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CASE NO.: Appeal (crl.)  1114 of 2006

PETITIONER: Usha Agarwal                                                     

RESPONDENT: Union of India & Ors.                                            

DATE OF JUDGMENT: 02/11/2006

BENCH: S. H. Kapadia & R. V. Raveendran

JUDGMENT: J U D G M E N T  (Arising out of Special Leave Petition (Crl.) No. 3012/2006) (With W.P. (Crl.) No. 191 of 2006 (D-14072/2006)

R.V. RAVEENDRAN, J.

       Leave granted in SLP (Crl.) No.3012/2006.

       The preventive detention of one Sandip Agarwal (’detenu’ for short)  under section 3(1) of the Conservation of Foreign Exchange and Prevention  of Smuggling Activities Act, 1974 (’COFEPOSA Act’ for short) is under  challenge in these two matters, namely, criminal appeal by special leave  against the judgment dated 21.4.2006 in Writ Petition No.23908/2005 of the  Calcutta High Court and a petition seeking a writ of habeas corpus under  Article 32 of the Constitution of India. Both have been filed by the mother of  the detenu.

2.      The facts, in brief, leading to the preventive detention of the detenu,  as gathered from the grounds of detention, are as follows - Sandip Agarwal,  the detenu,  was the Director in-charge of the management of M/s Sandip  Exports Ltd., the other Directors being his family members. On receipt of  information about irregularities committed by the detenu, a search of the  premises of Sandip Exports Ltd. was conducted by the Directorate of  Revenue Intelligence on 7.11.2003. The search and the investigations  disclosed that M/s. Sandip Exports Ltd. had obtained two Annual Advance  Licences dated 28.3.2001 and 22.3.2002 on actual user conditions from the  Director General of Foreign Trade, Kolkata, as manufacturer-exporter. The  said Annual Advance Licences issued under the Duty Exemption  Entitlement Certificate Scheme (’DEEC Scheme’ for short) enabled the  Licensee to import goods free of duty subject to the condition that the  Licensee shall manufacture and export products (by utilizing the imported  goods) within 18 months, the quantity and value being as specified in the  licences in terms of Customs Notification No. 48/99 dated 29.4.1999 as  amended from time to time. The detenu imported different types of polyester  and silk yarn/fabric, duty free, under the scheme by using the said licences  of Sandip Exports Ltd.  The duty foregone on importations made under the  said two Advance Licences was Rs.14 crores. Instead of utilizing such  imported materials in the manufacture of products for exports, he diverted  and disposed of the imported goods in the domestic market, and did not  fulfil the export obligation. He  falsely claimed that the goods for export  were manufactured from out of the imported goods through a non-existing  manufacturing unit, and through alleged job-workers; and he also falsely  claimed that the products so manufactured out of goods imported by Sandip  Exports Ltd. were exported through M/s Karan Exports (India) Ltd., another  company owned and controlled by detenu’s family. In this manner, the  detenu indulged in a systematic and organized import-export fraud by  importing goods duty-free, under the ’DEEC Scheme’ and diverting them to

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domestic market.

3.      At the instance of the Directorate of Revenue Intelligence (the  Sponsoring Authority), the Detaining Authority (Government of India,  Ministry of Finance, Department of Revenue, represented by its Joint  Secretary) passed an order of detention dated 19.8.2004 under Section 3(1)  of the COFEPOSA Act. In the grounds in support of the detention order, the  detaining authority stated that the action of the detenu in diverting duty free  imported goods into the domestic market in violation of the DEEC Scheme  Licences, amounted to "smuggling" of goods. The detaining authority also  stated that  the nature and gravity of the offence and the dubious and  fraudulent modus operandi employed by the detenu showed his propensity  and potentiality to indulge in such illegal activities in future, necessitating  detention to prevent him from continuing such activities.

4.      The detention order could not be executed as the detenu absconded.  As a consequence, an order dated 29.3.2004 was issued under Section 7(1)  of the Act. On the basis of a situation report filed under Section 7(1)(a) of  the Act on 26.10.2004, the Chief Metropolitan Magistrate, Calcutta, passed  an order dated 18.11.2004 for proclamation by proceeding under Section 82  Cr.P.C. The detenu filed a writ petition challenging the order of detention.  The said pre-execution challenge was rejected by the High Court on  10.6.2005. Ultimately, on 11.11.2005, the detenu was taken into custody and  the detention order and the grounds in support of the detention were served  on him. The copies of the documents relied upon by the detaining authority  in making the order of detention, were furnished to the detenu on  14.11.2005. As the detenu claimed that he had no working knowledge of  Hindi, English translations were furnished to him on 16.11.2005.  5.      The detenu made a representation against his detention to the  detaining authority on 25.11.2005. The said representation was rejected by  the Detaining Authority on 7.12.2005 and the same was communicated to  the detenu on 13.12.2005. On 14.12.2005, the detenu’s mother filed W.P.  No.23908/2005 in the High Court of Calcutta, seeking quashing of the  detention order dated 19.8.2004 and release of the detenu.  

6.      The detenu made a representation to the Advisory Board constituted  under the COFEPOSA Act on 16.1.2006. The Advisory Board gave a  hearing on 19.1.2006 and recommended confirmation of the detention. On  receiving a copy of the representation to the Advisory Board along with the  report of the Advisory Board on 27.1.2006, the Central Government  confirmed the detention on 1.2.2006. The representation dated 16.1.2006,  copies of which were furnished to the detaining authority and Central  Government, was also independently considered by them. The Detaining  Authority by order dated 10.2.2006 rejected the representation of the detenu  dated 16.1.2006. The Central Government (Special Secretary and Director  General, Central Economic Intelligence Bureau) also rejected the said  representation of the detenu by order dated 13.2.2006. These orders  of      rejection were served on the detenu on 17.2.2006.       The detenu made another  representation dated 7.2.2006 against his detention to the Central  Government. By order dated 22.2.2006 the Central Government rejected the  said representation and a copy thereof was served on the detenu on  18.3.2006.

7.      The events subsequent to filing of the writ petition were placed on  record in the pending writ petition and the order of detention was challenged  on the following grounds :

a)      Relevant materials were withheld by the sponsoring authority  from the Detaining Authority.

b)      The Detaining Authority had considered and relied on non- existent and irrelevant material in making the order of  detention.  

c)      The translations of Hindi documents were belatedly supplied.

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d)      Copies of the documents which were relied upon by the  Detaining Authority furnished to the detenu, contained several  sheets which were illegible thereby preventing the detenu from  making an effective representation.

e)      There was inordinate delay in considering the representation  made by the detenu to the Central Government and serving the  same on the detenu.

f)      The order of detention was based on a solitary incident. There  was no material to show that there was any possibility of the  detenu indulging in smuggling activities in future.

g)      The allegations against the detenu did not amount to  ’smuggling’ and therefore the order of detention was not  justified.

A Division Bench of the Calcutta High Court rejected all these contentions  and consequently, dismissed the writ petition by judgment dated 21.4.2006.  The said judgment of the Calcutta High Court is challenged in this appeal by  special leave. Simultaneously, the petition under Article 32 has also been  filed before this Court, challenging the detention.  

8.      Though several contentions were raised in the special leave petition  and the writ petition, during arguments the challenge to the detention was  restricted to the following three grounds:

(i)     The sponsoring authority had withheld from the detaining  authority a relevant material (Order dated 15/20.4.2004  stopping EXIM benefits to Sandip Exports Ltd made under  Rule 7 of the Foreign Trade (Regulations) Rules, 1993). The  detaining authority could not therefore apply his mind to all  relevant material before making the order of detention.   (ii)    Several sheets among the copies of the documents supplied to  the detenu, were illegible and this came in the way of the  detenu making an effective representation for his release.    

(iii)   There was inordinate delay in considering the representation  dated 7.2.2006 by the detenu submitted to the Central  Government and communicating the decision to the detenu.  

Re : Point No. (i)

9.      A detention under COFEPOSA Act is anticipatory and preventive. It  is neither punitive nor curative. Preventive detention being one of the two  exceptions to the constitutional protection under Article 22 against arrest and  detention, certain procedural safeguards are provided in respect of exercise  of the power to direct preventive detention. The procedural safeguards under  the Constitution have been interpreted, to require every material which is  relevant, having a bearing on the question as to whether a person should be  detained under the Act, to be placed before the detaining authority, as the   decision to detain a person is rendered by a detaining authority on his  subjective satisfaction as to the existence of the grounds for such detention.  The sponsoring authority should not undertake any exercise of examination  and interpretation of the available material with a view to place the  documents selectively before the detaining authority. It is not for the  sponsoring authority to decide as to which of the relevant documents should  be placed before the detaining authority, or which of the documents are  likely to help, or not help, the prospective detenu. Consequently, the  sponsoring authority cannot exclude any particular document from the

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material to be placed before the detaining authority. If the relevant facts or  documents which may influence the subjective satisfaction  of the detaining  authority on the question whether or not to make the detention order, are not  placed before the detaining authority, or are not considered by the detaining  authority, it may vitiate the detention order itself. It is no answer to say that  the exclusion of a relevant document did not affect the decision to detain a  person, in view of the other documents that were placed before the detaining  authority or that the detaining authority would have come to the same  conclusion even if he had considered the said document \026 vide Attorney  General of India vs. Amratlal Prajivandas [1994 (5) SCC 54], Ashadevi vs.  K. Shivraj, Addl. Chief Secretary to the Govt. of Gujarat [1979 (1) SCC  222], Sita Ram Somani vs. State of Rajasthan [1986 (2) SCC 86]; Ayya alias  Ayub vs. State of U.P. [1989 (1) SCC 374] and Ahamed Nassar vs. State of  Tamil Nadu [1999 (8) SCC 473].  

10.     Let us examine the facts, keeping in view the said principles. In this  case, the detention order was made on the ground that the detenu had  diverted the goods, imported duty free for manufacture of goods for export,  into domestic market and thereby indulged in ’smuggling’ as defined in  section 2(39) of the Customs Act, 1962 and the facts and circumstances  showed the propensity and potentiality on the part of the detenu to continue  such prejudicial activities in future. The grievance of the detenu is that the  sponsoring authority did not place the order dated 15/20.4.2004 of the Joint  Director-General of Foreign Trade, Kolkata (made under Rule 7 of Foreign  Trade Regulation Rules 1993, stopping the grant of all EXIM benefits to M/s  Sandip Exports Limited till finalization of the proposed action against the  said company), before the detaining authority. According to him, it was a  relevant document and the non-consideration of the said document vitiated  the order of detention. The fact that the said document was available in the  records of the sponsoring authority, but was not placed before the detaining  authority, is not disputed by the respondents. Though the High Court has  referred to the contention relating to the said document (order dated  15/20.4.2004), it did not specifically deal with it.   

11.     A document is relevant for considering the case of a person for  preventive detention if it relates to or has a bearing on either of the following  two issues : (a) Whether the detenu had indulged in smuggling or other  activities prejudicial to the State, which the COFEPOSA Act is designed to  prevent; and (b) Whether the nature of the illegal and prejudicial activity and  the manner in which the detenu had indulged in such activity, gave a  reasonable indication that he would continue to indulge in such activity. In  other words, whether he had the propensity and potentiality to continue the  prejudicial activity necessitating an order of detention.  

12.     The document in question did not prove any smuggling/prejudicial  activity on the part of the detenu. It only shows that the Department of  Foreign Trade had stopped all EXIM benefits to Sandip Exports Ltd.,  pending further action, as certain illegal activities of that company had come  to its notice. The said document was, therefore, neither relevant nor  necessary to decide whether the detenu had indulged in smuggling or other  prejudicial activity. The detaining authority obtained satisfaction in regard to  that aspect from the material that was placed by the sponsoring authority to  show illegal activities which amounted to smuggling.

13.     The said document was also not relevant to establish propensity or  potentiality of the detenu to continue his illegal activities. The export-import  violations, which amount to smuggling, involve considerable planning,  organization and establishing a network. The propensity is deducible from  the modus operandi adopted by the violator, the inclination of the violator to  indulge in such activities and the further opportunity to commit such illegal  activities. Persons indulging in such prejudicial activities routinely create  ’front’  companies and firms. The fact that a particular ’front’ company is  denied the EXIM benefits will not deter a violator from continuing such  activities, as he can always operate through other ’front’ companies/firms.  The contention of the detenu that as the said order dated 15/20.4.2004,

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stopped the EXIM benefits to Sandip Exports Ltd., he could not have  continued the alleged illegal activity, and therefore, the detention order was  not warranted, is untenable. The EXIM benefits were stopped with reference  to only one company namely, Sandip Exports Ltd., and that too till  finalization of further action. The investigation and search by the Directorate  of Revenue Intelligence, had disclosed that the detenu had other ’front’  companies. In fact the detention order makes reference to a similar violation  by the detenu by using M/s. Scandia Investments (P) Ltd. which was another  ’front’ company controlled by him and his family. When the benefits of  illegal activity are stopped to a particular company, the brain behind the  violation, would merely shift the operations to another ’front’ company or  start the activities through a new company. It should also to be noted that  whenever any irregularities/violations in regard to export/ import comes to  the attention of the department, the benefits are stopped in the normal  course, pending finalization of further action.  

Therefore, it cannot be said that the document whereby EXIM benefits to  one of the companies controlled by the detenu was stopped, was a ’relevant’  document, non-consideration of which would vitiate the detention order. The  first contention is therefore rejected.  

Re : Point No. (ii)  

14.     It is contended on behalf of the detenu that several sheets in the copies  of documents furnished to him, were illegible and that prevented him from   making an effective representation. It is submitted that the procedural  safeguard under clause (5) of Article 22 requires the grounds of detention to  be communicated to the detenu and this would mean not only the grounds  but also the documents on which reliance was placed to formulate the  grounds that led to the detention. It is further submitted that the documents   required to be furnished, should be legible and in a language known to the  detenu so as to enable the detenu to give an effective representation against  the detention; that if the documents are not legible or in a language  not  known to the detenu, then it is as bad as not furnishing the documents; and  that furnishing of copies of documents is not a mere formality but an integral  part of the right of the detenu assured under the Constitution. It is contended  that the order of detention is vitiated on account of the following pages of  the documents furnished to the detenu being not legible :-  Page Nos. 124-128, 160-178, 186, 254, 255, 257, 350, 352, 357, 358, 360,  362, 368-371. 371A, 371B, 493, 497, 500, 508, 510, 515, 516, 523, 534,  538, 543, 550, 551, 608, 611, 616-21, 623-37, 682-701, 745, 750, 755,  760, 765, 769-70, 777, 780, 821, 841-43, 857-65, 872, 874, 882, 884, 887  and the last page.  

15.     In Dharmishta Bhagat vs. State of Karnataka [1989 Supp.(2) SCC  15], this Court has held that ’refusal’ on the part of the detaining authority to  supply legible copies of ’relevant’ documents to the detenu for making an  effective representation infringes the detenu’s right under Article 22(5) of  the Constitution. This Court observed :  "Therefore, it is imperative that the detaining authority has to serve the  grounds of detention which include also all the relevant documents which  had been considered in forming the subjective satisfaction by the detaining  authority before making the order of detention and referred to in the list of  documents accompanying the grounds of detention in order to enable the  detenu to make an effective representation to the Advisory Board as well  as to the detaining authority. Therefore, the non-supply of legible copy of  this vital document i.e. panchnama dated February 12, 1988 in spite of the  request made by the detenu to supply the same renders the order of  detention illegal and bad."     In Manjit Singh Garewal @ Gogi vs. Union of India [1990 Supp. SCC 59],  this Court has held that where copies supplied at the request of the detenu  were illegible, the constitutional safeguards were violated and the order  of  detention is liable to be quashed.

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16.     The High Court has examined the copies that were furnished to the  detenu. In regard to the grievance relating to illegible copies occurring  between pages 493 and 887 and the last page, the High Court found that  these were copies of the documents which were supplied by the detenu  himself, and the department could do no better than to furnish the copies  thereof. If the documents furnished by the detenu to the department  contained some portions or pages which were illegible, obviously the copies  thereof furnished by the detaining authority to the detenu will also contain  such illegible portions. The learned counsel for the appellant contented that  if really  any document furnished by the detenu was illegible, it could not  have been used against the detenu.. But this contention overlooks the fact  that a document may contain several sheets and illegibility of some sheets or  parts of some sheets will not come in the way of the authorities making use  of the legible portions of the documents furnished by the detenu,  supplemented by other documents secured during investigation. There is  nothing strange in the department making use of partially legible documents  furnished by detenu. Therefore, illegibility of portions of documents which  are copies of documents furnished by the detenu, cannot be a ground for  grievance by the detenu. Insofar as the allegation that some of the sheets  between pages 124 to 371B were illegible, the High Court after having gone  through the copies of documents furnished to the detenu, has found no  substance in the contention. In fact, while acknowledging the copies of  documents, the detenu has made an endorsement that they were legible.  

17.     The entire issue of furnishing of illegible copies is with reference to  the question whether detenu’s right to make an effective representation  against his detention is hampered by non-supply of legible copies. The High  Court after an examination of the copies of documents found that the detenu  was not so hampered. Having gone through the representations made by the  detenu against his detention, we also find that he was in no way hampered  by the fact that a few of the sheets/copies of documents were partly illegible.  We therefore find no merit in the second condition, nor any reason to  interfere with the finding of the High Court in this behalf.  

Re : Point No. (iii)  

18.     The scope of Clause (5) of Article 22 which provides that when any  person is detained in pursuance of an order made under any law providing  for preventive detention, the authority making the order shall, as soon as  may be, communicate to such person the grounds on which the order has  been made and shall afford him the earliest opportunity of making a  representation against such order, has been examined in several decisions.  Interpreting the said provision, this Court in Sk. Abdul Karim vs. the State of  West Bengal [AIR 1969 SC 1028], held as follows :-  "Apart from these enabling and. disabling provisions certain procedural  rights have been expressly safeguarded by Clause (5) of Article 22. A  person detained under a law of preventive detention has a right to obtain  information as to the grounds of detention and has also the right to make a  representation protesting against an order of preventive detention. Article  22(5) does not expressly say to whom the representation is to be made and  how the detaining authority is to deal with the representation. But it is  necessarily implicit in the language of Article 22(5) that the State  Government to whom the representation is made should properly consider  the representation as expeditiously as possible. The constitution of an  Advisory Board-under Section 8 of the Act does not relieve the State  Government from the legal obligation to consider the representation of the  detenu as soon as it is received by it. On behalf of the respondent It was  said’ that there was no express language in Article 22(5) requiring the  State Government to consider the representation of the detenu. But it is a  necessary implication of the language of Article 22(5) that the State  Government should consider the representation made by the detenu as  soon as it is made, apply its mind to It and, if necessary, take appropriate  action. In our opinion, the constitutional right to make a representation  guaranteed by Article 22(5) must be taken to include by necessary  implication the constitutional right to a proper consideration of the

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representation by the authority to whom it is made. The right of  representation under Article 22(5) is a valuable constitutional right and is  not a mere formality."

In Sk. Rashid vs. State of West Bengal [AIR 1973 SC 824], this Court  interpreting the words ’as soon as may be’ occurring in clause (5) of Article  22, held  as follows :  "The use of the Words "as soon as may be" is important. It reflects the  anxiety on the part of the framers of the Constitution to enable the detenu  to know the grounds on which the order of detention has been made so  that he can make an effective representation against it at the earliest. The  ultimate objective of this provision can only be the most speedy  consideration of his representation by the authorities concerned, for,  without its expenditious consideration with a sense of urgency the basic  purpose of affording earliest opportunity of making the representation is  likely to be defeated. This right to represent and to have the representation  considered at the earliest flows from the constitutional guarantee of the  right to personal liberty - the right which is highly cherished in our  Republic and its protection against arbitrary and unlawful invasion.

Now, whether or not the State Government has in a given case considered  the representation made by the detenu as soon as possible, in other words,  with reasonable dispatch, must necessarily depend on the facts and  circumstances of that case, it being neither possible nor advisable to lay  down any rigid period of time uniformly applicable to all cases. The Court  has in each case to consider judicially on the available material if the gap  between the receipt of the representation and its consideration by the State  Government is so unreasonably long and the explanation for the delay  offered by the State Government so unsatisfactory as to render the  detention order thereafter illegal"

In Kamleshkumar Ishwardas Patel vs. Union of India [1995 (4) SCC 51],  this Court observed thus :-  "Construing the provisions of Article 22(5) we have explained that the  right of the person detained to make a representation against the order of  detention comprehends the right to make such a representation to the  authority which can grant such relief, i.e., the authority which can revoke  the order of detention and set him at liberty and since the officer who has  made the order of detention is competent to revoke it, the person detained  has the right to make a representation to the officer who made the order of  detention. The first premises that such right does not flow from Article  22(5) cannot, therefore, be accepted."

This Court has also repeatedly held that though there can be no specific or  mechanical test for determining whether there has been undue delay, where  there is an unexplained delay in either making the order or serving the order,  it would vitiate the order of detention.

19.     The order of detention states that detenu can make representations to  (i) Detaining Authority, (ii) Central Government, and (iii) Advisory Board,  in regard to the detention. The detenu has a constitutional as also statutory  right to make a representation against detention not only to the Detaining  Authority but to any authority which can revoke the order of detention. He  can also represent to the Advisory Board constituted under section 8 of  COFEPOSA Act. Such representations no doubt should be disposed of by  the concerned authority as early as possible. The fact that the Detaining  Authority or the Advisory Board have rejected the representation of the  detenu does not discharge the Central Government from its responsibility to  consider and dispose of the representation expeditiously.  

20.     The grievance of the detenu is in respect of the representation to the  Central Government on 7.2.2006 which was rejected by the Central  Government and the detaining authority, by two separate orders dated

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22.2.2006. The Central Government in its counter-affidavit has satisfactorily  explained how the time between 7.2.2006 and 22.2.2006 was spent. But the  said orders dated 22.2.2006 rejecting the representation was served on the  detenu only on 18.3.2006. The reason why the rejection orders dated  22.2.2006 were not served till 18.3.2006 on the detenu remains unexplained.  In fact the respondents have admitted this unexplained delay in their counter  filed in this Court. We extract below the relevant portion :-  

"In this connection, it is submitted that the Superintendent, Presidency  Correctional Home, Kolkata was requested to serve the original of the said  two memorandums on the detenu and obtain signature thereon which he  did on 18th March, 2006. IG (Prisons) and Chief Secretary, Government of  West Bengal, have been asked to look into the circumstances leading to  delayed submission of rejection memos to the detenu."  

21.     The grievance of the detenu is in regard to the delay in  communicating the decision dated 22.2.2006 of the Central Government till  18.3.2006. The learned counsel for the respondent however relied on the  decision of this Court in Abdul Razak Dawood Dhanani vs. Union of India  [2003 (9) SCC 652], to contend that delay on the part of the Central  Government in considering the detenu’s representation or the delay in  communication of such decision on the detenu will not be material, where  the Central Government has already considered the representation of the  detenu and rejected it and what is delayed is the decision on the second  representation. In that case, the representation dated 12.4.2002 given by the  detenu to the three authorities namely, Advisory Board, Detaining Authority  and Central Government were rejected respectively by orders dated  19.4.2002, 06.5.2002 and 08.5.2002. In addition to the first representation  dated 12.4.2002, the detenu had submitted a further representation dated  19.4.2002 to the Central Government and the grievance was that the second  representation had not been disposed of by the Central Government by a  separate order. This Court rejected the contention on the ground that the  second representation dated 19.4.2002 contained the same grounds and same  material as contained in the first representation dated 12.4.2002 and in the  absence of any fresh ground or material or subsequent event justifying the  consideration of the second representation, the Central Government was not  bound to pass separate order disposing of the second representation. The  ratio of that decision squarely applies to this case.

22.     In this case we find that the first representation dated 16.1.2006 was  disposed of by the Advisory Board, Detaining Authority and Central  Government on 27.1.2006, 10.2.2006 and 13.2.2006. The second  representation dated 7.2.2006 given to the Central Government is nothing  but a reiteration of the representation that was given to the Advisory Board  on 16.1.2006 copies of which were given to detaining authority and Central  Government. The representation dated 16.1.2006 had already been  considered and rejected by the Central Government by order dated  13.2.2006. Therefore applying the principle in Abdul Razak Dawood  Dhanani (supra), any delay in disposing of the subsequent representation  dated 7.2.2006 or any delay in communicating the decision on such  representation will not vitiate the order of detention. The third contention is  also therefore rejected.

23.     As a result, we dismiss the appeal as also the writ petition as having  no merit.