Code of Criminal procedure relating to searches would be applicable to searches under sub-section (2) so far as may be. Some of these provisions are contained in ChapterVII but one such provision in contained in section 165. It is true that section specifically refers to an officer-in-charge of a police station or a Police Officer making an investigation. Some of these provisions are contained in ChapterVII but one such provision in contained in section 165. It is true that section specifically refers to an officer-in-charge of a police station or a Police Officer making an investigation. But when the proviso applies the provisions of the Code of Criminal Procedure to all searches made under this sub-section, as far as maybe possible, we see no reason why section 165 should not apply mutais mutandis to searches' made under sub-section (2). We are, therefore, of the opinion that safeguard provided in section 165 also apply to searches made under sub-section (2). 122. According to the Supreme Court it was because the safeguards provided for in section 165 of the Code apply to searchs under subsection (2) of section 41 of the Madras General Sales Tax Act that the provisions of latter act did not amount to unreasonable restrictions on the right to hold property or carryon trade. The Supreme Court, thereafter, found on the facts of the case, that the safeguards provided in section 165 of the Code had not been followed. On these grounds the Supreme Court held that anything recovered on a defective search of the kind must be returned. 123. Mr. Mitter relied on this case very strongly and, no doubt on the face of it these decision supports Mr. Mitter's contention. Mr. Mitter pointed out that sub-section (2) of section 41 of the Madras General Sales Tax Act and sub-section (2) of section 19D of the, FER Act closely resemble each other. The only difference between these two Acts on this aspect of the matter lies in the fact that while the Madras General Sales Tax Act does not refer to section 165 of the Code the FER Act expressly refers it. In any event so far as the provisions pf the Code are sought to be attracted there is no reason why the reasoning of the Supreme Court in this decision that without the safeguard provided for in the provisions of the Code, particularly in section 16 the provisions as to searches and seizures will amount to unreasonable restrictions on the right to hold property or carryon trade will not apply to searches under section 19 D of the FER Act. 124. Mr. 124. Mr. Roy Chowdhury tried to distinguish this case by saying that the Supreme Court while holding that the safeguards provided in section 165 of the Code apply also to searches made under sub-section (2) of section 41 of the Madras General Sales Tax Act enumerates and described the safeguards in the following words :- “These safeguards are (1) the empowered officer must have reasonable grounds for believing that anything necessary for the purpose of the recovery of tax may be found in any place within his jurisdiction; (ii) he must be of the opinion that such thing cannot be otherwise got without undue delay ; (iii) he must record in writing the grounds for his belief ; and (iv) he must specify in such writing so far as possible the thing for which search is to be made.” 125. After he has done these things, he can made the searches. All these safeguards are such as are mentioned in sub-section (1) of section 165 of the Code. But Supreme Court has expressly excluded sub-section (1) of section 165 from applying to searches under section 105, Customs Act. (Case of Durga Prasad, AIR 1966 SC 1214 and Gopi Kishan's case AIR 1967 SC 1928). Mr. Roy Chowdhury further argued that, the case of Jhaver does not speak of any other safeguards contained in other subsections of section 165 and cannot; therefore, be of, assistance to the appellants in regard to the applicability of sub-sections (3) and (5) of the Code. 126. The last of the six Supreme Court decisions which we are now discussing is that the case of (56) Income Tax Officer v. Seth Brothers & Ors., 74 ITR 836 which deals with a search warrant issued by the Commissioner' of Income-tax under section 132 of the Income Tax Act, 1961. As this case is one of the main pillars of Mr: Roy Chowdhury's arguments on this aspect of the case it is desirable that we set out the facts of the case and also the various points of decision in that case which may have application to our case. Before doing so, however, let us note the contents of section 132 of the Income Tax Act. Section 132 starts by enumerating the conditions which have to, be satisfied before the Director of Inspection or the Commissioner can issue a warrant for search and seizure. Before doing so, however, let us note the contents of section 132 of the Income Tax Act. Section 132 starts by enumerating the conditions which have to, be satisfied before the Director of Inspection or the Commissioner can issue a warrant for search and seizure. Subsection (1) provides that the officer concerned must, in consequence of information in his possession, have reason to believe that (a) a person who has been asked by various notices mentioned therein to produce or cause to be produced any books of account or other documents has omitted or failed to produce or cause to be produced such books of accounts or documents, or (b) that any person to whom such summons or notice has been or might be issues will not or would not produce or cause to be produced any books of accounts or other documents which will be useful for or relevant to any proceedings under the Indian Income Tax Act, 1922, or (c) that any person is in possession of any money, bullion, jewellery etc. representing wholly or partly undisclosed, income on property. The Director of Inspection or Commissioner may in such cases authorise certain officers to enter and search buildings or places and to several things detailed in that sub-section for seizing the books of accounts, documents money, bullion etc. found as a result of such search. Sub-section (13) of that section provides that the provision of the Code of Criminal Procedure, 1898 relating to searches and seizure shall apply, so far as may be, to searches and seizure under sub-section (1) (underlining is mine). The resemblance of this section to section 19D of the FER Act in some features is apparent. Under both these sections only an officer of certain things. Again both sections provide that the provisions of the Code relating to searches and seizures shall apply, so far as may be, to searches carried out under these sections. 127. The facts of the case of Seth Brothers were briefly as follows :- M/s. Seth Brothers used to run a flour mill business ; its partners were engaged in other business also in various other name. The owners of the business were year after year assessed to the flour mill business. 127. The facts of the case of Seth Brothers were briefly as follows :- M/s. Seth Brothers used to run a flour mill business ; its partners were engaged in other business also in various other name. The owners of the business were year after year assessed to the flour mill business. On 14th March, 1963 a notice under section 148 of the Income Tax Act, 1961 was served on M/s. Seth Brothers by the Income Tax Officer, Meerut intimating that there was reason to believe that their income chargeable to tax had escaped assessment and it was proposed to reassess this income for the assessment year 1954-55. In response to this Notice fresh returns were maintaining duplicate records and were evading assessments of their true income and that it was necessary to seize the records which could be found at ‘Shantiniketan, Meerut’. The Commissioner of Income Tax drew up a memorandum in which he stated that on the basis of the report of the Income Tax Officer, Meerut requesting for authorisation under section 132 of the Income Tax Act, 1961 to enter and search the premises of M/s. Seth Brothers, he was satisfied about the need for the issue of the authorisation. The Commissioner also issued on Rules, 1962 authorising two Income Tax Officers to enter the premises known as ‘Shantiniketan and to search and seize such books and documents as may be considered relevant or useful for the purpose of the proceeding of reassessment. The premises thereafter were searched and certain books and documents found there in seized and carried to the Income Tax Officer. M/s. Seth Brothers, thereupon, made an application before the High Court of Allahabad for an order quasing this proceeding and also for a Writ of Prohibition restraining the income tax department from using any information gathered as a result of the search. It is alleged by the petitioner that the two Income Tax Officers on whose information the Commissioner had issued the authrisation for search had given false information with a view to black-mail the partners of M/s. Seth Brothers. It was further contended that section 132 of the Income Tax Act, 1961 and the Rules framed thereunder were violative of the fundamental rights guaranteed under Articles 14, 19(1)(f) and (g) and 31 of the Constitution. It was further contended that section 132 of the Income Tax Act, 1961 and the Rules framed thereunder were violative of the fundamental rights guaranteed under Articles 14, 19(1)(f) and (g) and 31 of the Constitution. On a consideration of the Affidavits filed by both parties the High Court of Allahabad held that the extent of the seizure was far beyond the limits of section 132 of the Income-Tax Act, and the action was mala fied in the sense that there was abuse of power conferred on Income Tax Officers by section 132. On this ground the proceedings were quashed by that Court. Upon appeal by the Income Tax Officer the Supreme court set aside the judgment of the High Court of Allahabad. Among other things, the Supreme Court held as follows:- 1. Section 132 of the Income-tax Act does not confer any arbitrary authority upon the Revenue Officers. The Commissioner or the Director of Inspection must have, in consequence of information, reason to believe that the statutory conditions for the exercise of the power to order searches exist. He must record reasons for the belief and must issue an authorization in favour of a designated purpose. 2. Since by the exercise of the power a serious invasion is made upon the rights, privacy and freedom of tax-prayers, the power must the exercised strictly in accordance with the law and for the purpose for which the law authorises it to be exercised. 3. If the action of the officer issuing authorization or of the designated officer is challenged, the officer concerned must satisfy the Court about the regularity of his action. 4. If the action is maliciously taken or power under the action exercised for a collateral purpose it is liable to be struck down by the Court. 5. If the conditions for exercise of the power are not satisfied the proceeding is likely to be quashed. 6. Where the Commissioner entertains the requisite belief and for reasons recorded by him authorises designated officers to enter and search premises, the Court in a petition by an aggrieved person cannot be asked to substitute its own opinion o the question whether an order authorizing search should have been issued. 7. 6. Where the Commissioner entertains the requisite belief and for reasons recorded by him authorises designated officers to enter and search premises, the Court in a petition by an aggrieved person cannot be asked to substitute its own opinion o the question whether an order authorizing search should have been issued. 7. Any irregularity in the course of entry, search and seizure committed by the officer acting in pursuance of the authorization will not be sufficient to vitiate the action taken, provided, the officer has in executing the authorisation acted bona fide. 8. The aggrieved party may undoubtedly move a Court for an order releasing the document seized. In such a proceeding the officer who has made the search will be called upon to prove how any of the documents seized are likely to be useful for or relevant to a proceeding under the Act. If he is unable to do so, the Court may order that those documents be released. 9. The circumstances that a large number of documents have been seized is not a ground for holding that all documents seized are irrelevant or the action of the officer is mala fide. 10. By sub-section (13) if section 132 the provisions of the Code of Criminal Procedure, 1898, relating to searches apply, so far that the officer concerned shall issue the necessary warrant, keep present respectable persons of the locality to witness the search, and generally carry out the search in the manner provided by the Code of Criminal Procedure. But sub-section (13) of section 132 does not imply that the limitations prescribed by section 165 of the Code of Criminal Procedure are also incorporated therein. 128. On the facts of the case the Supreme Court were not prepared to accept as correct the finding of the High Court that the action of the Commissioner of Income-tax, Uttar Pradesh and the Income Tax Officers who acted in pursuance of the letters of authorisation was mala fide. 129. This case was strongly relied on by Mr. Roy Chowdhury who argued as follows:- Section 132 of the Income Tax Act resembles section 105 of Customs Act which is in its turn an image of section 19D of the FER Act. Section 132 of the Income Tax Act provides for general authorisation to search for and seize documents without the obligation to specify things in the warrant of authorisation. Section 132 of the Income Tax Act provides for general authorisation to search for and seize documents without the obligation to specify things in the warrant of authorisation. Section 105 of the Customs Act and section 19D of the FER Act also do not themselves contain any express provision requiring the specification of the documents to be searched for or seized. Mr. Roy Chowdhury further points out that none of these three sections is limited to urgent cases. In these two aspects, he want on the argue, these three sections are to be contrasted with section 165 of the Code and since the Supreme court has held that the limitations of section 165 of the Code are not incorporated in sub-section (13) of section 132 which contains similar to the provision 132 which contains provisions similar to the provision of sub-section (2) of section 105 of the Customs Act and sub-section (2) of section 19D of the FER Act the latter does not import the provision of section 165 of the Code. Mr. Roy Chowdhury also argued that if an Act contains specific provisions then the general provisions for applying the provisions of section 165 of the Code are automatically shut out. 130. Mr. Mitter recongnised fully that this decision can be construed very much against his stand point. He, therefore, sought to distinguish this case by saying that Rule 112 of the Income Tax Rules provides for all the safeguards which, according to the Supreme Court decision in Jhaver's case or Rehman's case are necessary to save the statute from being unreasonable restrictions on the right to property and freedom of trade. According to Mr. Mitter, the Supreme Court was quite conscious of Rule 112 as will appear from a reference to the provisions of that rule, at pages 843 and 844 of the report, namely, Income Tax Officer v. Seth Brothers & Ors., 74 ITR 836. Mr. Mitter submitted that the Supreme Court made the particular observation on which Mr. Roy Chowdhury relies because of the fact that the necessary safeguards were already contained in the Rule 112. 131. The arguments of Mr. Roy Chowdhury which were adumbrated mainly on the basis of these Supreme Court judgments may be summarised briefly. Mr. Mitter submitted that the Supreme Court made the particular observation on which Mr. Roy Chowdhury relies because of the fact that the necessary safeguards were already contained in the Rule 112. 131. The arguments of Mr. Roy Chowdhury which were adumbrated mainly on the basis of these Supreme Court judgments may be summarised briefly. He contended that if section 165(5) of the Code is sought to be applied to a situation under section 19D(2) of the FER Act the following anomalies will arises. (1) Under section 19D(1) of the FER Act the Director of Enforcement own himself conduct the search envisaged under that section. If the provisions of section 165(5) of the Code have to be applied, the Director of Enforcement will have to send a copy to himself in those cases where he conducts the search personally. (2) Sub-sections (1) and (3) of section 165 of the Code on a plain construction relate to what the Supreme Court in nilratan Sarkar’s case AIR 1965 SC 1 has described as the first stage of search. This stage may very appropriately be described as the jurisdictional phase as it deals with the conditions which must be fulfilled before jurisdiction can be assumed. Both section 19D(1) of the same Act (after Amendment) relate to this first stage of search. In Nilratan’s case (ibid) the Supreme Court has held that since section 19(3) of the FER Act (before Amendment) deals with the first stage of search it permits the import of only such provisions of the Criminal Procedure Code relating to search as apply to the second stage of the search, that is to say, only the provisions regarding the actual conduct of search. At the same time, the Supreme Court has hold further that section 96 of the pre-amendment FER Act because it relates to the first stage of a search. By partly of reason, sub-section (1), (2) and (3) of section 165 of the Code cannot apply to a search initiated under section 19D(1) of the post amendment FER Act. (3) Applying Gopikisen’s case AIR 1967 SC 1298 where it was held that section 165(1) of the Code is not attracted to a case of search under section 105(1) of the Code does not also apply to a search under section 19D(1) of the F E R Act. (3) Applying Gopikisen’s case AIR 1967 SC 1298 where it was held that section 165(1) of the Code is not attracted to a case of search under section 105(1) of the Code does not also apply to a search under section 19D(1) of the F E R Act. If one has to hold that section 165(1) of the Code applies to a search under section 19D (1) of the F E R Act it must logically follow that section 165(1) of the Code must also be applicable to a search under section 105(1) of the Customs Act, that would be tantamount to saying that the case of Gopi Kishan was decided wrongly. (4) If the observation in the judgment of Subba Rao, C. J. in Gopikishan’s case (lcbid) in paragraph 10 of the Report (ibid) are construed to mean this that the provisions of sections 165 of the Code are applicable to a search under section 105(1) of the Customs Act, then, one must also hold that according to the same decision of the Supreme Court section 165(3) of the Code must necessarily apply to searches under section 105(1) of the Customs Act. There anomalies will follow, viz., (a) the statement of the Supreme Court in paragraph 9 of the Report (ibid) that they are not deciding the applicability of any clause or part of a clause of section 165 of the Code will be belief; (b) the observations of Supreme Court in paragraphs 7 and 14 of that Report, namely that the authorising officers cannot give particulars (which are known to them at the state of authorisation) to the officer who actually conducts the search, will be condemned as wrong ; (c) one has also to hold that section 165(3) of the Code has an existence independently of the provisions of section 165(1) and 165(2) of the Code, a construction which roundly counters the plain words of section 165 of the Code. 132. In my opinion, there is no escape from the proposition that the provisions of the Code in so far as they relate to searches shall apply to searches under section 19D of the FER Act sub-section (2) of section 19D clearly states this and it is absolutely impossible to nullify the effect of a clear, specific an equivocal statement in the statute by any kind of construction. The only question that may arise is as to the extent of such application. The contesting parties in this case were, of course, concerned mainly with the applicability of the provisions of section 165 of the Code. Since this is a provision of the Code relating to searches it ought to apply to searches under section 19D if it at all possible to apply them. One has to remember that the expression ‘so far as may be’ does not, after all, mean as little as possible’ on the other hand, this expression in the specific context in which it occurs in section 19D(2) is bound to imply that provision of the Criminal Procedure Code in so far as they relate to searches shall apply to the fullest extent unless, of course, such application contains an element which is inherently inconsistent with the FER Act. For the purpose one may add or subtract words or fill in some details so as to make the provisions of the Code applicable to the searches under section 19D. In the ease of Jhaver Brothers, AIR 1958 SC 59 the Supreme Court in applying the provisions of the Code to searches under the Madras General Sales Tax Act observed. "We see no reason why section 165 should not apply mutatis mutandis to search made under sub-section (2)". (The Supreme Court was referring to sub-section (2) of section 41 of the Madras General Sales Tax Act). Since the phrase so far as may be contained in that sub-section has been construed by the Supreme Court to mean mutatis mutandis, we see no reason why in an exactly similar context the same expression should not be similarly construed in interpreting section 19D of the FER Act. The phrase 'mutatis mutandis' is an expression the meaning of which is more or less fixed. According to Wharton's Law Lexicon (14th Edition at page 677) mutatis mutandis has been defined as 'with the necessary changes in point of details". In the Shorter Oxford Dictionary, Vol. 1 page 1302, the meaning that is given to the expression is things being changed that have to be changed, that is to say, necessary changes". 133. According to Wharton's Law Lexicon (14th Edition at page 677) mutatis mutandis has been defined as 'with the necessary changes in point of details". In the Shorter Oxford Dictionary, Vol. 1 page 1302, the meaning that is given to the expression is things being changed that have to be changed, that is to say, necessary changes". 133. As far as I can see, at least sub-section (5) of section 165 of the Code must apply, because sub-section (2) of section 19D specifically names that sub-section and indicates how it is to be applied by substituting for the word 'Magistrate' certain other words. As a logical corollary it follows that sub-section (5) involves the application of the provisions of sub-sections (1) and (3) of section 165 for the simple reason that in the frame word of the provisions of section 165, sub-section (5) has no room for existence apart from sub-sections (1) and (3). If neither sub-section (1) nor sub-section (3) were applicable in any particular context, it will be impossible to apply sub-section (5). The position then seems to me to be this. Sub-section (2) of section 190 of the FER Act introduces the safeguard contained in sub-section (5) of section 165 of the Code by making a direct reference to it. Sub-section (5) in turn imports by necessary implication sub-sections (1) and (3) of section 165. As a result though sub-section (1) of section 19D does not itself provide for any recording of reasons by the officer authorising a search. Subsection (2) of the same section makes it an obligation by bringing into play the procedural safeguards provided for in sub-section (1) of section 19D of the Act it cannot be regarded as a jurisdictional condition. This is in contracts with section 165 of the Code where the jurisdiction to institute a search without a warrant has been founded upon the condition precedent that reasons must be recorded in terms of subsection (1) of that section. But that makes no difference as we shall presently sec. The procedural safeguards are equally mandatory and non-observance of the formalities prescribed in these sub-section of section 165 would render the exercise of the powers as much illegal as an assumption of jurisdiction without fulfilment of the conditions precedent under sub-section (1) of section 19D. 134. I shall briefly dispose of the various difficulties and anomalies, which Mr. The procedural safeguards are equally mandatory and non-observance of the formalities prescribed in these sub-section of section 165 would render the exercise of the powers as much illegal as an assumption of jurisdiction without fulfilment of the conditions precedent under sub-section (1) of section 19D. 134. I shall briefly dispose of the various difficulties and anomalies, which Mr. Roy Chowdhury said will arise it the provisions of section 165(5) of the Code are applied to a situation under section 19D(2) of the FER Act. I deal with them Seriatim in the same order m which I have set them out before. (1) This is not an anomaly at all. The powers under section 19D can be exercised by officers of various ranks so long as they are not below the rank of Assistant Director of Enforcement. Ordinarily, one would except, it will be officers subordinate to the Director of Enforcement who be officers subordinate to the Director of Enforcement who will, exercise these powers. Therefore, under the provisions of section 165(5) of the Code such officers will have to record their reasons and send a copy to the Director of Enforcement. Only suggestion of anomaly that may arise will be in the case where the director himself orders the search. In such a case, obviously, he will record his reasons and keep a copy with himself. Section 19D(2) does not prescribe that the provisions of the Code will have to be applied without any modification whatsoever. The application will, following the Supreme Court decision in Jhaver's case, be mutatis mutandis I see no anomaly whatsoever in such application. (2) This is not an anomaly at all. According to section 165 of the Code recording of reasons is a condition precedent to the exercise of the power. Until the reasons are recorded the jurisdiction to make the searches does not arise. That is not the position in regard to searches under section 19D of the FER Act. The jurisdictional conditions which are mentioned in sub-section (1) of section 19D do not require recording of reasons. But that does not necessarily mean that recording of reasons cannot be required as a kind of procedural safegurad. The effect of sub-section (2) of section 19D is to make recording of reasons a procedural sefeguard. The jurisdictional conditions which are mentioned in sub-section (1) of section 19D do not require recording of reasons. But that does not necessarily mean that recording of reasons cannot be required as a kind of procedural safegurad. The effect of sub-section (2) of section 19D is to make recording of reasons a procedural sefeguard. Nil Ratan Sarkar's case does not say anything which militates against the FER Act providing for certain safeguard in the manner of conducting the search. (3) No principle laid down in Gopi Kisan's case is offended by the application of the provisions of section 165 to searches under section 19D of the FER Act. On the other hand, in paragraph 10 of the report ( AIR 1967 SC 1298 at page 1301) Subba Rao, C.J. has clearly indicated that according to his Lordship section 165(5) of the Code was applicable to a search under section 105 of the Customs Act which is more or less in the same term as section 19D of the FER Act. (4) I have already indicated how paragraphs 9 and 10 of the judgment of Subba Rao, C.J. are to be harmonised. In any case it will not be correct on our part to draw certain inferences from paragraph 9 by implication and use them to ignore clear and direct statements made in paragraph 10 of the report. 135. In the light of the various considerations set out above we are definitely of the opinion that the provisions of section 165 of the Code are applicable to searches under section 19D(1) of the FER Act. However, only such application is to be made as is possible in the context of the FER Act. The question is whether there was compliance with the procedure prescribed by section 165 of the Code in the instant case Did the officer who authorised the searches record in writing the 'reasons to believe' requisite under section 19D(1) of the FER Act? Did he specify in writing, as far as possible, the things for which the search was to be made? Further, since he did not conduct the search in person, did he record in writing his reasons for deputing other competent persons to make the search? Did he send a copy of this record to the Director of Enforcement? Mr. Roy Chowdhury, of course, says that Kaul has complied with all these formalities. Further, since he did not conduct the search in person, did he record in writing his reasons for deputing other competent persons to make the search? Did he send a copy of this record to the Director of Enforcement? Mr. Roy Chowdhury, of course, says that Kaul has complied with all these formalities. But since the respondents are - not prepared to disclose the records that Kaul prepared we cannot in the absence of evidence hold that all these formalities have been complied with Mr. Mitter contended that it was not enough for Kaul to have recorded the reasons. His clients were entitled have copies of the records made under the provisions of sub-section (1) or sub-section (3) of section 165 of the Code. To this Mr. Roy Chowdhury relies by saying. that such copies cannot be made available to the parties whose premises are searched without destroying the very purposes of the search and that, in any event, since Mr. Mitter's client had never applied for such copies before the proper authority, i.e. to say, before the Director of Enforcement the question of supplying such copies of the records made by Kaul to Mr. Mitter's client does not arise. On the facts of this case it is true that Mr. Mitter's client had not made an application before the proper authority. Therefore, we are not called upon to consider the question whether in the event of making such an application Mr. Mitter should have received such copies of records. We must also at the same time place on record out finding that on the materials that have been placed before us it is impossible for us to hold that the formalities prescribed by section 165 of the Code have been properly observed by the respondents. 136. It was contended by Mr. Mitter that the whole searches were motivated by mala fide. He makes out this part of his case in the following manner. In February, 1969 Shri Chandra Sekhar, a Member of the Parliament, appears to have prepared a memorandum containing certain allegations against the Birla group of companies. Allegation No.7 in that memorandum contained various charges against Hindustan Motors limited. In connection with these allegations, the Ministry of Finance prepared a statement showing the findings of Government with reasons and action taken or initiated on the allegations contained in the memorandam submitted by Shri Chandra Sekhar. Allegation No.7 in that memorandum contained various charges against Hindustan Motors limited. In connection with these allegations, the Ministry of Finance prepared a statement showing the findings of Government with reasons and action taken or initiated on the allegations contained in the memorandam submitted by Shri Chandra Sekhar. Two of these allegations relate to Hindustan Motors Limited. The gist of the allegations is given as follows :- (1) The Birlas have companies in at least 12 important countries outside India, which are primarily used for under-invoicing and over-invoicing. (2) M/s. Eastern India Produce Ltd., India and M/s. Eastern India Produce, New York belonging to the Birlas are doing the work of building up secret reserve funds in foreign countries by resorting to under-invoicing and over-invoicing. 137. The findings of the Government with reasons actions taken or initiated on these allegations are as follows :- "These allegations are too general to be pursued effectively. Where specific instances have been given, necessary investigations have been are being conducted by the Enforcement Directorate. The invoices are checked by the Customs authorities at the time of import and export in each case. The Customs authorities, Calcutta have reported in each case. The Customs authorities, Calcutta have reported that they have not come across any case of under-invoicing or over-invoicing involving the Birla companies. M/s. Eastern India Produce, New York, M/s. Eastern India Produce Co. Ltd., London and M/s. Birla A. G. Switzerland. However, as and when any evidence regarding unauthorised retention of foreign exchange aboard comes to the notice of the Reserve Bank, Enforcement Directorate, appropriate action is taken." 138. Mr. Mitter argued that in view of a clear declaration on the part of Government in March, 1969, that Customs authorities had not come across any case of under-invoicing or over-invoicing involving the Birla companies and also M/s. Eastern India Produce, New York and M/s. Eastern India Produce Co., London, the action of Kaul almost immediately thereafter in suddenly raiding all the office of Hindustan Motors in a colossal search operation shows apparent mala fide. Mr. Mitter argued that the affidavits do not show any new fact that could have emerged or any new incident that happened between March, 1969 and October, 1969. He reminded us that the documents of Hindustan Motors had been seized once in 1966. Mr. Mitter argued that the affidavits do not show any new fact that could have emerged or any new incident that happened between March, 1969 and October, 1969. He reminded us that the documents of Hindustan Motors had been seized once in 1966. The Government of India's statement in Parliament in March, 1969 shows that they have no substantial charges against Hindustan Motors, Besides, the Company Law Board of Government of India was all the time aware regarding the existence of the appellant company's buying agents in London, Europe and America. In fact, the Company Law Board bad a scrutinised all particulars and details about the two buying agents regarding whom certain insinuations had been made by the respondents in this case and had after such scrutiny authorised the appointment of the buying agents. Even the Reserve Bank of India was aware of and had permitted the appointment of buying agents and payment of commission to them. There is no allegation anywhere in the affidavits that the appellant Company has allowed purchasing agents to retain anything over and above the permissible commission. Mr. Mitter also submitted that mala fide is confirmed by complete non-disclosure of' reasons in the present proceedings and also complete non-disclosure of any records whatsoever in support of any allegation or insinuation, made by the respondents. He argued that taking an over-all view of all the affidavits of the respondents it was impossible to escape from the conclusion that they had searched first and were then thinking of excuses for this search. After considering all the arguments of Mr. Mitter in support of his contention that the respondents were actuated by mala fide, I am not persuaded to accept his contention. It is true that Government had stated in Parliament in March, 1969 that up to that moment they had no specific evidence of over-invoicing or under-invoicing or any other malpractice against Hindustan Motors But a further statement was also made that as and when any evidence regarding unauthorised retention Of foreign exchange abroad comes to the notice of the Reserve Bank of India, Enforcement Directorate appropriate action is taken. Between March, 1969 and October, 1969 various materials might have come to their possession though I do not say that such materials did actually come into their possession. Between March, 1969 and October, 1969 various materials might have come to their possession though I do not say that such materials did actually come into their possession. In any case, I do not find any evidence of personal malice or bad faith on the part of Kaul against the respondents. If the respondents have exceeded their jurisdiction or performed any executive act in disregard of the procedural formalities, their action must be struck down. But that would not in any opinion, show that they were acting out of mala fide. 139. Now, let us come to the very important question as to what is the effect of non-fulfilment of the conditions precedent mentioned in section 19D of the FER Act or of non-compliance of the provisions of section 165(5) of the Code? 140. According to Mr. Mitter such non-compliance would render the entire search and seizure illegal ab initio void and anything that is seized in course of such illegal search must be restored to the parties. Mr. Mitter relied on the Supreme Court decision in Jhaver's case AIR 1968 SC 59 for his contention that all documents and articles seized in course of an illegal search have to be restored to the parties from whom these things are seized. Mr. Mitter also relied strongly on an unreported Bench decision of the Gujarat High Court in the case of (57) New Swadeshi Mills, Ahmedabad Ltd. v. S. K. Rattan in Special Civil Application No. 1198 of 1967). In that case certain searches were made by the Superintendent of Police, Central Board of Investigation, Fraud Squad-I, New Delhi, upon receipt of information from the Assistant Collector. In that case certain searches were made by the Superintendent of Police, Central Board of Investigation, Fraud Squad-I, New Delhi, upon receipt of information from the Assistant Collector. Directorate of Revenue Intelligence, New Delhi, that payment of excise duty had been evaded and wrongful gain obtained by several parties including the New Swsadeshi Mills of Ahmedabad Ltd. Before conducting the searches, the Superintendent of Police submitted a report in which he stated that he had reasonable grounds to suspect that the documents and articles detailed in an attached list were essential and vital for the purpose of investigation of the case and were in the possession or under the control or management of M/s. New Swadeshi Mills of Ahmedabad Ltd. The report also contained some statements that delay was likely to result in the disappearance or destruction of the said documents and articles that an Inspector was being authorised to conduct the search of the Mill premises and seize the documents and articles. A record was made under section 165(1) of the Criminal Procedure Code, but instead of stating the reasonable grounds of belief as required in that section, the report contained reasonable grounds for suspecting the existence of the facts mentioned in the section. It was contended that this made the search illegal. It was also contended on behalf of the Company that having regard to the circumstances of the case and the nature of the documents that were intended to be seized, it could not be said that any officer could have reasonably come to the conclusion that the documents that were sought to be seized, could not have been obtained otherwise than by a search. It was further contended that the powers under section 165 of the Code were exercised mala fide for the purpose of making a fishing enquiry into the books and records of the petitioner. The Gujarat High Court following the decision of the Supreme Court in (58) Monghyr v. Keshav Prasad Goenka, AIR 1962 SC 1964, held that the provisions of sub-section (1) of section 165 which laid down the conditions which have to be satisfied before a search is started under that sub-section are mandatory in nature. The Gujarat High Court following the decision of the Supreme Court in (58) Monghyr v. Keshav Prasad Goenka, AIR 1962 SC 1964, held that the provisions of sub-section (1) of section 165 which laid down the conditions which have to be satisfied before a search is started under that sub-section are mandatory in nature. Their Lordships specifically relied on the observations of the Supreme Court in Keshav Prasad Goenka's case that the question whether any requirement is mandatory or directory has to decided on the basis of the "purposes for which the requirement has been enacted particularly in the context of the other provisions of the Act and the general scheme thereof". It would, inter alia, depend on whether the requirement is insisted on as a protection of the rights and liberty and property of persons. Their Lordships held that if the provisions of section 165(1) of the Code were not treated as mandatory it would result practically in removing the only safeguard that has been placed by the Legislature on the indiscriminate use of powers of search and seizure by a Police Officer. On these grounds their' Lordships considered the provisions of section 165(1) to be mandatory. In doing so, they incidentally' relied on the judgment of the Supreme Court in Rehman's case AIR 1960 SC 210 and in the light of that decision also observed that the requirement of section 165 must be complied with before the Police Officer conducting an investigation could validly institute a search of the nature mentioned in section 165. 141. Mr. Roy Chowdhury, on the other hand, argued that non-compliance with the provisions of section 165(5) of the Code will not vitiate the seizure; it will merely amount to an irregularity in the manner of conducting the search and that such non-compliance will not require the return of the documents and articles seized during the investigation. Mr. Roy Chowdhury relied strongly for this proposition on the Full Bench decision of the Kerala High Court in (59) Kochan Velayudhan v. State of Kerala, AIR 1961 Kerala 8. That was the case of a person convicted of an offence under the Travancore Cochin Prohibition Act. An Excise Officer acting upon the information that illicit manufacture of Arrack was going on in a particular house, searched that house and made certain seizures in connection with that search. That was the case of a person convicted of an offence under the Travancore Cochin Prohibition Act. An Excise Officer acting upon the information that illicit manufacture of Arrack was going on in a particular house, searched that house and made certain seizures in connection with that search. In the case that followed the accused was found guilty and convicted under section 8(1)(A) and (G) of the Travancore Cochin Prohibition Act. The matter went up on appeal to the High Court. One of the points that was argued on behalf of the accused was that the mandatory provisions contained in sections 165 and 103 of the Criminal Procedure Code had not been complied with in conducting the search and, therefore; the trial was vitiated and the conviction bad. The argument was that the search having been conduted in an illegal manner the evidence discovered by the search was inadmissible, and therefore, the conviction based on such inadmissible evidence could not be sustained. This contention was negatived by the Full Bench who held that even assuming that there had been contravention of the provisions contained in sections 103 and 165 of the Code and the search , was thereby defective, that fact will not vitiate the trial or make the evidence of the search officer inadmissible in evidence. Their Lordships relied on a very large number of decisions including among them the decisions of (60) Barindra Kumar Ghosh v. Emperor, ILR 37 Cal 467 ; (61) Banamali Bhattacharee v. Emperor, AIR 1940 Cal 85 and (62) In re: Gobindan Nair, AIR 1959 Madras 544. Mr. Roy Chowdhury also drew our attention to the observations of the Supreme Court in (63) Radha Kissen’s case AIR 1963 SC 822 . In that case, it will be remembered, the accused was tried for certain offences under the Indian Post Office Act and one of the contentions of the accused appellant was that the search carried out in course of the investigation into the alleged offence was illegal inasmuch as it was in contravention of the provisions of sections 103 and 165 of the Criminal Procedure Code. The Supreme Court held that even if the search was assumed to be illegal the seizure of the articles will not thereby be vitiated. The Supreme Court held that even if the search was assumed to be illegal the seizure of the articles will not thereby be vitiated. The Supreme Court observed: "It may be that where the provisions of sections 103 and 165, Code of Criminal Procedure are contravened the search could be resisted by the person whose premises are sought to be searched. It may also be that because of the illegality of the search the Court may be inclined to examine carefully the evidence regarding the seizure. But beyond these two consequences no further consequence ensures (at page 824 of the report). 142. Mr. Roy Chowdhury relied on a few more cases to which I shall make a brief reference. In (64) Income Tax Officer, Agra and Ors. v. Firm Madanmohon Dammamal and Another, 70 ITR 293 which was a case under section 132 of the Income Tax Act, 1961, the Allahabad High Court held that documents recovered at a search which was not absolutely according to law can be utilised for assessment purposes and that there is no direct connection between the assessment of tax and the method by which a document which is utilised for purposes of assessment is found out. Their Lordships relied on the Privy Council decision in (65) Kumuma son of Kanio v. Regina, (1955) 1 AER 236 where their Lordships of the Privy Council had held: "In considering whether evidence is admissible a test is whether it is relevant to the matter in issue and if it is relevant the Court is not concerned with the method by which it is obtained or with the question whether that method is tortuous or reasonable". 143. The case of (66) Fedders Lloyd’s Corporation v. B. A. L. Swami, AIR 1969 Delhi 26 was a case where the search which had been carried out under the provisions of the Criminal Procedure Code, was held to be an irregular search. Even so a Division Bench of the Delhi High Court held that the mere fact that a search has not been made in accordance with the requirements of section 165 of the Code dues not vitiate the seizure and does not make the evidence of seizure inadmissible, and it does not also vitiate the trial or conviction if there is no miscarriage of justice and no prejudice to the accused. 144. 144. In (67) Bai Radha v. State of Gujarat, AIR 1970 SC 1396 the question arose whether the trial had been illegal by reason of the fact that the search which preceded had not been conducted strictly in accordance with the provisions of section 15 of the Suppression of Immoral Traffic in Women and Girls Act, 1956. Section 15 provided that the Special Police Officer, who had reasonable grounds for believing that an offence punishable under the Act has been or is being committed in respect of a women or girl living in certain premises and that search of the premises with a warrant cannot be made without undue delay, may, after recording the grounds of his belief, enter and search such premises without a warrant. The Special Police Officer was also to have two respectable inhabitants of the locality as witnesses of the search. The accused on being prosecuted challenged the legality of the search in so far as the grounds which are required to be recorded under section 15(1) had not been recorded and the requirement of the presence of two respectable witnesses of the locality had not been complied with. The accused were acquitted by the Magistrate whereupon the State preferred an appeal to the High Court. The High Court of Gujarat set aside the order of acquittal and convicted Bai Radha for offences punishable under sections 3(1) and 4(1) of the Act. The accused then appealed to the Supreme Court. The accused appellant relied on the Supreme Court decision in Rehman's case AIR 1960 SC 210 . The Supreme Court, however, distinguished the present case from Rehman's cast: on facts. The Supreme Court further invoked section 537 of the Criminal Procedure Code and held: (i) non-compliance with the directions contained in section 15(2) in the matter of search would only be an irregularity and not an illegality; (ii) the sentence cannot, therefore, be set aside unless it can be shown that such irregularity has caused failure of justice. 145. While, according Mr. Roy Chowdhuy, to the Gujarat High Court decision in the case of New Swadeshi Mills (supra) is not to be followed because it goes against the Supreme Court decision in Bai Radha v. Slate of Gujaral, AIR 1970 SC 1396 . Mr. 145. While, according Mr. Roy Chowdhuy, to the Gujarat High Court decision in the case of New Swadeshi Mills (supra) is not to be followed because it goes against the Supreme Court decision in Bai Radha v. Slate of Gujaral, AIR 1970 SC 1396 . Mr. Mitter argued that the Delhi High Court decision in Fedeers Lloyd Corporation v. B.A.L. Swami, AIR 1969 Delhi 26 in so far as it holds that the provision of section 165(1) and 165(3) of the Code are not mandatory but directly is to be ignored because that finding is contradictory to the clear trend of the Supreme Court decision in Collector of Mungyr v. Keshab Prasad Goenka, AIR 1962 SC 1964 as well as the recent Supreme Court decision in the cases of Jhaver Brothers, AIR 1968 SC 59 and of Seth Brothers, 74 ITR 836. 146. In my opinion, there are two aspects to this question. First, where a search has been found to be an illegal search should the Courts order restoration of the things and papers seized? Secondly, in such a case will the evidence collected by such searches be inadmissible in any prosecution that followed the search? In the present case, we have not only found that the search was conducted in violation of the procedural safeguards stipulated by the statute but also that the officer who authorised the search had ab initio, no jurisdiction to order the search because the conditions precedent which give rise to such jurisdiction did, not exist. Where the jurisdiction itself does not exist it is futile to consider whether the safeguards are mandatory or directory. The search must be declared illegal and all proceedings arising in connection therewith quashed. In my opinion, it is inevitable from this to come to the next conclusion that all the documents and effects seized by the officers in connection with such illegal search must be restored to the appellants. The Supreme Court decisions on this point in Jhaver's case and in the case of Seth Brothers are clear, unambiguous and so direct as leave no room for hedging by implication. Indeed, in Jhaver's case the Supreme Court stated in unmistakable language that if "the safeguards provided in section 165, of the Code of Criminal Procedure were not followed, anything recovered on a defective search of this kind must be returned". Indeed, in Jhaver's case the Supreme Court stated in unmistakable language that if "the safeguards provided in section 165, of the Code of Criminal Procedure were not followed, anything recovered on a defective search of this kind must be returned". In the instant case there has not only been violation of procedural safeguards, but even jurisdiction has been lacking right from the beginning. There can, therefore, be no question that all papers, documents and personal effect seized in course of the illegal search must be restored to the appellants. 147, The Supreme Court's observation in the case of Radha Kissen, AIR 1963 SC 822 must be taken in the context of the second aspect of the matter which I have indicated above, namely, the question of admissibility of evidence. Radha Kissen's case, it will be remembered, was a criminal case where the question arose as to whether certain documents obtained during an illegal search were admissible. This question is essentially different from the other question which, I have just discussed. The law concerning the admissibility of evidence procured by such an illegal operation is difficult question which may one day perhaps be settled by the Supreme Court. 148. The law on this question has had an interesting history both in English law and in American law. The consistent trend of English and Scottish cases has been to admit evidence which is otherwise relevant even though such evidence has been obtained by an illegal search. This principal has been accepted by the Privy Council in two recent decisions. One is the case of Kuruna v. The Queen, 1955 AC 197 and 203 in which Lord Goddard, C. J., delivering the judgment of the Judicial Committee said: "The test to be applied in considering whether evidence is admissible is whether it is relevant to the matters in issue. If it is, admissible and the Court is not concerned with how the evidence was obtained". 149. In a more recent case, namely, (68) King v. Queen, (1968) 3 WLR 391 a search warrant had been issued under the Jamaican Drugs Law authorising the search of certain premises occupied by a named person for drugs and, in the event of drugs being found, the arrest of that named person. The question arose whether the constable conducting the search was authorised by that warrant to search other persons found on the premises. The question arose whether the constable conducting the search was authorised by that warrant to search other persons found on the premises. The Judicial Committee held that on the face of it the warrant did not so authorise. A further question arose as to whether the evidence obtained by the illegal search was admissible in the trial that followed. The judicial Committee hold that evidence would be admissible in the discretion of the trial Judge. Lord Hodson delivering the judgment of the Judicial Committee held that although there had been no legal right to search the accused nevertheless no injustice would be done by admitting evidence of drugs found in the possession of the accused. 150. The principle underlying these decisions had been enunciated very clearly in an earliar Scottish case viz., (69) Lawrie v. Muir, (1950) SC (J) 19, 26. Lord Cooper observed that two highly important interests which may often come into conflict have to be reconciled to decide this point, namely, the interest of the citizen to be protected from illegal or irregular invasions of his liberties by the authorities and the interest of the State to secure that evidence bearing upon the commission of trial and necessary to enable justice to be done is not withheld from Courts of law on any merely formal or technical ground. "Neither of these objects can be insisted upon to the uttermost...... Whether any given irregularity ought to be caused depends upon the nature of the irregularity and the circumstances under which it was committed". 151. The American law on the subject has had a very interesting history and has even in recent years been passing through an interesting process of development. The starting point of this process was in 1970 when the Fourth Amendment to the Constitution was enacted to provide as follows: "The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures shall not be violated...... "The answer to the question whether any evidence collected by a breach of this amendment will be admissible in evidence is not to be found in the amendment. The question arose for the first time in 1886 in (70) Boyd v. United States, 116 US 616. "The answer to the question whether any evidence collected by a breach of this amendment will be admissible in evidence is not to be found in the amendment. The question arose for the first time in 1886 in (70) Boyd v. United States, 116 US 616. After warning the Courts to be watchful for the constitutional rights of the citizen and against any stealthy encrochments thereon, the Court specifically declared the use of any evidence seized in course of such encroachment as unconstitutional. This principle reaffirmed by the decisions of the same Court in 1914 in (71) Weeks v. United States, 232 US 385 and, again, in 1948 in (72) Mc Nabb v. United Slates, 318 US 332 received a setback in 1949 when the Supreme Court held by a majority of five to four in (73) Wolf v. Colorado, 338 US 25 that the Weeks exclusionary rule regarding the admissibility of evidence obtained unlawfully would not be imposed upon the States as "an essential ingredient of the right" of privacy arising out of the Fourth Amendment through the operation of the due process clause. There has been, however, a swing back to the Weeks doctrine recently when, in 1961 the Supreme Court in (74) Mapp v. Ohio, 367 US 643 overruled the majority decision of the Wolf case. The position now in the United States is quite clear that the Fourth Amendment is regarded not only as prohibiting unreasonable searches and seizure but also, of itself, barring the use of evidence so unlawfully obtained. This doctrine, which now holds sway in the United States and is known as the Mapp doctrine is totally different from the rule followed in England. This is rather interesting in view of the fact that historically the American doctrine can be traced to the England Bill of rights no which the Fourth Amendment was bassed. 152. So far as the present case is concerned we do not think we are really called upon to give any decision in this aspect of the matter. How far the documents and papers seized by the respondents in the course of the searches which we have just declared illegal will be used against the appellants is a matter of mere speculation. How far the documents and papers seized by the respondents in the course of the searches which we have just declared illegal will be used against the appellants is a matter of mere speculation. If they are sought to be used at all the question whether such evidence procured by illegal methods, should be admitted as evidence will be decided by the tribunals adjudicating those proceedings. It is not for us to state the law anticipation. 153. The appellants have also challenged the notices served by respondent, D. K. Guha under section 19E of the FER Act. There were four such notices all signed by D. K. Guha who was an Assistant Director of Inspection in the Income Tax Department. We have already reproduced one specimen copy of the notices which were all in similar terms. To appreciate the arguments of the contending parties it is necessary to set out section 19E of the FER Act which runs as follows :- 19E. The Director of Enforcement may, during the course of any enquiry in connection with any offences under this Act-(a) require any person to produce or deliver any document relevant to the enquiry; (b) examine any person acquainted with the facts and circumstances of the case. 154. It was contended on behalf of the appellants that the notices purported to have been served under section 19E of the FER Act were pre-mature and illegal as such notices can be served only during the adjudication proceeding. It was further argued that D. K. Guha had no jurisdiction to serve the notices. 155. Mr. Mitter developed the first part of his argument regarding this notice by analysing section 19E alongwith various other sections in the following manner: Section 19E of the FER Act provides that the Director may serve the notices "during the course of any enquiry in connection with any offence." Section 19F gives certain analogous powers to summon persons to give evidence and produce document in any 'inquiry' which the officer may be making in connection with any offence under the Act. Section 23 provides for certain penalties for contravention of some of the provisions of the FER Act. Section 23 provides for certain penalties for contravention of some of the provisions of the FER Act. Sub-section (3) of section 23 refers to certain offences which are not to be taken cognizance of by any Court unless complaints in writing are made by officers of the Directorate of Enforcement their status depending on the specific nature of the offences. In certain cases, sanction of the Director of Enforcement is necessary. There is a proviso to sub-section (3) which requires that where any such offence is the contravention of any of the provisions of the Act or any rule, direction or order made thereunder which prohibits the doing of an act without permission, no such complaint shall be made unless the person accused of the offence has been given an opportunity of showing that he had such permission. Section 23D(1) which deals with the power to adjudicate provides that for the purpose of adjudging under clause (a) of sub-section (1) of section 23 whether any person has committed a contravention, the Director of Enforcement shall held an 'enquiry' in the prescribed manner after giving that person a reasonable opportunity of being heard. Section 23D(2) says that while holding an 'inquiry' under this section the Director of Enforcement shall have the power to summon and enforce the attendance of any person to give evidence or to produce a document or any other thing which in the opinion of the Director of Enforcement may be useful for or relevant to the subject-matter of the inquiry. Section 27 confers powers on the Central Government to make rules for giving effect to the provisions of the Acts such rules may among other things prescribe the manner in which the 'inquiry' may be held under this act and the procedure to be followed in respect of the proceedings before the Director of Enforcement or the Appellant Board. Certain rules have been made by the Central Government in exercise of these powers under section 27. These rules (to which we have already had occasion to refer) are known as Adjudication Proceedings and Appeal Rules, 1957. Rule 3 of these rules runs as follows:- Rule 3. Certain rules have been made by the Central Government in exercise of these powers under section 27. These rules (to which we have already had occasion to refer) are known as Adjudication Proceedings and Appeal Rules, 1957. Rule 3 of these rules runs as follows:- Rule 3. (1) In holding an inquiry under sub-section (1) of section 23D of the Act for the purpose of adjudging under clause (a) of sub-section (1) of section 23 whether any person has committed contravention, the Director shall, in the first instance, issue a notice to such person requiring him to show cause within such period as may be specified in the notice (being not less than 10 days from the date of service thereof) and the adjudication proceedings should not be held against him. 156. There are other sub-rules which lay down the manner in which the adjuication proceedings are to be conducted. In sub-rule 5 and sub-rule 6 the adjudication proceedings are referred to as "inquiry". 157. According to Mr. Mitter, the 'inquiry' mentioned in section 19E of the FER Act is the same 'inquiry' which is mentioned in section 23D. He argued that the only 'inquiry' envisaged or contemplated by the Act is the 'inquiry' under section 23D(2). And wherever the word 'inquiry' occurs in other section of the act it means the same thing and refers to the same transaction as is referred to in section 23D(2). In answer to the possible objection that the 'inquiry' referred to in section 19E & 19F is really a preliminary' inquiry in the sense of investigation and not kind of inquiry involved in adjudication proceedings, Mr. Mitter gives four answers. First, he says wherever a statute provides for a prior investigation before any action is taken it provides for a special machinery for that purpose. For example, Chapter XIV of the Code provides for investigation prior to trial before Magistrate. Secondly, such preliminary investigation is not normally made by the same authority who tries or adjudicates the offence, but a subordinate officer. Thirdly, that kind of investigation always results in a report by the subordinate officer to wit, a report under section 163 of the Criminal Procedure Code or a report under section 240 of the Company's Act or a report under section 13 of the Industries and Industrial Development and Regulation Act. Thirdly, that kind of investigation always results in a report by the subordinate officer to wit, a report under section 163 of the Criminal Procedure Code or a report under section 240 of the Company's Act or a report under section 13 of the Industries and Industrial Development and Regulation Act. Finally, there is always a provision in the statute indicating the steps that have to be taken in connection with that report. It was argued that the inquiry under section 19E and 19F is not charactcrised by any of these features and cannot be treated as a preliminary investigation. Mr. Mitter also laid the greatest emphasis on two aspects of the matter. He urged that the word 'inquiry' should be given the same meaning all throughout the statute except for compelling reasons. He relied on the Supreme Court decision in (75) Raghubans Narain v. Government of Uttar Pradesh, AIR 1967 SC 465 which lays down the principle that where the same expression is used in the same statute at two or more places than the same interpretation is to be given to it unless the context requires otherwise. In this connection Mr. Mitter pointed out that section 23D of the FER Act and Rule 3 of the Adjudication Proceedings' and Appeal Rules both came into effect simultaneously on 24th December, 1957. Under section 230(1) the Director has to hold an inquiry and section 23D(2) gives him certain powers in that connection. Under Rule 3 the Director has to serve a notice before holding the inquiry under section 23D. Upto the year 1964 this was the only' inquiry contemplated under the FER Act. It is only in 1964 that section 19E, 19F and 19G came into force by way of an amendment. It will be remembered that they were bodily reproduced from the Customs Act (compare sections 107 and 108 of the Customs Act). As a result section 19F seems outwardly to overlap section 23D(2). In fact, Mr. Mitter pointed out that at least one writer of a text book considers' section 19E and 19F as superfluous and as overlapping the provisions of section 23D. (Refer to S.R. Vakil, 'The Law Relating to Foreign Exchange in India", 3rd Edition at page 227 and 4th Edition at page 354). Mr. In fact, Mr. Mitter pointed out that at least one writer of a text book considers' section 19E and 19F as superfluous and as overlapping the provisions of section 23D. (Refer to S.R. Vakil, 'The Law Relating to Foreign Exchange in India", 3rd Edition at page 227 and 4th Edition at page 354). Mr. Mitter, however, argued that these are not overlapping provisions but were deliberately introduced by the Legislature to fill up two lacuna that existed prior to the amendment of 1964. Mr. Mitter said that prior to 1964, section 23D and the rules under the FER Act were the only provisions that existed in regard to an 'inquiry' all proceedings had at that time to be initiated with a notice upon the delinquent person and the statute gave no power to the Director to require a third party to supply information etc. so that the Director could summon or search on only such persons as were proceeded against under the FER Act. Rules 3, 4, 5, 6, and 7 etc. of the Adjudication Rules gave no powers so far as third persons were concerned and, consequently, there w, s no obligation on a third party to come and give evidence in adjudication proceedings commenced by the Director. The purpose of section 19E and 19F, according to Mr. Mitter, is to remove this defect in the act. 158. The second aspect on which Mr. Mitter laid emphasis was this that if the same meaning be not given to the word 'inquiry' throughout the act then arises a situation in which the investigator and the Judge become combined in the same person, for the Director who exercises the powers under section 19E and 19F is also the officer who has to adjudicate under section 23D. This is a result which vitiates the quasi-judicial character of the inquiry or proceedings under section 23D. (vide (76) Shyamlal Sell Pvt Ltd. v. Collector of Customs, 66 Calcutta Weekly Notes 948). 159. Relying on these contention Mr. Mitter went on to argue that in the instant case since the notice under Rule 3 of the Adjudication Proceedings and Appeal Rules has not yet been served, adjudication proceedings under section 23D cannot betaken to have formally commenced so that, in the result, inquiries under section 19E and 19F which are inquiries in aid of the adjudication proceedings under section 230 cannot be initiated yet. 160. 160. I find no substance in this contention of Mr. Mitter. The 'inquiry' under section 19E or 19F of the FER Act has been expressly described as inquiry in connection with any offence under the FER Act. An inquiry under section 23D of that Act on the other hand is an inquiry in the prescribed manner for the purpose of collecting information for adjudication. There are certain offences under the FER Act in respect of which there can be an adjudication by the Director of Enforcement, while there are certain other offences which cannot be adjudicated by the Director. The FER Act does not provide for any express punishment in regard to these offences. There is, however, a general provision in section 23(1A) that these who commit such offences shall upon conviction by a Court be punishable with imprisonment for a term which may extend to two years or with fine or with both. Apart from these there are certain other offences which are punishable but are not liable to adjudication by the Director. The offences under the FER Act therefore, fall into three groups, viz, (i) the group of offences under sections 4, 5, 9, 10, 12(2), 17 and 18A which are offences that shall be adjudicated by the Director of Enforcement, (ii) the group of offences under sections 23(1A), 8, 13, 13A, 14, 15,16, 18 and 22 for which no specific punishment is mentioned, but which are punishable by a Co un within the limits laid down in section 23(1A) ; and, finally, (iii) the group of offences under sections 19(1)(2) and 23F, which cannot be adjudicated by the Director. In these circumstances, since both section 19E and 19F speak of inquiry in connection with any offence under the FER Act there can be no justification for limiting the word 'inquiry' to only such offences as are being adjudicated by the Director. 161. It is clear that an acceptance of Mr. Mitter's argument will make the scheme of the whole FER Act unworkable. It is to be noted that these can be an inquiry also under section 19E and that such inquiry takes place independently of and long after the section 23 inquiries. The inquiry under section 23 is one which must be held in the prescribed manner and limited to finding out whether contravention of any offences which are being adjudicated by the director has taken place. The inquiry under section 23 is one which must be held in the prescribed manner and limited to finding out whether contravention of any offences which are being adjudicated by the director has taken place. Section 27 (bb) says that Central Government may prescribe the manner in which inquiries may be held under this act and the procedure to be followed in regard to proceedings before the director. This section, therefore, clearly makes distinction between inquiries held under the act and the proceedings before the director. So far a rules for regulating the procedure to be followed in proceedings before the director are concerned, such rules have already been framed. These are of course, the Adjudication Proceedings and Appeal Rules, 1957. As for rules prescribing the manner in which other inquiries may be held under the FER Act, no such rules have yet been framed. The provisions of section 19G give clear indication that the requisition or summons under section 19E or 19F can be made long before any proceedings under section 23 are initiated. That section provides that where-in pursuance of an order made under sections 19, 19A, 19C or 19D or of acquisition or summons under section 19E or 19F any document is furnished or seized, and the Director of Enforcement or any other officer of Enforcement has reason to believe that the said document would be evidence of the contravention of any of the provision's of this Act or of any rule, direction or order thereunder and that it would be necessary to retain the document in his custody, the officer concerned may do so for a period not exceeding one year or if, before the expiry of the said period of one year any proceedings under section 23 have been commenced before him until the disposal of those proceedings. It is clear, therefore, that the period of detention of the document is normally one year. But the section contemplates that •in course of this period proceedings under section 23 may be initiated in which case the officer will be entitled to detain the document for a further period until the disposal of the proceedings. It is, therefore, an indication in the clearest possible terms that proceedings under section 23 maybe initiated after the documents have been seized under section 19E or 19F. This is a clear refutation of Mr. Mitter's argument. 162. It is, therefore, an indication in the clearest possible terms that proceedings under section 23 maybe initiated after the documents have been seized under section 19E or 19F. This is a clear refutation of Mr. Mitter's argument. 162. An examination of the scheme of the FER Act also shows clearly how Mr. Mitter's argument is without substance. The director was introduced in the statute for the first time on 24 December, 1957. On the same day the following changes were also introduced. Section 2(bb) was introduced defining the Director of Enforcement as follows :- "2(bb) : Director of Enforcement' means the Director of Enforcement of Foreign Exchange Regulation appointed by the Central Government for the purpose of enforcing the provisions of this Act" 163. On the same day were also introduced the various amendments of section 23 relating to powers of the director. It is significant that on the same day rules also were introduced for governing the adjudication proceedings. It is to be noted that between 1957 and 1964 the only powers of calling for information were confined to what are to be found in section 19 of the FER Act and such powers belonged only to Government of India and the Reserve Bank of India. After 1957 the director was sought to be given the same power as the Customs Officer had by virtue of certain provisions of the Customs Act. In the Statement of Objects and Reasons of Bill No. 62 of 1964 which introduced the Foreign Exchange Regulation (Amendment) Act of 1964 one of the objects is stated to be as follows :- "To confer additional powers on officers of the Enforcement Directorate similar to those conferred by the Customs Act, 1962 on officers of the Customs Department in regard to search and arrest of persons, search of conveyances and premises and summoning of persons to give evidence and produce documents, etc." 164. The new powers are to be found in sections 19A, 19B, 19C, 19D and 19F of the FER Act of these section 19E relates to the power of examining any person or of requiring any person to produce and deliver any relevant documents. Section 19F gives the power to summon any person to give evidence and produce documents. Section 19E corresponds to section 107 of the Customs Act and 19F to section 108 of the Customs Act. As for Mr. Section 19F gives the power to summon any person to give evidence and produce documents. Section 19E corresponds to section 107 of the Customs Act and 19F to section 108 of the Customs Act. As for Mr. Mitter's argument that section 19E and section 19F remove two lacuna in section 23D, it is obvious that there was in fact no lacuna in section 23D and section 19E and 19F serve different purposes. Mr. Mitter had, for instance, argued that under section 23D the director, could not summon a third person and section 19F was introduced to correct this. Mr. Mitter was not quite correct when he said this for sub-section (2) of section 23D gives the necessary power to the director to summon "any person". It is to be noted that sub-section (1) of section 19F also uses the expression "any person". There can be little doubt that the word "any" in subsection (2) of section 23D has the same force as in sub-section (1) of section 19F'. It is also obvious that the same power for the same purpose cannot be conferred twice by a statute. Obviously, therefore, the powers under section 19E and 19F are not the same as the powers contemplated by section 23D. 165. In this connection Mr. Mitter had faintly argued that although section 23D provides for issue of summons, it does not provide for the manner of issue of such Summons and, further that a person summoned under sub-section (2) of section 23 can avoid appearance with impunity and, according to him, section 19F was introduced to provide the remedy for this defect. In my opinion, this is not correct either section 19F does not lay down the manner of issuing the summons. It is true that sub-section (3) of section 19F mentions that all persons are bound to appear and sub-section (4) makes it a judicial proceeding within the meaning of sections 193 and 228 of the Indian Penal Code. The fact that section 23D does not itself contain such provisions does not, however, matter in the list because section 23 (1A) comes to aid of any officer whose order or direction may be disobeyed. Therefore, in this sence also, there is no lacuna to be filled in by section 19F. Section 19A closely resembles section 19G of the FER Act. Therefore, in this sence also, there is no lacuna to be filled in by section 19F. Section 19A closely resembles section 19G of the FER Act. Section 19A allows retention for the period of four month of all documents which become available in course of proceedings taken under section 19. Section 19G provides for one year's retention of documents which would become available in course of or as a result of proceedings under section 19, 19A, 19C, 19D, 19E and 19F. Now, in Nilrotan's case (supra) the Supreme Court has-clearly referred to proceedings under section 19A as a preliminary inquiry. Therefore, it is quite clear that section 19G is also a provisions in connection with preliminary inquiry. This means that the inquiries under section 19E and 19F are preliminary inquiries. 166. In this connection Mr. Roy Chowdhury referred to various cases, namely. (77) Collector of Customs v. Katumal Vithalajani, AIR 1967 Madras 263, (78) Ramesh Chandra Mehta v. The State of West Bengal, AIR 1970 SC 940 , (79) Illias v., Collector of Customs, AIR 1970 SC 1065 which are all decisions in regard to sections 107 and 108 of the Customs Act. In these decision the inquiries under sections 107 and 108 of the Customs Act are all treated as preliminary investigations. This, Mr. Roy Chowdury correctly submitted, also shows that sections 19E and 19F of the FER Act which correspond to sections 107 and 108 of the Customs Act are also provisions for preliminary investigation. 167. It is true that the rules of construction ordinarily require that the same expression used in the same statute in several places should be understood in the same sense. But this doctrine is always subject to the proviso "unless the context requires otherwise" (see Raghubgas Narain's case, AIR 1967 SC 465 at page 469). The word "inquiry" has been used in section 23E in one context. It cannot be the same as the word "inquiry" used in a different context in section 19E and 19F. 168. Mr. Mitter's argument that if his contention regarding the meaning of the word "inquiry" in section 19E be not accepted it would mean that the same person, namely, the Director who holds the investigation would also have .to be the judge is not of much substance. 168. Mr. Mitter's argument that if his contention regarding the meaning of the word "inquiry" in section 19E be not accepted it would mean that the same person, namely, the Director who holds the investigation would also have .to be the judge is not of much substance. The statute itself contemplates a machinery which permits different person to discharge the functions under section 23D as well the functions under section 19D and 19E. This is because of section 2B. 169. The next challenge to the notices under section 19E was based on the contention that respondent. D. K. Guha, who issued the various notices under section 19E of the FER Act did not have any legal jurisdiction to issue those notices and really acted in excess of his powers. Mr. Mitter based this contention on two grounds. But before we elaborate his arguments on this point it is necessary to set out two notifications which are supposed to have conferred the necessary power on D. K. Guha and also to set out section 2B of the FER Act under which the notifications themselves were issued. Section 2B of the FFR Act is in the following terms. "2B : The Central Government, may by order and subject to such limitations and conditions as it thinks fit to impose, authorise any officer of Enforcement, or any officer of Customs or any Central Excise Officer or any Police Officer or any other officer of the Central Government or a State Government to exercise such of the powers and discharge such of the duties of the Director of Enforcement or any other Officer of Enforcement under the Act as may be specified in the order. 170. In exercise of the powers conferred by section 2B, there were two notifications issued on 21 May, 1968. They are set out below :- "Ministry of Finance (Department of Revenue & Insurance) ORDER F E R A New Delhi, the 21st May, 1968 Supreme Court 1852. In exercise of the power conferred by section 2B of the Foreign Exchange Regulation Act, 1947 (7 of 1947), the Central Government hereby authorises all officers of Enforcement of and above the rank of Chief Enforcement Officers, to exercise all the powers of the Directors of Enforcement under section 19E of the said Act. Supreme Court 1853. In exercise of the power conferred by section 2B of the Foreign Exchange Regulation Act, 1947 (7 of 1947), the Central Government hereby authorises all officers of Enforcement of and above the rank of Chief Enforcement Officers, to exercise all the powers of the Directors of Enforcement under section 19E of the said Act. Supreme Court 1853. In exercise of the powers conferred by section 2B of the Foreign Exchange Regulation Act, 1947 (7 of 1947), the Central Government hereby authorises Sri D. K. Guha, Assistant Director of Inspection, Income Tax to exercise all the' powers and discharge all the duties of an Assistant Director of Enforcement under the said Act. (No 2/68) JAGJIT SINGH, Jt. Secy." 171. The effect of 'Notification No. 1852 was to authorise all Officers of Enforcement of and above the rank of Chief Enforcement Officers to exercise all the powers of the Directors of Enforcement under section 19E of the said Act. Therefore, in order that Mr. D. K. Guha may exercise the powers of a Director of Enforcement, under section 19E it will necessary to show that he was an officer of Enforcement of the requisite rank at the relevant time. So far as the second notification, namely, Notification No. 1853 is concerned it authorises D. K. Guha by name to exercise all the powers and discharge all' the duties of the Assistant Director of Enforcement. Mr. Mitter argued that Mr. Guha was an officer of the Income Tax Department at the relevant time which appears clearly from Notification SC No. 1853. It is true that the same notification also authorises him to exercise powers and duties of an Assistant Director of Enforcement. Mr. Mitter, however, points out that the powers under section 19E of the FER Act can be exercised only by the director so that Notification No. 1953 standing by itself does not give Guha the necessary authority to issue notices under section 19E. As for Notification No. 1852 of 21 May, 1968 since that notification authorises only officers of the Enforcement Branch to exercise the powers of the directors Mr. Mitter contended that Guha not being an officer of the Enforcement Branch cannot invoke this notification in support of his acting as a director in the matter of issuing the notices under section 19E of the FER Act. 172. Mr. Roy Chowdhury rebutted this contention of Mr. Mitter contended that Guha not being an officer of the Enforcement Branch cannot invoke this notification in support of his acting as a director in the matter of issuing the notices under section 19E of the FER Act. 172. Mr. Roy Chowdhury rebutted this contention of Mr. Mitter by pointing out, first, that by virtue of Notification No. 1853 Mr. 'Duha did enjoy the status of an Assistant Director and that as an Assistant Director Guha must be recognised as holding a rank above that of Chief Enforcement Officer. For this Mr. Roy Chowdhury relies on an admission contained in sub-paragraph (w) of paragraph 60 of the petition where there is a statement made by the petitioners that officers of and above the rank of Chief Enforcement Officer include Guha. From this Mr. Roy Chowdhury argued that Guha could exercise powers of a director under section 19E of the FER Act by virtue of Notification No. 1852. Mr. Roy Chowdhury also pointed out that section 2B permitted the Central Government to authorise any officer of Enforcement or "any other, officer of the Central Government" to exercise such of the powers and discharge such of the duties of the Director of Enforcement as may be specified in the order. Therefore, since Mr. D. K. Guha was admittedly a Central Government officer belonging to the Income Tax Department, the Central Government had by reason of section 28 of the FER Act the jurisdiction to confer on D. K. Guha the power to exercise such of the powers and discharge such of the duties of the director as may be specified in an order. In Notification No. 1852 the Central Government has specified the powers and duties of the Director of Enforcement that all officers of Enforcement above a certain rank could exercise. By virtue of the second notification, namely, Notification No. 1853 D. K. Guha was appointed an Enforcement Officer with a rank obviously above the rank designated in the first notification. There should therefore, be no difficulty about D. K. Guha exercising the powers of the Director under section 19E on the strength of these two notifications. 173. Upon being confronted with this situation Mr. Mitter next fell back upon the argument that section 2B of the FER Act is, ultra vires, the Constitution of India for two reasons. There should therefore, be no difficulty about D. K. Guha exercising the powers of the Director under section 19E on the strength of these two notifications. 173. Upon being confronted with this situation Mr. Mitter next fell back upon the argument that section 2B of the FER Act is, ultra vires, the Constitution of India for two reasons. First, he argued, the section imposes unreasonable restrictions on the right to carry on trade and right to hold property and is, situation. Secondly, it is a delegation of legislative powers to the executive and is, therefore, unconstitutional and liable to be struck down. Mr. Mitter argued that section 2B made it possible for the Central Government to delegate the enormous powers that are normally to be exercised by the Director of Enforcement to any officer of the Central Government or State Government irrespective of his rank or status so that the practically at least Government would be in a position to entrust even petty and lowly paid officers to be entrusted with the enormous powers of the director under the FER Act. Since the powers that a Director of Enforcement exercise under the FER Act encroach in various directions on a man's right to carryon trade or a man's right to hold property, such encroachment and restrictions may be admissible only so long as there are reasonable limits imposed upon the exercise of such powers. But to extend the power to make this encroachment and restrictions to lowly paid and petty government of officers would be unreasonable. From this point of view section 28 is violative of the provisions of section 19(1)(f) and (g) of the Constitution of India and would, therefore be ultra vires the Constitution. It would logically follow that the Notification Nos. 1852 and 1953 which were issued in exercise of the power conferred by section 2B would also be illegal notifications. This would destroy the very foundation of Mr. Guha's authority to issue the notices under section 19E. Mr. Mitter relied for his argument on the case of (80) Khagendra Nath Dey v. District Magistrate, West Dinajpur, 55 CWN 53. That was a case under the West Bengal Security Act, 1950. This would destroy the very foundation of Mr. Guha's authority to issue the notices under section 19E. Mr. Mitter relied for his argument on the case of (80) Khagendra Nath Dey v. District Magistrate, West Dinajpur, 55 CWN 53. That was a case under the West Bengal Security Act, 1950. Section 21 of the Act give power to the State Government to make an order restricting the movements or actions of a person if the State Government were satisfied with respect to any particular person that he was doing or likely to do any subversive act etc. Section 38 of the Act provided that "the State Government may, by notified order, direct that any power or duty which is conferred or imposed by any provision of this Act upon the State Government shall, in such circumstances and under such conditions, if any, as may be specified in the direction, be exercised or discharged also by any officer or authority' subordinate to the State Government". The question arose whether section 38 was ultra vires Article 19(f) of the Constitution of India. Harries, C. J. who delivered the judgment of the Division Bench of this High Court made the following observations; "A Commissioner of Police in the City of Calcutta or a Superintendent of Police in the Moffassil is, I think clearly an officer or authority subordinate to the State Government and so is a Sub-Inspector. It appear to me that section 38 is framed wide enough to allow the Government to authorise a Sub-Inspector to make these orders. A Havildar is a lowly and humble officer of Government. He certainly is a servant of Government and I do not think that the term "Officer" has any precise meaning. Servants of Government are frequently classified as gazetted or non-gazette officer or ministerial or non-ministerial officers. All are, however, officers, no matter what the qualifying adjective may be". 174. From this Harries, C. J. concluded that section 38 was framed in such a manner as would enable the Government to delegate the powers to officers who would be wholly unfit to be, entrusted with such powers. On this ground their Lordship struck down section 38 of the Act as ultra vires the Constitution of India. Mr. 174. From this Harries, C. J. concluded that section 38 was framed in such a manner as would enable the Government to delegate the powers to officers who would be wholly unfit to be, entrusted with such powers. On this ground their Lordship struck down section 38 of the Act as ultra vires the Constitution of India. Mr. Mitter was quite alive to the fact that the Supreme Court in (81) Jhaver's case, AIR 1968 SC 55 has, while interpreting an analogous section held that such delegation of power by Government does not make the statute ultra vires the Constitution. Mr. Mitter explained the observation of the Supreme Court in that case by saying that the decision was to be read in the context of the other provisions of the relevant Act which, inter alia, provided that the search in that case could be conducted only by a Police Officer. 175. I accept the argument of Mr. Roy Chowdhury that so long as the legislative Will is fully expressed by a statute the choice of instruments to carry out the legislative Will can be left to the executive without making the Act ultra vires. So far as legislative Will is concerned the FER Act clearly express that will in four different ways. First, the obligations which are imposed on the citizens by the FER Act have been clearly laid down. Secondly, the method for inquiry into breaches of such obligations is also provided for. Thirdly, there is provision for adjudication and trial regarding such alleged breaches of obligations. Fourthly, a specific machinery has been laid down in the Act for enforcement of the provisions. It is true that the Legislature has not clearly stated or laid down the qualifications of officers who can be given the powers and duties of a Director of Enforcement under section 2B. But that, according to Mr. Roy Chowdhury, is not a legislative function, but a pre-eminently executive function. "Executive function" has been defined as the residue of the Governmental functions that remain after legislative and judicial functions are taken away (See Halsbury's Law of England, 3rd Edition, Volume VII, Article 409 at Page 192 and (82) Ram Jawaya v. State of Punjab, AIR 1955 SC 549 and (83) Jayantilal Amratlal v. F. N. Rana, AIR 1964 SC 648 ). 'In view of the multifarious complexity of functions which modern Governments have to carry out and also "the plethora of Parliamentary 'business" to which it inevitably leads, the executive has often got to exercise powers which resemble subordinate legislation. But when the statute empowers a Government or an authority empowered by it to make rules and when Government names the authority which will make the rules Government does not perform a legislative function, but performs what is, in essence, an executive function even though framing 'of rules is really making subordinate legislation. "In all such cases 'there are three states: (i) conferment of power by the law on the Government of its nominee to make rules; (ii) Domination of the nominee by the Government, and (iii) exercise of the rule-making power by the nominee. The first and the third are clearly legislative acts, but the second is in our view clearly executive for it is merely the designation of the person on authority who will make the law". Jayanlilal Amratlal v. F. N. Rana, AIR 1964 SC 648 at page 667. In (84) Municipal Corporation of Delhi v. Birla Cotton Spinning & Weaving Mills, Delhi, AIR 1968, SC 1232, Hidayatullah J, as his Lordship then was, observed "that there is no specific provision in the Constitution which says that the Parliament cannot delegate to certain specific instrumentality the power to effectuate its own Will the question always is whether the legislative, Will has been exercised or not. Once it is established that the Legislature itself has willed that a particular thing is to be done and has merely left the executive to choose the instrumentality (provided that it has not parted with its trial) there can be no question of excessive delegation." In fact, according to Hidayatullah, J. who delivered the judgment on behalf of himself and Ramaswami, J, even guidance need not be given in the matter of choice of instruments, for, that is a peculiarly executive function. In a recent decision of the Supreme Court, namely, in the case of (85) Income Tax, Officer, Alleppey v. M. C. Pan noose and Others, AIR 1970 SC 385 the Supreme Court held that the exercise of the power under sub-clause (ii) of Clause (44) of section 2 of the Income Tax Act, 1961 (as amended by Finance Act, 1963) is more of an executive than a legislative Act. It may be remembered that by reason of that sub-clause, any officer of a certain status could be authorised to exercise the powers of a Tax Recovery Officer. In (86) A. Majermans v. S. K. Ghosh & Ors., 70 CWN 82, a division Bench of this High Court dealing with the question of excessive delegation of power also held that so long as the legislative policy had been clearly determined by the Legislature the application of the principles in individual cases may be always left to the executive and such delegation would not amount to excessive delegation. 176. As far section 2B, of the FER Act four points are quite clear, namely, (i) the power of entrustment has been given to no less an authority than the highest executive in the land namely, the Central Government; (ii) not all powers of the Director can be delegated by the Central Government, but only such of the powers and such of the duties as may be specified are delegated which means that the Legislature has willed that the Central Government must apply its mind to specify the duties and the powers; (iii) the section also provides for such limitations and conditions as the Central Government thinks fit to impose upon the officer who is authorised. So that the legislative Will is clearly this that the Central Government before conferment of power on any officer is also to fix the limits ; (iv) the Legislature has deliberately used the expression "any other officer of Central Government" to avoid the particular contingency 'which was apprehended in the case of Khagendra Nath De v. District Magistrate of West Dinajpur, 55 CWN 53, namely, the entrustment of important powers and' functions to petty officers like Havildars. 177. With references to the 'argument that the possibility of Government entrusting petty officers with large powers itself is an unreasonable restriction, it was contended by Mr. Roy Chowdhury that in view of recent Supreme Court decisions it is no longer possible to up hold that principle. This contention seems to us to be correct. In fact, as a result of latter Supreme Court decisions certain principles seem to have clearly emerged. Roy Chowdhury that in view of recent Supreme Court decisions it is no longer possible to up hold that principle. This contention seems to us to be correct. In fact, as a result of latter Supreme Court decisions certain principles seem to have clearly emerged. They are as follows :- (1) discretionary power is not necessary a discriminatory power ; (ii) there is a presumption that public officer would discharge their duties according to the rule of law; (iii) abuse of power is not to be assumed easily particularly where the discretion is vested in a high officer; (iv) possibility of discriminatory treatment will not necessarily invalidate the legislation, but a particular instance of abuse of power will be struck down. In (87) M/s. Pannalal Binjraj v. Union of India, AIR 1957 SC 309 . Section 5(7A) of the Income Tax Act, 1922 was challenged as violative of Article 14 of the Constitution and as imposing an unreasonable restriction on the fundamental right to carryon trade or business enshrined in Article 19(1)(g) of the Constitution. The Supreme Court rejected the challenge. It was held that the power to transfer a case from anyone ITO to another at any stage of the proceedings given under section 4(7A) was a provision which was necessary for administrative convenience and since the power was vested not in minor officers but in high-ranking authorities like the Commissioner of Income tax and the Central Board of Revenue, abuse of power cannot be easily assumed and that there is a presumption that public officers will discharge their duties honestly and in accordance with the rules of law. "If, however, there is an abuse of power and there is discrimination it can be remedy by appropriate action either under Article 226 or under Article 32 of the Constitution of India in which case what is to be struck down is not the provision contained in section 5(7A) but the order passed thereunder which may be mala fide or discriminatory or violative of the fundamental rights". In Jhaver's case (supra) the Supreme Court while dealing with similar challenge with regard to section 41 (2) of the Madras General Sales Tax Act, 1959 held that though "search under this subsection can be made by any officer empowered by the Government in this behalf………we have no reason to think that Government will not empower officers of proper status to make searches. The fact that the act gives power to Government to empower any officer, is therefore, no reason to strike "it down, for as we have said, the Government will see that officers proper status are empowered". 178. Mr. S. C. Roy Choudhury who appeared for the Attorney-General in this appeal submitted that in any event the power that has been delegated under section 2B is not a very wide power and is not also a legislative power. Besides, he argued, one has to remember that section 2B relates to a technical branch of executive administration where the executive act concerned may become a matter of great urgency and necessity. 179. in. the light of the various considerations, I have just mentioned, I have no doubt in my mind that the challenge to the constitutionality of the provisions of section 2B of the FER Act must fail. In the result the various attacks made on the authority of D. K. Guha to issue the notices under section 19E also must fail. 180. We are now in a position to sum up our findings on most of the controversies in this matter. (1) We arc definitely of the opinion that the fulfilment of the cot1aitions precedent to the exercise of the power conferred by subsection (1) of section 19D is justiciable. If the jurisdiction of the officer who exercises the power is challenged in a Court of law it is incumbent on the officer concerned to prove by giving satisfactory evidence of objective facts that the conditions precedent have been fulfilled. (2) The officer concerned has to show that he had reason to believe that documents which would, in his opinion, be relevant to or useful for proceedings (either pending or contemplate the FER Act) are secreted or are likely to be secreted. (3) The officer whose jurisdiction is challenged has to prove to the satisfaction of the Court the fulfillment of the conditions precedent by referring to facts or materials which were known to him prior to the issue of the authorization or warrant for search. Materials or facts which come into the possession of the officer are not, however, altogether irrelevant. Thought such facts and materials standings by themselves alone cannot establish the jurisdiction of the officers, they can be used to corroborate the officer’s contention that he had the requisite reason to believe. Materials or facts which come into the possession of the officer are not, however, altogether irrelevant. Thought such facts and materials standings by themselves alone cannot establish the jurisdiction of the officers, they can be used to corroborate the officer’s contention that he had the requisite reason to believe. (4) In the instant case respondent Kaul has failed to prove that he had reason to believe as required under section 19D of the FER Act. (5) In the aforesaid circumstances, the authorisations andorders for search were issued without jurisdiction and are illegal and void ab initio. (6) The procedural safeguards under section 165(1), (3) and (5) are all engrafted on all operations or search conducted by virtue of the powers conferred by sub-section (1) of section 19D. (7) There is nothing on evidence to show that all the procedural formalities had been duly and properly observed by the respondents. (8) The charge of mala fide against the respondent has failed. (9) All documents and papers seized in course of illegal searches are liable to be returned to the appellants. (10) The question whether the documents and papers seized during the searches can be used in future proceedings against the appellants is a quest ion which need not be answered in this appeal. (11) D. K. Guha had jurisdiction to issue the various notices under section 19E of the FER Act. (12) Section 2B of the FER Act is legal and not ultra vires the Constitution of India. 181. In the result this appeal succeeds in part though, we must say, it succeeds substantially. We make the following order :- The appeal is allowed in part. The judgment and order of Banerjee, J. are set aside and the Rule is made absolute except in so far as they relate to the notices under section 19E of the FER Act. The purported orders of authorisation and search warrants under section 19D are cancelled and quashed. A Writ of or in the nature of Mandamus shall issue directing and commanding the respondents and each of them forthwith to return to the petitioners all books, papers and documents seized by them in connection with the search operation. In the circumstances of this case, we direct that each party will pay and bear his or its own costs. 182. In the circumstances of this case, we direct that each party will pay and bear his or its own costs. 182. There will be a stay of operation of this order for three months subject to the following conditions :- (a) All documents, files, papers and books of account seized and mentioned in the petition, shall be kept in steel boxes to be sealed by Messrs Khaitan & Co. and by the Enforcement Directorate with their respective seals and such boxes shall be kept at the office of the Enforcement Directorate. One of the petitioners' representatives shall be entitled to be present at the time of such sealing. The steel boxes will be supplied by Messrs. Khaitan & Co. and the sealing shall be completed within a fortnight; (b) If either the appellants or the respondents at any time require to have access to any of the documents to be sealed and kept as aforesaid, liberty is given to apply for special permission to this Court on proper materials and upon notice to the other side; (c) There will also be a stay of examination of the petitioner, Nos. 2 to 5 under section 19E of the Foreign Exchange Regulation Act as long as the above stay continues. Mukherji, J.: I agree.