RAJENDRAN CHINGARAVELU v.

MR. R.K. MISHRA, ADDL. COMMISSIONER OF I T & ORS. (Civil Appeal No. 7914 of 2009)

NOVEMBER 24, 2009 [R.V. Raveendran and K.S. Radhakrishnan, JJ.]

[2009] 15 (Addl.) SCR 1113

The Order of the Court was delivered by

O R D E R

R.V. RAVEENDRAN, J. 1. Leave granted. Heard.

2.  The  case  of  the  appellant  in  brief  is  as  follows:  The  appellant,  a  

Computer  Engineer,  who  was  lucratively  employed  in  United  States  of  

America for more than ten years, returned to India with his earnings and took  

up employment in Hyderabad in the year 2006. He wanted to buy a property  

at  Chennai.  But  his  attempts  were  not  fruitful.  He was advised  that  if  he  

wanted to buy a good plot, he must be ready to pay a considerable part of the  

sale price in cash as advance to the prospective seller. When the appellant  

ultimately identified a prospective seller, he wanted to go to Chennai with a  

large sum and finalise the deal.  He contacted the Reserve Bank of India,  

ICICI Bank (his Banker) and the Airport Authorities to find out whether he can  

carry a large sum of money in cash, while travelling. He was informed that  

there was no prohibition. Thereafter he drew Rs.65 lakhs from his bank. He  

travelled by air from Hyderabad to Chennai on 15.6.2007, carrying the said  

cash. At the Hyderabad Airport, he disclosed to the security personnel who  

checked his baggage that he was carrying cash of Rs.65 lakhs along with a  

bank certificate certifying the source and withdrawals. After the contents of  

his bags were examined by the security personnel, he was allowed to board  

the aircraft without any objection. But when the flight reached Chennai, some  

police officers and others (who were later identified as officers of Income Tax  

Investigation Wing) rushed in, loudly called out the name of the appellant.

When appellant identified himself, he was virtually pulled from the aircraft and  

taken to an office in the first floor of the airport.  He was questioned there  

about the money he was carrying. The appellant showed them the cash and  

bank  certificate  evidencing  the  withdrawals  and  explained  as  to  how  the  

amounts formed part of his legitimate declared earnings which were drawn  

from his bank’s account. He also explained to them the purpose of carrying  

such huge amount. The officers recorded his statement. After a few hours,  

the second respondent came in and asked the appellant to sign some papers  

without  allowing  him  to  read  them  and  without  furnishing  him  copies.  It  

became  obvious  to  the  appellant  that  the  officers  of  the  Income  Tax  

Department were suspecting him of carrying the money illegally. They even  

attempted to coerce him to admit that the amount was being carried by him  

for some illegal purpose. Having failed, they seized the entire amount under a  

mahazar, gave him a receipt and permitted him to leave. In this process, he  

was detained for about 15 hours without any justifiable reason. To add insult  

to the injury, the Tax Intelligence Officers prematurely and hurriedly informed  

the  newspapers,  that  they  had  made  a  big  haul  of  Rs.65  lakhs  in  cash,  

making  it  appear  as  though  the  appellant  was  illegally  and  clandestinely  

carrying the said amount, and they had successfully caught him while he was  

at  it.  The  next  day  all  three  leading  Tamil  newspapers  (Daily  Thanthi,  

Dinamalar, Dinamani) as also an English daily  Hindu, prominently carried the  

news  of  the  seizure  from  him.  The  news  reports  disclosed  his  name,  

profession,  his native place in Tamil  Nadu,  his place of  employment.  The  

news  report  also  stated  that  he  was  not  able  to  satisfactorily  explain  the  

source of the amount and that the officials had found discrepancies between  

what was drawn by him from the bank and what he was carrying. Ultimately,  

two  months  later,  after  completing  the  investigation  and  verification,  as  

nothing was found to be amiss or irregular, the seized money was returned to  

him, but without any interest.

3. The appellant lists the following four acts on the part of the Income Tax  

Officials as objectionable and violative of his fundamental rights : (i) his illegal  

detention for more than 15 hours at the Chennai Airport; (ii) illegal seizure of  

the  cash  carried  by  him  despite  his  explanation  about  the  source  and  

legitimacy of the funds with supporting documents; (iii) failure to return the  

seized amount for more than two months without any justification; and (iv)  

prematurely and maliciously disclosing to the media a completely false picture  

of  the  incident.  The  said  acts,  according  to  him,  tarnished  his  reputation  

among his friends, relatives and acquaintances, by being dubbed as some  

sort  of  a  criminal.  Being  aggrieved,  he  filed  a  writ  petition  (WP  

No.27344/2007)  in  the High Court  of  Andhra Pradesh in  December,  2007  

seeking several reliefs. He sought action against the Income Tax officials and  

the  newspapers.  He  also  sought  compensation  for  the  illegal  acts,  and  

quashing of the proceedings initiated against him under Income Tax Act. He  

sought appropriate directions for reforming and streamlining the procedure  

relating  to  checking  of  passengers.  He  also  sought  some  consequential  

reliefs. He impleaded four officers of the Income Tax department, the Director  

of the Hyderabad Airport and the editors of the three Tamil newspapers as  

respondents.

4. The said writ petition was dismissed by the High Court on 17.6.2008 on  

the ground that no part of the cause of action arose within Andhra Pradesh.  

The  contentions  raised  by  the  appellant  were  not  considered.  The  court  

directed the appellant to approach the appropriate court at Chennai. The said  

order is challenged in this appeal by special leave.

5. The first question that arises for consideration is whether the Andhra  

Pradesh High Court was justified in holding that as the seizure took place at  

Chennai  (Tamil  Nadu),  the  appellant  could  not  maintain  the  writ  petition  

before it. The High Court did not examine whether any part of cause of action  

arose in Andhra Pradesh. Clause (2) of Article 226 makes it clear that the  

High Court exercising jurisdiction in relation to the territories within which the

cause of  action  arises  wholly  or  in  part,  will  have  jurisdiction.  This  would  

mean that even if a small fraction of the cause of action (that bundle of facts  

which  gives  a  petitioner,  a  right  to  sue)  accrued  within  the  territories  of  

Andhra Pradesh, the High Court  of that State will  have jurisdiction. In this  

case, the genesis for the entire episode of search, seizure and detention was  

the action of the security/ intelligence officials at Hyderabad Airport (in Andhra  

Pradesh)  who  having  inspected  the  cash  carried  by  him,  alerted  their  

counterparts at the Chennai Airport that appellant was carrying a huge sum of  

money, and required to be intercepted and questioned. A part of the cause of  

action therefore clearly arose in Hyderabad. It is also to be noticed that the  

consequential income tax proceedings against him, which he challenged in  

the writ petition, were also initiated at Hyderabad. Therefore, his writ petition  

ought not to have been rejected on the ground of want of jurisdiction.

6. Normally, we would have set aside the order and remitted the matter to  

the High Court for decision on merits. But from the persuasive submissions of  

the appellant, who appeared in person on various dates of hearing, two things  

stood out.  Firstly,  it  was clear  that  the main object  of  the petition was to  

ensure that at least in future, passengers like him are not put to unnecessary  

harassment or undue hardship at Airports. He wants a direction for issuance  

of clear guidelines and instructions to the inspecting officers, and introduction  

of  definite  and  efficient  verification/investigation  procedures.  He  wants  

changes in the present protocol where the officers are uncertain of what to do  

and seek instructions and indefinitely wait for clearances from higher ups for  

each and  every  routine  step,  resulting  in  the  detention  of  passengers  for  

hours  and  hours.  In  short,  he  wants  the  enquiries,  verifications  and  

investigations to be efficient, passenger-friendly and courteous. Secondly, he  

wants  the  department/concerned  officers  to  acknowledge  that  he  was  

unnecessarily harassed.

7.  As the first  issue required a decision at  the level  of  the concerned  

Ministry and Central Board of Direct Taxes, instead of remitting the matter to

the High Court, we requested Mr. Gopal Subramanium, the learned Solicitor  

General to take notice and suggest a solution. He agreed to have the matter  

examined as to whether there was a need for issue of guidelines.

8. Taking note of the issue, the Central Board of Direct Taxes, Ministry of  

Finance has issued a circular dated 18.11.2009 setting out the guidelines to  

be followed by Air Intelligence Units or Investigation Units while dealing with  

air passengers with valuables at the airports of embarkation or destination, to  

avoid any undue inconvenience to them. The said circular is extracted below :

“Subject : Avoiding harassment in the course of enquiry/search of the air  

passengers by the Air Intelligence Units/Investigation Units of the Income  

Tax Department.

Detailed procedure regarding enquiry and identification of the passengers  

at the airports for action under section 132 of the Act has been laid down  

in the Search & Seizure Manual, 2007 (pp.92-95 of Volume-I). Instances  

have come to the notice of  the Board where some of  the passengers  

have allegedly felt harassed. In view of this, the following guidelines are  

laid down in this regard, which he followed strictly by Air Intelligence Units  

or Investigation Units while dealing with air passengers at the airports of  

embarkation or destination:

(i) On the basis of information through the scanner in check-in-area  

and  security  hold  area,  further  enquiry/action  under  section  

131/132/133A of the Income tax Act, 1961 may be conducted within  

the  time  available  before  the  departure  of  the  flight  of  the  

passenger(s).  Alternatively,  the  information  may  be  passed  on  

quickly to the Air Intelligence Unit at the Airport of destination and,  

in case there is no Air Intelligence Unit at the airport of destination,  

to  the  local  Investigation  Unit.  On  getting  such  information,  the  

recipient  Unit  will  carry  out  necessary  enquiries  as  quickly  as  

possible  so  as  to  intercept  the  passenger  at  the  exit  of  the  

destination airport.

(ii) When the passenger is intercepted at the airport of destination  

and  his  statement  is  recorded  to  ascertain  the  accounted  or  

unaccounted nature of the cash, bullion, jewellery etc., being carried  

by  him,  the  Unit  recording  the  statement  may  not  wait  for  the  

conclusion of the statement before taking steps to obtain warrant of  

authorization  from  the  concerned  Authority.  As  soon  as  the  

information is sufficient to infer that the assets are unaccounted, the  

concerned authority may be contacted and the information may be  

furnished to him for obtaining warrant of authorisation.

(iii)  For  issuing  such  warrant  of  authorisation,  the  Director  of  

Income-Tax (Investigation) should carry blank forms and his official  

seal. Before issuing such authorisations, he may try to obtain the  

administrative  approval  from  the  Director  General  of  Income-tax  

(Investigation) telephonically. In case he is not able to contact him,  

he should still  issue the authorisation under his statutory powers  

without  loss  of  time.  Such  warrant  of  authorisation  may  be  

communicated expeditiously.

(iv)  The  statement  may  be  recorded  in  the  language  which  the  

passenger understands. The statement should invariably be read to  

him  before  asking  for  his  signature.  He  should  be  given  full  

opportunity  to  go  through  the  statement,  questions  as  well  as  

answers,  before  putting  his  signature  and  to  make  amendments  

under his signature if there is variation in what he said and what  

was recorded. It should be ensured that what is recorded is stated  

voluntarily without any coercion. At the end of the statement, the  

passenger should be requested to write in his own handwriting that  

it was given voluntarily and it recorded truthfully what was stated by  

him.

(v)  The  procedure  regarding  administering  of  oath  may  be  duly  

followed.

(vi) The proceedings of enquiry and action may be completed as  

expeditiously as possible. In the course of these proceedings, the  

passenger should be provided drinking water, tea, snacks and food  

in  case  the  passenger  desires  the  same.  He  should  also  be  

provided medical assistance in case it is required.

(vii) In case the seizure involves bullion or jewellery, the services of  

an  approved  valuer  should  be  obtained  expeditiously.  For  this  

purpose, while granting approval under section 34AB of the Wealth  

Tax Act, the Chief Commissioners/Director Generals should put a  

condition that the approved valuer shall be available for providing  

his services at any time, at any place, at any place, at short notice  

and even at odd hours.

(viii)  On the  conclusion  of  the  search,  the  passenger  should  be  

dropped at the place he wants to go in the government vehicle, if he  

makes a request on the ground of security etc.

(ix)  The  officer  would  take  adequate  precautions  and  steps  to  

ensure that enquiry/investigation undertaken at the airports is kept  

confidential  and  any  premature  disclosure  to  the  media  

(print/electronic) is avoided.”

The Directors General of Income-tax (Inv.) and Directors of Income-

tax  (Inv.)  are  requested  to  ensure  that  these  guidelines  are  

complied with by  all the concerned authorities.”

[Note : Instruction (ix) is being added to the notification dated 18.11.2009 by  

issuing  an  amendment,  as  stated  in  the  department’s  Additional  affidavit  

dated 23.11.2009]

9. In regard to the merits of the case and the claim for compensation, the  

learned Solicitor General submitted that  whatever action was taken by the  

security/intelligence officials at Hyderabad and Chennai Airports, was in the  

line  of duty. He submitted that a legitimate suspicion was created in the mind

of the officers on account of appellant carrying an unusually large sum of  

money in cash; that even though the appellant offered some explanation and  

produced a  bank certificate in regard to withdrawals,  they required to be  

verified. He submitted that two factors necessitated the appellant’s prolonged  

stay at the Airport for purposes of enquiries and verification and the seizure of  

the cash : (i) The appellant had given contradictory statements regarding the  

proposed purchase of land by him. Initially he had stated that the deal was  

yet  to  be  finalised.  But  the  documents/  investigation  showed that  he  had  

already paid some advance to the seller  by cheque.  (ii)  There was some  

variation  between  the  denominations  of  cash  in  the  possession  of  the  

appellant  and  the  cash  withdrawn from ICICI  Bank.  The  learned  Solicitor  

General submitted that the appellant is not free from blame, as by his unwise  

and  rather  naïve  decision  to  carry  such  a  large  sum  of  money,  creates  

suspicion. He also pointed out that appellant put himself to personal risk by  

carrying such an amount of cash. He pointed out that in the circumstances,  

the delay and seizure were inevitable.

10. We are in agreement with the submissions of the learned Solicitor  

General.  When the bonafides  of  a  passenger  carrying  an unusually  large  

sum, and his claims regarding the source and legitimacy, have to be verified,  

some delay and inconvenience is inevitable. The inspecting and investigating  

officers have to make sure that the money was not intended for any illegal  

purpose. In such a situation, the rights of the passenger will have to yield to  

public interest. Any bonafide measures taken in public interest, and to provide  

public safety or to prevent circulation of black money, cannot be objected as  

interference with the personal liberty or freedom of a citizen. We are satisfied  

that  the  actions  of  the  officers  of  the  investigation  wing  in  detaining  the  

appellant for questioning and verification, and seizing the cash carried by him,  

were bonafide and in the course of discharge of their official duties and did  

not furnish a cause of action for claiming any compensation. The nation is  

facing terrorist threats. Transportation of large sums of money is associated

with distribution of funds for terrorist activities, illegal pay offs etc. There is  

also  rampant  circulation  of  unaccounted  black  money  destroying  the  

economy of  the country.  In  this  background if  the  officers  wanted  to  fully  

satisfy themselves that the funds were not intended for any illegal purposes,  

such action cannot be termed as highhanded or unreasonable.

11.  The appellant  contended that  when he had demonstrated that  the  

money  carried  by  him  was  drawn  from his  bank  and  formed  part  of  his  

legitimate  earnings,  and  when  there  was  no  legal  prohibition  in  law  for  

carrying such money, there was no justification for detaining him for 15 hours  

or  for  seizing the money that  was carried by him.  He contended that  the  

purpose for which he was carrying the money was not relevant at that stage  

as he could use the money for any purpose; that if he used the money for any  

illegal purpose, he could always be prosecuted; and that therefore, seizure of  

money  legally  held  and  carried,  merely  on  baseless  suspicions,  was  not  

warranted. The appellant is looking at the issue from the narrow angle of the  

right of a citizen to carry money which is duly accounted for from a disclosed  

source. It is no doubt true that a person has the right to carry money, whether  

his own or under authority of the person owning it,  in the absence of any  

prohibition. But the purpose for which the money is carried is also important  

from the point of view of intelligence gatherers. Money which is drawn from a  

Bank and legitimately belonging to the carrier, may still be used for an illegal  

purpose, - say to pay for a crime or to fund an act of terrorism. It may also be  

used for a routine illegal function - to make part payment of sale consideration  

for a property in cash, so that the full price is not reflected in the sale deed,  

resulting in evasion of stamp duty and registration charges and evasion of  

payment of capital gains and creation of black money. The carrying of such a  

huge sum, itself gives rise to a legitimate suspicion. The intelligence officers  

are therefore entitled to satisfy themselves, not only that the money is from a  

legitimate source, but also satisfy themselves that  such a large amount is  

being carried for a legitimate purpose.  That is necessary in the interest of

preventing crimes and offences. Therefore, even if the carrier is not guilty of  

any  offence  in  carrying  the  money,  the  verification  or  seizure  may  be  

warranted to ensure that the money is not intended for commission of a crime  

or offence.

12.  It  is  not  only  the security/intelligence personnel  who require to  be  

sensitised, but also the air travelling public some of whom throw tantrums and  

create  scenes  at  Airports,  even  for  minimum  delays  and  checking  

procedures.  When  security  protocols  are  in  place,  certain  hardship  and  

inconvenience is inevitable,  and should be accepted with  grace,  patience,  

and discipline.  Many a  traveller  forgets  that  the  vigilance and checks are  

meant for their own interest.

13. But the appellant’s grievance in regard to media being informed about  

the incident even before completion of investigation, is justified. There is a  

growing  tendency  among  investigating  officers  (either  police  or  other  

departments)  to  inform  the  media,  even  before  the  completion  of  

investigation, that they have caught a criminal  or an offender.  Such crude  

attempts to claim credit for imaginary investigational breakthroughs should be  

curbed.  Even  where  a  suspect  surrenders  or  a  person  required  for  

questioning  voluntarily  appears,  it  is  not  uncommon  for  the  Investigating  

Officers to represent to the media that the person was arrested with much  

effort after considerable investigation or a chase. Similarly, when someone  

voluntarily declares the money he is carrying, media is informed that huge  

cash which was not declared was discovered by their vigilant investigations  

and thorough checking. Premature disclosures or ‘leakage’ to the media in a  

pending  investigation  will  not  only  jeopardise  and  impede  further  

investigation, but many a time, allow the real culprit to escape from law. Be  

that as it may.

14.  The  department’s  additional  affidavit  dated  23.11.2009  expressed  

regret for the inconvenience caused to the appellant and also assuages the  

apprehension felt by appellant that he would be harassed for having taken the

department to court. The relevant portions of the affidavit are extracted below  

:

“I state and submit that the petitioner has alleged  harassment against  

various Income Tax Officers who had questioned hum on the possession  

of Rs.65 lakhs upon his disembarkation at Chennai on 15th June, 2007.  

The inconvenience caused to the petitioner, under the circumstances, is  

regretted. Further, I state and submit that the actions of the officers were  

not  intended  to  harass  or  cause  any  inconvenience  to  the  petitioner.  

Moreover,  these  actions  were  in  furtherance  of  the  prevailing  

circumstances where adequate precaution and sensitization is rendered  

necessary.

I state and submit that the petitioner has referred to certain notices issued  

by the Income Tax Department under section 142(1) of the Income Tax  

Act,  1961,  dated  20th  November,  2009  in  respect  of  the  assessment  

years  2002-03,  2003-04,  2004-05,  2006-07  and  2007-08.  I  state  and  

submit  that  the  assessments  of  the  petitioner,  pursuant  to  the  above  

notices, will be undertaken strictly in accordance with law.”

15. The bonafides of the intelligence wing officials at Chennai is not open  

to question, though their enthusiasm might have exceeded the limits when  

they went  to  press in  regard to  the seizure.  We are of  the view that  the  

remedial action by the department and the expression of regret serves and  

achieves the purpose of appellant filing the writ petition. In view of the above,  

the appeal is disposed of, treating the entire episode as closed. The appellant  

is not entitled to any further relief in the matter.

16. The efforts of the learned Solicitor General to find a solution to reduce  

the hardships of the travelling public without compromising the  

security/intelligence concerns, requires to be appreciated.