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PETITIONER: STATE, BY NILRATAN SIRCAR, ENFORCEMENT OFFICER

       Vs.

RESPONDENT: LAKSHMI NARAN RAM NIWAS

DATE OF JUDGMENT: 14/04/1964

BENCH: DAYAL, RAGHUBAR BENCH: DAYAL, RAGHUBAR HIDAYATULLAH, M.

CITATION:  1965 AIR    1            1964 SCR  (7) 724

ACT: Criminal  Trial-Documents seized-Period provided by  statute for  retention of seized documents--Whether can be  extended by Magistrate-Power of Magistrate in respect of retention of documents-Seizure made under special Act-Provisions of  Code relating  to  search  whether  applicable-Foreign   Exchange Regulation Act, 1947, sub-s. (3) of s. 19, s. 19-A-Code  of, Criminal Procedure, 1898 (Act V of 1898), ss. 5(2), 96,  98, 101, 102, 103.

HEADNOTE: On  May  14,1959 ,a number of documents  were  seized   from the possession of the respondent by the Enforcement  Officer in  execution of a search warrant.  The search  warrant  was issued  by the Chief Presidency Magistrate under sub-s.  (3) of s. 19 of the Foreign Exchange Regulation Act, 1947.   The Director  of  Enforcement with the permission of  the  Chief Presidency Magistrate retained those seized documents for  a period  exceeding  four  months.  On October  5,  1959,  the respondent filed an application before the Chief  Presidency Magistrate  in  which he claimed the return  of  the  seized documents  on the basis, of the provision of s. 19-A of  the Foreign  Exchange Regulation Act.  On this  application  the Chief  Presidency Magistrate directed the return of all  the documents to the respondent except those mentioned at  items 2  and  7  of the search list.  The respondent  went  up  in revision  against this order for the continued retention  of the  two documents, and the High Court allowed the  revision and  ordered  the  return of these  documents  also  to  the respondent.   Against  this order appeal was filed  in  this Court. Held:(i)  The  Magistrate  has  no  jurisdiction  over   the articles  seized in execution of the search  warrant  issued under  s. 19(3) of the Foreign Exchange Regulation  Act  and that he cannot permit the retention of such documents by the Director of Enforcement after the expiry of the period he is entitled  to keep them in accordance with the provisions  of s.  19-A  of the Act.  The Enforcement Officer has  a  right under s. 19-A to retain the articles seized for a period not exceeding  four  months and it is not necessary for  him  to obtain  permission  from the Magistrate  for  retaining  the seized  documents within the statutory  period.   Therefore,

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the Magistrate issuing the search warrant has nothing to  do with  the retention or disposal of the documents  seized  in execution of the search warrant either during the  statutory period of four months or after the expiry of that period. Mohammad Serajuddin v. R. C. Mishra, [1962] 1 Supp. S.C.R. 545, distinguished. (ii) In  view of the specific provision for the issue  of  a search  warrant  under sub-s. (3) of s. 19  of  the  Foreign Exchange  Regulation Act, the provisions of ss. 96,  98  and Form No. 8 of Schedule V of the Code would not be applicable to  the  search warrants issued under sub-s. (3) of  s.  19. The  provisions of SS. 101, 102, 103 of the Code will  apply to searches under sub-s. (3) of s. 19 of the Act as there is no specific provision in the Act with respect to the conduct of the search. 725 (iii)  The provisions of s. 5(2) of the Code will not  apply to an investigation conducted under the Act because the  Act is  a  special  Act and it provides  under  s.19-A  for  the necessary   investigation   into   the   alleged   suspected commission of an offence" under the Act, by the Director  of Enforcement. (iv) No  express provision is necessary in the  statute  for the  return of documents after the expiry of  the  statutory period.  Provisions are necessary for retaining documents of others  and  not  for returning them  to  persons  entitled. Therefore  the documents seized have to be returned  to  the person from whose possession they had been seized after  the expiry of the statutory period. (v)  Under s.19-A of the Act the Director of Enforcement can justifiably  retain with himself the documents  seized  till the  final disposal of the proceedings taken under  s.23  of the  Act if the proceedings had commenced before the  period of  four months, during which he could keep  the  documents. In  the  present  case  he could  not  have  retained  those documents beyond four months because no such proceeding  had been commenced within 4 months. In  the present case proceedings under s.23 did start  prior to  the order for the return of documents.  On the facts  of this  case it was held that the direction of the  Magistrate in regard to the retention of documents was an order  giving effect to the spirit behind the provision of s. 19-A.

JUDGMENT: CRIMINAL  APPELLATE JURISDICTION: Criminal Appeal No. 83  of 1961.   Appeal  from the judgment and order dated  June  20, 1960,  of the Calcutta High Court in Criminal  Revision  No. 1525 of 1959. H.   R.  Khanna,  K. L. Hathi and R. N.  Sachthey,  for  the appellant. G.   S.  Pathak, B. Datta, J.  B. Dadachanji, O.  C.  Mathur and Ravinder Narain, for the respondent. April 14, 1964.  The judgment of the Court was delivered by RAGHUBAR  DAYAL, J.--This appeal, on certificate granted  by the Calcutta High Court, is directed against an order of the High  Court dated June 20, 1960 reversing the Order  of  the Chief  Presidency  Magistrate directing  return  of  certain documents to the respondent, and has arisen in the following circumstances: On April 6, 1959, the Chief Presidency Magistrate, Calcutta, ordered  the issue of search warrants on the application  of the  Enforcement Officer, Enforcement Directorate,  Ministry of  Finance,  under sub-s. (3) of s. 19 of the  Foreign  Ex-

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change  Regulation Act, 1947 (Act VII of 1947).  The  search warrant was issued on May 6, 1959.  It required the  produc- tion  of  documents  seized,  before  the  Magistrate.    In execution of the search warrant, a number of documents  were seized  from  the possession of the respondent  on  May  14, 1959.  The 726 Enforcement  Officer reported that day that a  certain  room could  not be searched and therefore further action  on  the search warrant was to be taken.  He also noted in his appli- cation, for the Chief Presidency Magistrate’s information:               "that  the  seized documents as  per  enclosed               Seizure  Memo  have  been  kept  with  us  for               scrutiny  and those will be retained till  the               completion of the enquiry or- the adjudication               proceedings  as the case may be and  a  report               will be submitted to Your Honour thereafter." on  May  28. 1959, the Enforcement Officer  applied  to  the Chief Presidency Magistrate for permission for the retention of  the seized documents for a period of two months for  the submission  of  further  report in the  matter.   The  Chief Presidency  Magistrate  granted  the  necessary  permission. Similar permission was again granted on applications, by the Chief  Presidency Magistrate, on July 28 and  September  28, 1959. On  October  5, 1959, the respondent applied  to  the  Chief Presidency  Magistrate  for an order of return of  the  said documents  as the statutory period of 4 months during  which the  Director  of Enforcement could keep the  documents  had expired,  and no proceedings had been commenced against  him under  s.  23 of the Act.  The claim for the return  of  the documents was based on the provisions of s. 19-A.  On  Octo- ber  20,  1959 the Chief Presidency Magistrate  ordered  the return of the seized files to the respondent.  He,  however, modified  this  order the same day, when his  attention  was drawn to his earlier order dated September 28, 1959  permit- ting  the Enforcement Officer to retain the  documents  till November  28, 1959.  He directed the matter to be heard  ’on October 26, 1959 and on that day, in view of the Investigat- ing  Officer  being  on  leave,  adjourned  the  matter  for decision to November 10, 1959. in  his  application  presented on  November  10,  1959  the Enforcement Officer stated that the Director of  Enforcement had started adjudication proceedings against the  respondent for  alleged violation of s. 4(1) of the Act and had  issued notice to him to show cause and that in connection with  the adjudication proceedings seized files items Nos. 2 and 7  of the  Seizure  Memo  would be required and  that  he  had  no objection to the return of the remaining seized files though they might have some distant bearings on those proceedings. The  Chief  Presidency Magistrate ordered, on  November  10, 1959, the return of all the documents except those mentioned at items 2 and 7 of the search list.  The respondent went up in revision against this order for the continued retention 727 of  the  two  documents, and the  High  Court   allowed  the revision  and ordered the return of these documents also  to the s respondent.  It is against this order that this appeal has been filed. We may first refer to the relevant provisions of ss. 19  and 19-A of the Act, and later to certain provisions of the Code of  Criminal  Procedure,  hereinafter called  the  Code,  to appreciate the contention for the parties.               "19(1).   The Central Government may,  at  any               time by notification in the Official  Gazette,

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             direct owners, subject to such exceptions,  if               any, as -nay be specified in the notification,               of such foreign exchange or foreign securities               as  may  be  so specified, to  make  a  return               thereof  to  the  Reserve  Batik  within  such               period, and giving such particulars, as may be               so specified.               Government  or the Reserve Bank  considers  it               necessary  or expedient to obtain and  examine               any information, book or other document in the               possession  of  any  person or  which  in  the               opinion  of  the  Central  Government  or  the               Reserve Bank it is possible for such person to               ’obtain  and furnish, the  Central  Government               or, as the case may be, the Reserve Bank  may,               by  order in writing, require any such  person               (whose  name shall be specified in the  order)               to  furnish, or to obtain and furnish, to  the               Central Government or the Reserve Bank or  any               person  specified  in  the  ’order  with  such               information, book or other document.               (3)   If on a representation in writing,  made               by  a person authorised in this behalf by  the               Central  Government  or the  Reserve  Bank,  a               District      Magistrate,       Sub-Divisional               Magistrate,    Presidency    Magistrate     or               Magistrate  of the first class, has reason  to               believe  that  a contravention of any  of  the               provisions  of this Act has been, or is  being               or is about to be, committed in any place,               (2)  of  this  section has been  or  might  be               addressed,  will not or would not produce  the               information, book or other document,               or  where  such  information,  book  or  other               document is not known to the Magistrate to  be               in the possession of any person,               or  where  the Magistrate considers  that  the               purposes  of any investigation  or  proceeding               under  this  Act will be served by  a  general               search or inspection,               728               he  may issue a search warrant and the  person               to whom such warrant is directed may search or               inspect in accordance therewith and seize  any               book or other document, and the provisions  of               the Code of Criminal Procedure, 1898  relating               to  searches under that Code shall, so far  as               the  same  are applicable, apply  to  searches               under this sub-section: Provided that such warrant shall not be issued to any police officer below the rank of sub-inspector. Explanation.-In  this subsection, ’place’ includes a  house, building, tent, vehicle, vessel or aircraft.               19-A.   Where  in pursuance of an  order  made               tinder  sub-section (2) of section 19 or of  a               search warrant issued under sub-section (3) of               the  said section, any book or other  document               is  furnished or seized, and the  Director  of               Enforcement  has reasons to believe  that  the               said   document  would  be  evidence  of   the               contravention of any of the provisions of this               Act  or of any rule, direction or  order  made               thereunder, and that it would be necessary  to               retain the document in his custody, he may  so               retain  the  said document for  a  period  not

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             exceeding four months or if. before the expiry               of  the said period of four months,  any  pro-               ceedings under section 23:-               (a) have been commenced before him, until  the               disposal of those proceedings, including,  the               proceedings  before  the Appellate  Board,  if               any, or               (b)   have  been  commenced  before  a  Court,               until  the  document has been  filed  in  that               Court." Chapter VII of the Code provides for processes to compel the production of documents etc.  Section 94 empowers the  Court to issue a summons to a person in possession of the document or whose production is considered necessary or desirable for the  purpose of any investigation, inquiry, trial  or  other proceeding under the Code to produce the same before it.  In certain  circumstances  mentioned in s. 96 it  may  issue  a search warrant, for conducting the search for such documents or articles as are mentioned in s. 94.  The combined  effect of the two sections is that the articles seized in execution of  the  search  warrant  have to  be  produced  before  the Magistrate  and  the Magistrate thereafter  passes  suitable orders about the custody or return of those documents.  Form 8,  Schedule  V, of the Code gives the form  of  the  search warrant and contains a direction that the articles seized be produced  forthwith before the Court.  Sections 98 and  99-A deal with search 729 warrants  in special circumstances and ss. 101 to  103  come under the  general  provisions relating to searches. The appellant’s main contentions are: 1.The  provisions of s. 19-A limit the period for  retaining the documents seized in execution of a search warrant issued under s. 19 to 4 months by the  Director of Enforcement  but does  not limit the power of the Court  issuing  the  search warrant  to pass any orders for the retention of the  seized documents  or  with  respect  to  the  disposal  ’of   those documents. 2.   In  the  absence of any prescribed  procedure  for  the issue of a search warrant under s. 19, the provisions of ss. 96,  98  and  Form  8 of Schedule V of  the  Code  would  be applicable to the search warrants issued under s. 19. 3.The  Court has inherent power to pass proper  orders  with respect  to  the retention of the documents seized  for  the purposes of investigation and proceedings following it. 1.Section 19 and, 19-A are special provisions which  provide for  special  procedure  for investigation  of  the  several offences created by the statute and were enacted in order to remove  certain difficulties in investigation which  led  to the  keeping of documents of citizens unduly long  and  thus causing  them inconvenience and harassment, and  to  relieve the Magistrate of his repeatedly dealing with police reports for  permission to retain the documents and  that  therefore when s. 19-A fixes the maximum duration for the retention of the documents by the Director of Enforcement at 4 months and thus  prohibits further detention except in certain  circum- stances  by  the officer concerned,  the  Magistrate  cannot allow  the  Director of Enforcement to  keep  the  documents beyond four months. 2.There is no provision in the Act empowering- the Court  to extend  the  period for the detention of documents  and  any such power in the Magistrate will defeat the very object  of the Act. 3.   The  provisions of the Code relating to searches  under the Code apply so far as the same be applicable to  searches

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under  sub-s.  (3)  of s. 19 of the Act  and  therefore  the provision of the Code giving jurisdiction to the  Magistrate over  the property seized in execution of a  search  warrant issued  by  him will not fully apply to property  seized  in execution  of the search warrant issued under sub-s. (3)  of s. 19. The  first  question  to  determine  is  whether  Magistrate issuing the search warrant has control over the disposal  of the  articles  seized  in execution  of  the  warrant.   The provisions of the Code relating to searches apply to  search warrants issued under sub-s. (3) of s. 19 but only in so far as they be 730 applicable.   The provisions dealing with the  circumstances in which, and the authorities by which, search warrants  can be  issued cannot apply, in view of the  specific  provision for  the issue of a search warrant under the Act  in  sub-s. (3)  of s. 19. Sections 96, 98 and Form 8 of Schedule V,  do not therefore operate in connection with searches under sub- s. 19.  It is therefore the provisions which deal with  what is done after the issue of a search warrant which have  been made   applicable  to  searches  under  the  Act  and   such provisions therefore would be the provisions relating to the mode  of  conducting searches.The object  of  the  aforesaid provision  in  sub-s.  (3) of s. 19 is to  provide  how  the searches  are to be conducted as it deals with the issue  of search  warrant  in sub-s.   (3) of s.19. It  is  only  with respect to the intervening stage, that is    the  stage   of actual search that no specific Provision is made in    the Act.  We are therefore of opinion that, the provisions under sub-s.  (3)  of  s. 19 are the provisions  relating  to  the conduct  of searches and that these provisions are ss.  101, 02  and  103  of  the Code.  What is to  be  done  with  the articles seized does not strictly come within the expression ’searches’.   It is dealt with in s. 19-A.  It is  therefore not correct for the appellant to say that the Magistrate can exercise  his  powers  under the  Code  in  connection  with property seized tinder sub-s. (3) of s. 19 of the Act. It follows that any further reference to the Magistrate,  as made by the Enforcement Officer in this case, for permission to  retain  the  documents seized was  not  necessary.   The Enforcement Officer has a right under s. 19-A to retain  the articles  seized  in accordance with  its  provision.   What course  is  to be adopted by the person aggrieved  when  the Enforcement  Officer contravenes the provisions of s.  19-A, is a different matter.  The fact that such a contingency may arise  does not mean that it is the Magistrate  issuing  the search warrant who is to be approached and who is  competent to deal with the grievance.  Any way, such a contingency  is insufficient  to  warrant the finding  that  the  Magistrate issuing  the  warrant has control and  possession  over  the documents  seized and that therefore he can pass any  orders with  respect to their disposal.  He has no such  power,  in any case, till the period mentioned in s. 19-A has  expired. There  is no provision in the Act which gives him any  power to deal with the situation arising after the expiry of  that period.  One should, however, presume that the Director  ’of Enforcement will not by his order act against the provisions of s. 19. Section 19-A deals with the custody of documents which  come into  the possession of the Director ’of Enforcement in  two ways.   Documents  are  furnished to  the  Director  of  En- forcement in pursuance of an order made under sub-s. (2) of  s. 19 under the directions of the Central Government  or the  Reserve Bank.  No Magistrate as such  has  jurisdiction

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over  the  disposal of such documents which  come  into  the possession  of the Director of Enforcement in pursuance  ’of orders  under  sub-s.  (2)  of  s.  19.   The  Director   of Enforcement  also gets possession of documents in  execution of  search  warrants  under  sub-s.  (3)  of  s.  19.    The provisions with respect to his retaining in his  posses.-ion the  documents  which come in his possession are  the  same, whether  they  conic so one way or the  other.   It  follows that,  in  the latter case too, the Magistrate  issuing  the search  warrant  has  nothing to do with  the  retention  or disposal of the documents seized in execution of the  search warrant. It  was also urged for the apelllant that the provisions  of s. 5(2) of the Code apply to the present case in matters which are  not  provided by the Act.  This contention too  has  no basis.   Section 5 provides that all offences under any  law other than the Indian Penal Code shall be investigated,  in- quired into, tried and otherwise dealt with according to the provisions contained in the Code of Criminal Procedure,  but subject  to any enactment for the time being in force  regu- lating the manner or place of investigating, inquiring into, trvina or otherwise dealing with such offences.  The Act  is a  special  Act  and  it provides  under  s.  19-A  for  the necessary   investigation   into  the   alleged   suspected- commission  of an offence under the Act. by the Director  of Enforcement.   The  provisions  of  the  Code  of   Criminal Procedure therefore will not apply to such investigation  by him,  assuming that the expression  investigation’  includes the  retaining  of the documents  for the  purposes  of  the investigation. Reliance has also been placed for the appellant on the  case reported  as  Moliammad  Serajuddin v. R.  C.  Mishra(1)  in support  of the contention that the Magistrate retains  con- trol over the disposal of the articles seized in  connection with  the  search warrant issued by him.  In that  case  the Court  was considering the question of the disposal  of  the documents  seized in execution of a search warrant under  s. 172 of the Sea Customs Act.  The provisions of that  section are different from those of sub-s. (3) of s. 19 of the  Act. A search warrant issued by a Magistrate under s. 172 of  the Sea  Customs  Act has the same effect as  a  search  warrant issued under the Code of Criminal Procedure and thus assumes the  character of a search warrant issued under the Code  of Criminal  Procedure.  The same is not the case with  respect to  the  search warrant issued under sub-s. (3)  of  s.  19. further, there is no section corresponding to s. 19-A of the Act in the Sea Customs Act.  This case, therefore, is not of help to the appellant. 732 In this view of the matter, the order of the Magistrate with respect  to  the disposal of the documents  was  beyond  his jurisdiction  and the High Court was right in setting  aside his  order directing the retaining of certain  documents  by the Director of Enforcement. The  question however remains whether the order of the  High Court  directing  the  return of the two  documents  to  the respondent is a correct order. It  has been urged for the appellant that there is  no  pro- vision  under s. 19-A or any other section of the  Act  that the  documents be returned to the party from  whose  custody they  were seized, without an order from the Magistrate  and that therefore no order for their return can be made by  any authority.    No  such  express  provision   is   necessary. Documents  seized  have to be returned if the  law  provides

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that  they are not to be retained after a certain period  of time.   Such  a direction under the  statute  is  sufficient Justification and authority for the person in possession  of the  documents  to  return them to  the  person  from  whose possession  they had been seized.  Provisions are  necessary for retaining documents of others and not for returning them to the persons entitled. Section  19-A  authorises  the Director  of  Enforcement  to retain  a document for a period of not exceeding  4  months, or, if before the expiry of the said period of 4 months, any proceedings  under s. 23(1) have been commenced before  him, until  the  disposal  of those  proceedings,  including  the proceedings  before the Appellate Board, if any, or (ii)  if such  proceedings have been commenced before a Court,  until the document has been filed in that Court.  This means  that the  Director  of Enforcement can  justifiably  retain  with himself  the document seized till the final disposal of  the proceedings taken under s. 23 of the Act if the  proceedings had commenced before the period of 4 months, during which he could  keep  the  documents.   In  the  present  case   such proceedings  had not been commenced within the period  of  4 months of the Director of Enforcement getting possession  of the  documents.   He could not have therefore, on  his  own, retained  those  documents after the expiry  of  the  fourth month.   He ,could have taken legal steps for the  retention of  those documents.  He did not keep those  documents  with himself on his own.  He had been obtaining the permission of the Chief Presidency Magistrate for retaining the  documents from the time of their seizure under the impression that the Magistrate   could  legally  order  the  retention  of   the documents,  presumably  as  the  warrant  had  directed  the production of documents seized, before him. Proceedings under s. 23 did start prior to the order for the return of the documents.  Considering the real intention 733 of s. 19-A to be that the Director of Enforcement can retain the documents seized till the final disposal of  proceedings under  s. 23 of the Act. the Magistrate’s order, even if  he had  not the authority to pass orders for the  retention  of the documents by the Director of Enforcement, till the final disposal of the proceedings under s. 23, was an order giving effect to the spirit behind the provisions of s. 19-A.   The order  of  the  High  Court  directing  the  return  of  the documents  to the respondent therefore appears to us  to  be unjustified in the special circumstances of the case. It  is  not necessary for us to consider in this  case  what legal  steps the Director of Enforcement could take for  re- taining possession of the documents seized on the expiry  of the 4 months’ period in case his investigation in connection with  those  documents is not complete within  that  period. One of the methods possibly can be his applying to the  Cen- tral Government to make an order under sub-s. (2) ’of s.  19 directing  the owner of those documents to furnish  them  to the  Director of Enforcement.  Such an order will  be  legal justification  for the Director of Enforcement to retain  in possession any of the documents which nationally be would be deemed  to have returned to the owner on the expiry. of  the four  months  and to have got fresh  possession  over  those documents  not by virtue of a search warrant but  by  virtue ,of  an order of the Central Government under sub-s. (2)  of S. 19. We  therefore hold that the Magistrate has  no  jurisdiction over the articles seized in execution of the search  warrant issued  under s. 19(3) of the Act and that he cannot  permit the retention of such documents by the Director of  Enforce-

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ment  after the expiry of the period he is entitled to  keep them  in accordance with the provisions of s. 19-A.  In  the special circumstances of the case, we allow the appeal,  set aside  the  order  of  the High Court  and  order  that  the documents  mentioned at items Nos. 2 and-, 7 of the  Seizure Memo can be retained by the Director of Enforcement till the final conclusion of the proceedings commenced under s. 23 of the Act. Appeal allowed. 734