K. M. A. Abdul Kabeer v. Enforcement Directorate — 1994 DIGILAW 387 (MAD)

Judgment :- The petitioner in both the writ petitions are one and the same and the two reliefs sought for in the two petitions arise out of the same facts. I therefore, proceed to dispose of the writ petitions by a common order. The facts are as follows :- The Officers of Enforcement Directorate searched the residential premises of the petitioner, in exercise of the powers conferred under Section 34 of the Foreign Exchange Regulation Act, 1973 (hereinafter called the FERA Act). They seized Indian Currency of Rs. 1, 65, 000/- which was kept in a wooden almirah under a Mahazar on 18-8-1992. A statement is said to have been recorded from the petitioner, by using force and exercising coercion, and the said statement was subsequently retracted by a letter dated 21-8-1992. It is not necessary for this Court to go into the question as to the character of possession of the currencies and whether the same was acquired in a lawful manner or not. While W.P. No. 1279 of 1994 relates to the power to retain the currency under Section 41 of the FERA Act beyond a particular period, W.P. No. 1280 of 1994 relates to the validity of the show cause notice issued on 4-8-1993. For the purpose of understanding the scope of the argument in W.P. No. 1279 of 1994, the following dates are materials. (1) The date of seizure of the Currency 18-8-1992 (2) The date of Amendment to Section 41 of the FERA Act. 8-1-1993 (3) The date of the show-cause notice 4-8-1993 (4) The date of service of the show cause notice 24-8-1993 2.The argument is that after 8-1-1993 Section 41 of the FERA Act empowers the authorities to retain the currency only for a peried of six months, unless of course proceedings had been initiated as per sub-clauses (i) and (ii) of Section 41 of the FERA Act. Prior to the amendment the authorities had power to retain the documents for a period of one year. If a period of one year is available, the power to retain the documents can be unheld because within the period of one year from 18-8-1992, a show-cause notice was issued on 4-8-1993. If the amended provision of law applies, the respondent will have only six months from 18-8-1992 and the period of six months from 18-8-1992 and the period of six months had expired on 17-8-1993. If the amended provision of law applies, the respondent will have only six months from 18-8-1992 and the period of six months from 18-8-1992 and the period of six months had expired on 17-8-1993. Consequently, show-cause notice issued on 4-8-1993 will not enable the authorities to retain the documents being the currency notes after 17-2-1993. The prayer in W.P. No. 1279 of 1994 is for the issue of a writ of mandamus to direct the respondent to return the seized documents namely, currency notes to the tune of Rs. 1, 65, 000/- to the petitioners. 3.In W.P. No. 1280 of 1994, the argument is that the first respondent namely Special Director has no jurisdiction to issue the show cause notice under Section 51 of the FERA Act and the delegation of powers to the first respondent is illegal and contrary to Sections 3 and 4 of the FERA Act. Consequently, the prayer in W.P. No. 1280 of 1994 is to quash the show-cause notice date 4-8-1993 by the issue of awrit of certiorari. 4.Two separate counter affidavits have been filed by the respondents. While the facts are not disputed with reference to the sequence of events, it is contended that the amended provision of Section 41 of the FERA Act will not have any application to the present case and the show cause notice having been issued within a period of one year, they are entitled to retain the seized currency. In other words, the argument is that the amended provisions do not have a retrospective effect, and they can be applied only prospectively. It is also contended that the right of seizure and retention of documents is a substantive right, and therefore, the same cannot be taken away by reducing the period of retention. It is therefore, contended that the argument of the petitioner that the period of limitation is only procedural in nature, and therefore, the amended provisions alone should be applied cannot be accepted. In W.P. No. 1280 of 1994, the argument is that by a specific notification dated 22-9-1989, the Government has exercised the power under sub-section (1) of Section 4 read with Clause (c) of Section 3 of the FERA Act and appointed one S.S. Renhgen to be an Officer of Enforcement with the designation of Special Director of Enforcement giving him powers of adjudication under Section 50 of the Act. The contention is the delegation of powers to the incumbent of the first respondent is perfectly legal and in accordance with Sections 3 and 4 of the FERA Act. Consequently, it is contended that the show-cause notice is valid and not liable to be quashed. 5.I will first deal with the power to retain the document namely, the currency notes in accordance with Section 41 of the FERA Act and whether the respondent has lost the power and is bound to return the currency notes. A decision on this aspect will depend on the question whether the amended provisions of Section 41 of the FERA Act which came into force on 8-1-1993 are prospective or retrospective. The argument of the petitioner that even after the amended provisions came into offect on 8-1-1993, the respondents had about 23 days in January, and 16 days in February, 1993 to initiate proceedings like the issue of a show-cause notice and continue to retain the documents. On the other hand, the respondents failed to avail of this period and save themselves from the bar of limitation prescribed by the amended Act. Therefore, it is contended that by no stretch of imagination can the respondent seek to claim the period of one year granted under the unamended Section 41 of the FERA Act. It is pointed out that there is a line of authority on the manner of interpreting the statute of limitation when the period is shortened or reduced by an amendment. It is also not disputed that the question will depend upon the nature of the right which is sought to be reduced namely, where it is a procedural right or a vested right. The well accepted principle of law is that in the case of a vested right, the same cannot be taken away by an amendment of the law which is silent with regard to its applicability prospectively or retrospectively. On the other hand if the amended provision only relates to a procedure, then it can be applied retrospectively subject to one or two well accepted exceptions. These principles of law can very well be deduced from the following judgment cited at the Bar. InBegam Sultanv.Sarvi Begam 1926 AIR(All) 93 ) the Court was considering a case where a decree was passed at a time when the old Civil Procedure Code of 1882 was in force. These principles of law can very well be deduced from the following judgment cited at the Bar. InBegam Sultanv.Sarvi Begam 1926 AIR(All) 93 ) the Court was considering a case where a decree was passed at a time when the old Civil Procedure Code of 1882 was in force. The application for execution was made at a time when new Civil Procedure Code, 1908 had come into force. It was held that the law of procedure and limitation applicable to an application for execution would be the law actually in force at the time when the application was made namely, the new C.P.C. 1908. The following passage is relied upon :- "The new Code did not in any way affect his right to execute the decree which he had obtained. It has in no way curtailed his right; it has merely placed a bar of limitation as to the period of time during which he can apply. There was no vested right in the decree-holder to wait for an indefinite period of time in order to apply for execution. The learned Judges who decided the case above mentioned were led away by the supposition that the decree-holder acquires a vested right not only to apply for execution but also in the period within which he can apply."* InKhondkar Md. Salehv.Chandra Kumar 1930 AIR(Cal) 34 ) a Division Bench of Calcutta High Court has analysed all the aspects of the case relating to the alteration of the period of limitation and the circumstances under which the amended provisions will or will not apply. In that case the due date under a mortgage deed, for payment of the mortgage money, was 12-4-1904. The original mortgagee died in December, 1905. The only legal representative being his minor son brought the suit in 1906 and a preliminary decree was passed on 30-11-1906. A final decree was passed on 7-1-1907. After the sale of the mortgaged property there was still a balance to be paid to the mortgagee. The minor legal representative of the mortgagee attained majority on 23-9-1924 and applied under Order 34, Rule 6 C.P.C. for a personal decree against the mortgagor. The mortgagor pleaded that the application was barred by limitation. The trial court had overruled the plea of limitation and granted a personal decree against the mortgagor. The minor legal representative of the mortgagee attained majority on 23-9-1924 and applied under Order 34, Rule 6 C.P.C. for a personal decree against the mortgagor. The mortgagor pleaded that the application was barred by limitation. The trial court had overruled the plea of limitation and granted a personal decree against the mortgagor. The appeal against the said order which was decided by the Division Bench of the Calcutta High Court. The issue arose before the Division Bench in the following manner :- Under the Limitation Act 15 of 1877, the mortgagee had a right to apply for a personal decree after attainment of majority and thereafter within the period of limitation. Under the new Limitation Act 9 of 1908 which was passed in August 1908, but came into operation on 1-1-1908, the minor must make the application within the period of limitation prescribed under Article 181 of the Schedule to the Limitation Act. In other words the period of limitation was three years from the time when the right to apply accrued. The right to apply accrued in the said case in September, 1908. Therefore, it was contended that the application filed in September, 1924 was barred by limitation. The argument which was accepted by the trial Court was that the Limitation Act 15 of 1877 would alone apply and even though the right to apply accrued in September, 1908 the mortagagee was under a disability of minority till 23-9-1923. It was therefore, argued that he was entitled to make the application within three years from the date when attained majority. The trial court in that case had held that 1908 Act affected the vested right of the mortgagee and therefore, it was only 1877 Act which apply. The Calcutta High Court, as I have already pointed out, has analysed all the aspects of the case on the issue in question and held that 1908 Act only cut down the period of limitation and did not take away any vested right. In this view of the matter it was held that the application for a personal decree was barred by limitation. The following passages are strongly relied upon by the learned counsel for the petitioner :- "Now, applying this rule to the present case there cannot be any doubt that the plaintiff might have made his application within the period of limitation, prescribed under Act 9 of 1908. The following passages are strongly relied upon by the learned counsel for the petitioner :- "Now, applying this rule to the present case there cannot be any doubt that the plaintiff might have made his application within the period of limitation, prescribed under Act 9 of 1908. The time when the right accrued was September 1908 and three years would expire in September, 1911. Therefore, the mortgagee had about two years nine months, time after the passing of the Act of 1908 to make his application and hence there was no hardship which was discussed in the cases ofTowlerv.Chatterton[1829 6 Bing 258-21 L.J.M.C. 193] andR.v.Leeds And Bradford Ry Co. 1852 (18) QB 343. It is not necessary in this case to lay any stress upon the fact the Limitation Act of 1908 was passed in August 1908 and it was to come into operation on 1st January, 1909. That fact might have been important if the position of the plaintiff was such that he would have no time under the new law to make any application after the Act came into operation. But as a matter of fact, as I have already pointed out, he had two years nine months under the new law within which he could make his application. Therefore, in my judgment, it cannot be doubted that the rule of limitation applicable to the present case should be that laid down by Act 9 of 1908."* However, the Calcutta High Court referred to a distinguished case ofPromotha Nathv.Sourav Dasi 1920 (31) CLJ 463 ] in the following words :- "The learned Judges held that S. 66 of the Code had no retrospective operation as it actually took away a right of suit which is a vested right."* Finally, the Calcutta High Court concluded with the approval the following passage in Maxwell's 'Interpretation of Statutes' 6th Edition, at page 399. "In both of the above cases, however the construction, though fatal to the enforcement of a vested right, by shortening the time for enforcing it, did not in terms take away any such right; and in both it seems to fall within the general principle that the presumption against a retrospective construction has no application to enactments which affect only the procedure and practice of the Courts, even where the alteration which the statute makes has been disadvantageous to one of the parties. Although to make a law for punishing that which, at the time when it was done, was not punishable, is contrary to sound principle; a law which merely alters the procedure may, with perfect propriety, be made applicable to past as well as future transactions; and no secondary meaning is to be sought for an enactment of such a kind. No person has a vested right in any course of procedure."* 6.Two important principles of law can be deduced from the above judgment. The first is that the law of limitation is procedural and should operate in respect of past transactions also. The only exception is where the Law of Limitation is amended in such a way as to take away the rights of a person to bring a suit within the period of limitation prescribed by the Act before the amendment comes into operation. In such a case, the law as laid down by the Calcutta High Court in to see whether the plaintiff has time to apply before the new law come into operation. It is this aspect of the case which is strongly relied upon by the learned counsel for the petitioner in suggesting that the respondent had time even after the new provisions of Section 41 of the FERA Act come into effect on 8-1-1993 to take appropriate action before 17-2-1993. The contention is that in view of this availability of time, it must be interpreted that the amended provisions of Section 41 of the FERA Act will have a retrospective effect. Inasmuch as the respondent did not take steps even after amendment of Section 41 of the FERA Act, before 17-2-1993, they should be debarred from withholding the documents. In my opinion, the interpretation of a statute cannot be left to differ from the facts of each case. In other words, in this particular case, it so happens that the seizure was on 18-8-1992 and even after the amendment of Section 41 of the FERA Act, there was short period from 8-1-1993 to 17-2-1993 for initiating action and consequently retaining the documents. But one can easily visualise other cases where for instance a seizure is made on or before 8-7-1992. In respect of such seizure if the new Section 41 of the FERA Act is applied the period of six months will expire by 8-1-1993 when the new Act came into force. But one can easily visualise other cases where for instance a seizure is made on or before 8-7-1992. In respect of such seizure if the new Section 41 of the FERA Act is applied the period of six months will expire by 8-1-1993 when the new Act came into force. In other words, in respect of a seizure made prior to 8-7-1993 when the authorities were contemplating action within a period of one year as per the unamended Act they are suddenly faced with a situation that the period has been reduced to six months and therefore they are bound to return the documents, because no action had been initiated. Therefore, the proper interpretation of a statute of limitation reducing or shortening the period will be to see whether the amended Act gives an order dated by which actions should be initiated in respect of applications which get barred by the ammended provisions. One can easily advert to several such enactments like the Limitation Act, 1963 and the Land Acquisition Act 64 of 1984. These enactments say that as and from the date of the amended act actions should be initiated within a particular period failing which the action, if any, will get time barred under the provisions of the amended Limitation Act. In this connection reference may be made to two other judgments of the Supreme Court inRamprasadv.Vijay Kumar(1967 S.C. 278-69 BLR. 20). The apex court had to consider the applicability of the Article 138 of the Limitation Act, 1908 which abridged the period of limitation for enforcement of a mortgage. The Supreme Court held that the abridgment did not take away any vested right. The following passage is in with the line of approach indicated by me earlier :- "But this abridgment did not impair or take away any vested right. Section 30 of the Indian Limitation Act, 1908 inserted by the Part B States (Law) Act, 1951 made suitable provision safeguarding vested rights in cases where the period prescribed was shorter than that prescribed by the corresponding law previously in force in the part B State." 7.InYousufv.Mohammed the Apex Court was concerned with the recovery of a Wakf property and the fact that the Hydrabad Limitation Act did not contain any period of limitation for the recovery of Wakf property. On the other hand, Article 142 of the Limitation Act, 1908 which was made applicable to the area in question by the Part B States (Laws) Act, 1951 with effect from 1-4-1951, provided a limited period for recovery of Wakf property and the question was whether the switchover for unlimited period to a limited period had the effect of taking away the vested right and as to the principles which would govern the case. Observed the Supreme Court, "The extension of the Indian Limitation Act, 1908* 8.Let me now find out whether Section 41 of the FERA Act which was amended to reduce the period of retention of documents by the authorities from one year to six months contains any such salient provisions like Section 30 of the Indian Limitation Act, 1908. If there is no such safeguard in the amended provisions of Section 41 of the FERA Act, the contention of the respondents that the substantial right of the Department to retain the documents for a period of one year cannot be reduced to six months and the documents directed to be returned to the persons from whom they were seized, loam be taken as well founded. A careful perusal of the amended provision of Section 41 of the FERA Act shows that after reducing the period to six months a proviso was added. It is as follows :- "provided that the aforesaid period of six months may, for reasons to be recorded in writing, be extended by the Director of Enforcement for a further period not exceeding six months."* 9.It is thus clear that where in stated cases the department is faced with the situation that the period of six months expires on the date of coming into force of the amended provisions namely on 8-1-1993, it is always open to the Director of Enforcement to come to the aid of the authority and extend the period upto a maximum limit of six months, after recording the reasons therefor. In my opinion, this safety valve in the amended Section 41 of the FERA Act provides the key to solve the disputed question between the parties. In my opinion, this safety valve in the amended Section 41 of the FERA Act provides the key to solve the disputed question between the parties. Even assuming on the particular facts of the case where even after the amendment to Section 41 of the FERA Act, the Department had a short period from 8-1-1993 to 17-2-1993 to initiate action and continue to have possession of the seized documents, and that it was not sufficient, it was open to the authorities to have sought for extentions of time by applying to the Director of Enforcement under the proviso above quoted. 10.The agrument of the respondents is, that no questions of limitation is involved to Section 41 of the FERA Act and the right to retain the documents is a substantial right and therefore, the same cannot be taken away by the amended provisions. There is a misconception in the argument because the amended provision does not take away substantial right to retain the documents. On the other hand, the amended provision only says that instead of a period of one year the authorities can retain documents only for a period of six months, subject of course, to the authorities initiating action under sub-clauses (1) and (11) of Section 41 of the FERA Act. So far as the reduction of the period of limitation is concerned, on the basis of the voluminous authorities cited above, I have no hesitation in holding that the shortening of the period of limitation is only procedural and therefore, the amended provisions will alone apply subject to the proviso above quoted. In this case, it is not disputed that there was no order of the Director of Enforcement extending the period of retention of the documents by the respondent. 11.The last argument of the respondents is based on Section 6(e) of the General Clauses Act, 1897. In my opinion, there is no scope for resorting to Section 6 of the General Clauses Act because this is not a case of repeal of a provision of law and the repeal not affecting any investigation or obligation arising out of an Act being proceeded with as if the repealing Act had not been passed. In my opinion, there is no scope for resorting to Section 6 of the General Clauses Act because this is not a case of repeal of a provision of law and the repeal not affecting any investigation or obligation arising out of an Act being proceeded with as if the repealing Act had not been passed. The shortening of the period of limitation and the retrospective or prospective application of the amendment will depend only upon the considerations already referred to and as decided by various courts, including the apex court. 12.The prayer in W.P. No. 1279 of 1994 has necessarily to be conceded based on the judgment of the Supreme Court of India in S.L.P. (Civil) No. 3997 of 1976 reported inArjunan Chettiarv.Enforcement Officer[1977 (II) M.L.J. S.C. 5] Consequently, a writ of mandamus will issue directing the respondents to return the seized currency to the tune of Rs. 1, 65, 000/- to the petitioner herein within eight weeks from today. W.P. No. 1279 of 1994 is allowed in the above manner. 13.The above decision will not automatically result in prayer in W.P. No. 1280 of 1994 being granted. I have already noticed the fact that in this writ petition the challenge is to the show cause notice dt. 4-8-1993 on the ground that the Special Director, S.S. Renhgen has no jurisdiction to issue the notice. The argument of Mr. S.K.L. Ratnam is as follows :- Section 3 of the FERA Act lists the class of Officers of Enforcement. Sub-clause (3) of Section 3 says that such other class of officers of Enforcement may be appointed for the purpose of the Act. Section 4(1) of the Act empowers the Central Government to appoint any person as it thinks fit to be an officer of an Enforcement. Sub-section (2) of Section 4 need not detain us because that relates to the delegation of powers to certain class of officers to appoint an officer of enforcement below the rank of Assistant Director of Enforcement. We are not concerned with such a case in this writ petition. The arguments of the petitioner is that under GSR 61, dated 1-1-1974 the Central Government had already authorised the Director of Enforcement to appoint officers of the Enforcement below the rank of an Assistant Director of Enforcement. We are not concerned with such a case in this writ petition. The arguments of the petitioner is that under GSR 61, dated 1-1-1974 the Central Government had already authorised the Director of Enforcement to appoint officers of the Enforcement below the rank of an Assistant Director of Enforcement. On the creation of a class designated as Enforcement Officers the power under clause (e) of Section 3 read with Section 4(1) gets exhausted, according to the petitioner. It is the further case of the petitioner that the Government is not empowered by Section 3(e) to create a new class or a new post. The class of Enforcement Officers already created under Section 3(e) rank below the Assistant Director. Therefore, it is argued that the post of a Special Director cannot come within the clause because he ranks above the Addl. Director and below the Director. Learned counsel for the petitioner relies on certain Text books in support of his argument. In the Text book written by R. Swaminathan, the following is relied on : "Special Directors have not been notified by the Central Government as Officers above the rank of Assistant Directors and hence powers of adjudication given to them may be open to question, though at present each Special Director of Enforcement is specially entrusted with adjudication powers by separate notifications."* The above passage does not conclusively prove that the delegation to Special Director is illegal or contrary to the provisions of Sections 3 and 4 of the Act. In fact, the author later on says. The word in Section 50 of the FERA Act says the Officer in question should be specially empowered in this behalf by an order of the Central Government, would appear to require each officer to be specially empowered and not by empowering a whole class of officers.' 14.In answer to the above contention Mr. C.A. Sundaram points out that in the instant case there was a specific notification dated 22-9-1989 published in the Gazette of India which specifically authorises the Special Director to be an Officer of Enforcement for the purpose of enforcing the provisions of the Act and to exercise the power under Section 50 of the Act. These notifications have been purported to be in the exercise of the power conferred by Section 4(1) read with Section 3(e) of the FERA Act. These notifications have been purported to be in the exercise of the power conferred by Section 4(1) read with Section 3(e) of the FERA Act. I am of the opinion that the argument of the petitioner is without any force because Section 4(1) categorically says that the Central Government may appoint any person as it thinks fit to be an officer of Enforcement. Mr. S.S. Renhgen has been specifically appointed as an Officer of Enforcement with the designation of a Special Director of Enforcement. There can therefore be no dispute that the impugned show cause notice is valid. That apart, as rightly pointed out by the learned counsel for the respondents, the doctrine of factum valet or thede factotheory will apply to this case. For this proposition learned counsel relies on the judgment of the Supreme Court inGokaraju Rangarajuv.State of A.P. and Pushpadevi M. Jatia v. Wadhavan[1987 (12) E.C.C. 356]. The following passage in the latter decision is sufficient to uphold the contention of the respondents. "In any event, the learned counsel further contends that R.C. Singh was clothed with the insignia of office and he was purporting to exercise the functions and duties of a gazetted Officer of Enforcement under Sec. 40(1) of the FERA and therefore thede factodoctrine was attracted. He relies upon the decision of this Court inGokaraju Rangarajuv.State of Andhra Pradesh enunciating thede factodoctrine born of necessity and public policy to prevent needless confusing and endless mischief. In other words, he contends that where an officer acts under the law, in matter not how the appointment of the incumbent is made so far as the validity of his acts are concerned." 15.In this view of the matter, I therefore, reject the contention of the petitioner that the first respondent has no jurisdiction to issue the subject show cause notice. Consequently, W.P. No. 1280 of 1994 is dismissed. There will, however, be no order as to costs.