SUPREME COURT OF INDIA
Vinod K. Chawla
Vs
Union of India and Others
Appeal (Crl.) 793 of 1999
(K. G. Balakrishnan and G. P. Mathur, JJ)
18.08.2006
G. P. MATHUR, J.
1. This appeal, by special leave, has been preferred against the judgment and
order dated 27.1.1999 of High Court of Delhi by which the writ petition filed
by the appellant challenging the detention order passed against him on
12.2.1997 under Section 3(1) of Conservation of Foreign
Exchange and Prevention of Smuggling Activities Act, 1974 (for short
'COFEPOSA') by the Joint Secretary, Government of India, was dismissed.
2. Though the detention order was passed on 12.2.1997 but the same could be
served upon the appellant after more than a year on 12.3.1998 when he was taken
into custody as he was absconding. The appellant filed the writ petition under
Articles 226 and 227 of the Constitution soon thereafter before the Delhi High
Court which was dismissed on 27.1.1999. The appellant has already undergone the
entire period of detention but he is pursuing the present appeal as he is
threatened with proceedings under Smugglers and Foreign
Exchange Manipulators (Forfeiture of Property) Act, 1976.
3. The grounds of detention mention that the Director of Revenue Intelligence,
New Delhi (for short 'DRI') had received information that the appellant was
indulging in large scale evasion of customs duty by importing consumer
electronic goods at grossly under-invoiced prices and by circumventing Import
and Export Policy and remitting payments for the same through illegal channels.
The goods were imported through various firms and concerns owned by the
appellant. On the basis of the said information, the officers of the DRI
conducted simultaneous searches on 20.12.1996 at seven
residential/business/factory premises of the appellant, wherein many
incriminating articles and documents were recovered. Further searches were also
made on 30th December, 1996 and some more goods of foreign origin were
recovered which established evasion of excise duty. His statement was recorded
on 19th and 20th December, 1996 and 30th January, 1997. On the basis of the
material collected, the Joint Secretary to the Government of India passed the impugned
order under Section 3(1) of COFEPOSA on 12.2.1997. The appellant evaded service
of the detention order and absconded. After great efforts had been made and
proceedings had been initiated under Section 7 of COFEPOSA, the appellant was
served with the copy of the detention order on 12.3.1998 when he was taken into
custody. The representation made by the appellant was rejected by the detaining
authority and also by the Central Government after the Advisory Board had
recorded an opinion that there was sufficient cause for his detention. The
appellant challenged the detention order by filing the writ petition before the
High Court of Delhi raising several pleas but the same was dismissed on
27.1.1999.
4. Learned counsel for the appellant has submitted that the grounds of
detention make reference to the statement made by the appellant's son, Asheesh
Chawla before the officers of DRI on 7.1.1997 and 8.1.1997. However, when he
was produced before the ACMM, New Delhi, on 8.1.1997 he specifically retracted
the statement allegedly made by him before the officers of DRI. The said
statement of Asheesh Chawla made on 8.1.1997, whereby he specifically retracted
from the statement made before the officers of DRI, was not placed by
sponsoring authority before the detaining authority and, therefore, a vital
document which could affect the opinion of the detaining authority one way or
the other was suppressed and was not placed before him (detaining authority)
and thus the detention order passed against the appellant is illegal. In
support of this submission reliance is placed on Ashadevi v. K. Shivraj, Addl.
Chief Secretary to the Govt. of Gujarat wherein it has been held as
under :
"If material or vital facts which would influence the mind of the
detaining authority one way or the other on the question whether or not to make
the detention order are not placed before or are not considered by the
detaining authority, it would vitiate its subjective satisfaction rendering the
detention order illegal."
Reliance is also placed on Ayya v. State of U.P. wherein it was held :
"There would be vitiation of the detention on grounds of
non-application of mind if a piece of evidence, which was relevant though not
binding, had not been considered at all. If a piece of evidence which might
reasonably have affected the decision whether or not to pass an order of
detention is excluded from consideration, there would be a failure of
application of mind which, in turn, vitiates the detention. The detaining
authority might very well have come to the same conclusion after considering
the material; but in the facts of the case the omission to consider the
material assumes materiality."
Substantiating his argument learned counsel for the appellant has also relied
upon Sita Ram Somani v. State of Rajasthan wherein it was observed that
it was for the detaining authority to consider the relevant material before
taking a decision whether it was necessary to detain the appellant under
COFEPOSA and that having not been done, there was a clear non-application of
mind by the detaining authority to relevant material.
5. In order to examine the contention raised by learned counsel for the
appellant, it is necessary to refer to the detention order dated 12.2.1997 and
the relevant part thereof which has a bearing on the controversy in dispute, is
being reproduced below :
"The Directorate of revenue Intelligence, D Block, I.P. Bhawan, I.P.
Estate, New Delhi received information that you i.e. named Mr. Vinod Kumar
Chawla, resident of E-526, Greater Kailash-II, New Delhi were indulging in
large scale evasion of Customs Duty by way of importing consumer electronic
goods at grossly under invoiced prices and by way of circumventing Import and
Export Policy and remitting payment through illegal channels through your
business of computer accessories, connectors and cables. These goods are being
imported through various firms owned by you namely i) M/s Connectronics and
Cables Pvt. Ltd., New Delhi ii) M/s Life Electronics Pvt. Ltd., Noida, iii) M/s
WINGS Electronics, Noida, iv) M/s MOBICON Enterprises, New Delhi.
Pursuant to the said information, the officers of the Directorate of Revenue
Intelligence conduced simultaneous searches on 10.12.1996 at the
residential/business/factory premises of the various firms owned by you as
detailed below :
1. Business premises of M/s Connectronics and Cables Pvt. Ltd., G-3, Osian
Buildings, 12, Nehru Place, New Delhi.
2. Residential premises of Mr. J.C. Malhotra, Director of M/s Connectronics and
Cables Pvt. Ltd.
3. Business premises of M/s Wings Electronics and M/s Mobicon Enterprises
situated at 309, Lajpat Rai Market, Delhi 6.
4. Your residential premises situated at K-526, Greater Kailash-II, New Delhi.
5. Factory premises of M/s Wings Electronics situated at A-62, Sector 16,
NOIDA, Distt. Ghaziabad (U.P.)
6. Factory premises of M/s Life Electronics Pvt. Ltd. situated at E-3, Sector
VIII, NOIDA, Distt. Ghaziabad (U.P.)
7. The godown of M/s Connectronics and Cables situated at 7-1/147, Chittaranjan
Park, New Delhi. The said premises is also the residential premises of Mr.
Puran Chand Joshi, Sales Assistant of M/s Connectronics and Cables.
3. As a result of the searches, several incriminating documents were recovered
from the premises listed at Sr. No.1, 3 and 6 which are resumed by the officers
for further investigation. In the premises listed at Sr. No.7 above imported
goods of foreign origin valued at Rs.14.83 lakhs were recovered which were
detained pending further enquiries as the functionaries present could not
produce any documents for lawful importation and acquisition of the said goods.
In a subsequent search carried out on 11.12.97, at the premises listed at Sr.
No.6, several goods viz. speakers, cabinets, connectors and AT & T Cables, all
the foreign origin valued at Rs.35 lakhs approximately were also recovered from
the basement of the said premises. These were also detained pending further
enquiry, and were subsequently seized on 17.12.1996 under Section 110 of the Customs Act, 1962 as no person, including you could
produce any documents for legal import depicting their correct and true value.
..................................................................................................
..................................................................................................
5. In your statement recorded on 19.12.96 under Section 108 of the Customs Act, 1962 you inter alia stated that initially you
started doing business in purchase and sale of electronic components under a
firm named M/s WINGS Electronics, 309, Lajpat Rai Market, Delhi 6; that at the
same place you opened another firm, M/s LIFE Electronics (P) Ltd. in 1984-85 of
which you were the Managing Director.
..................................................................................
....................................................... that in addition to
this, you also had a trading centre in the name and style of M/s CONNECTRONICS
AND CABLES Pvt. Ltd. G-3, Osian Building, 12, Nehru Place, New Delhi since 1991,
in which you were dealing in stock and trade of connectors, cables, switches,
wires and other electronic components which were being imported from
Hongkong/Taiwan. Your son Asheesh Chawla, was the Managing Director of this
firm.
6. You further stated that you were importing components such as plastic molded
items, wires and cables, connectors, hardware switches etc. through your firms
and that this work of imports was being looked after by you; that you yourself
used to negotiate prices and finalize the orders on behalf of M/s LIFE
Electronics and M/s WINGS Electronics, Noida, that you were looking after the
business interest of M/s CONNECTORS AND CABLES including the imports, that
their main overseas suppliers were i) M/s Pearl Industrial Co., Hongkong. ii)
M/s Mirtex Enterprises (HK) Ltd., Taiwan and Hongkong, iii) M/s RAFS
Enterprises, Singapore iv) M/s Phillips, Holland. You further stated that
before importing, you used to ask for a proforma invoice from the foreign
supplies for the items to be imported, followed by a sales confirmation in
certain cases in writing; that for regular items you simply used to get a
proforma invoice and then place the order over phone.
..................................................................................................
..................................................................................................
11. In view of the admissions made by you in various statements in connection
with the import of juice extractors VCRs and cables the officers of the
Directorate again visited the factory premises of M/s WINGS Electronics on
30.12.1996 and conducted further search of the said premises. As a result, 2460
pieces of car audio speaker "made in Korea" and 254 nos. of Spectra
Strap Planar Cables valued at Rs.20 lakhs (approx) were recovered which were
detained pending further enquiries which were subsequently seized on 15.01.97
as no person including you could produce the documents for legal importation
and acquisition of the said goods.................................................................................
.........................................................
12. Further the officers of DRI scrutinized the documents which were recovered
from your various premises, as a result of searches conducted on 10.12.96.
Scrutiny of records resumed from the business premises of M/s CONNECTRONICS AND
CABLES Pvt. Ltd. revealed gross under valuation of the items viz. connectors
imported by the company from Taiwan. It was found that all the goods imported by
the said company since 1994 were supplied by a single supplier, namely, M/s
MIRTEX ENTERPRISES (HK) LTD., Taiwan. Investigations revealed that this was a
branch office with the main office at Hongkong.
13. On correlating the price of the items shown in the invoices of M/s MIRTEX
which were declared to customs for duty purposes, with their quotation/proforma
invoice, it was observed that the goods were under valued to the extent of
approx 1/5th of the actual quoted price. From the respective bills of entry 9,
in number regarding which the exercise of correlation has been carried out so
far it was found that the firm had evaded customs duty to the tune of Rs.25
lakhs approx by way of such under invoicing.
14. Mr. Asheesh Chawla, your son and Managing Director of the said firm, was
summoned on 07.01.97 to tender his statement. In his written statement, he
stated that for the last one year he had been placing orders with M/s MIRTEX
though previously you had been placing the orders; that the method of placing the
orders is that the firm first calls for quotations from manufacturers and
suppliers in Taiwan, and on the basis of these quotations they place the order
with MIRTEX Enterprises, Taiwan on fax.
..................................................................................................
..................................................................................................
28. Thus, from the statements of various persons, including yours, from the
investigations conducted by the Directorate so far, the scrutiny of the
documents recovered, it is clear that you are involved in the following
offences :
(i) Large scale evasion of customs duty to the tune of over Rs.1.35 crores in
the import of connectors, cables and other electronic items, through massive
under valuation of the goods.
(ii) Remitting the differential amount to foreign suppliers through illegal
channels, seized document show that you have remitted US$ 2, 92, 256.62
equivalent to Rs.85 lakhs approximately during the period June, 1995 to
September, 1996 through illegal channels.
(iii) Importing various cables through his firm M/s WINGS Electronics and
showing the same as being used in the manufacture and assembly of various
consumer electronic goods such as car cassette players, music systems etc.
taking MODVAT credit on the same, but diverting these cables for sale through
your trading establishment M/s CONNECTRONICS AND CABLES thus flouting rules
relating to MODVAT in the Central Excise and Salt Act, 1944.
(iv) Importing ready to assembly kits in SKD condition 890 VCR's and 1560
juicers by deliberately splitting the consignment showing the import under OGL
and showing part of the consignment as having been imported by a third party
whereas import of consumer electronics goods in SKD form requires special
import licence."
6. The statement of Asheesh Chawla made in the Court of ACMM, New Delhi on
8.1.1997 which, according to the appellant amounts to retraction of the
statement made by him (Asheesh Chawla) before the officers of DRI, is being
reproduced below :-
"I have been in the custody of the Officers of the department since
2.30 p.m. on 7.1.97. The Officers have made me write false and incorrect
statements on their dictation and sign several documents under threat and coercion
and after being given a beating. I have been maltreated and subjected to deep
humiliation. I have not been provided anything to eat for the last one day. I
was not permitted to sleep or drink any water.
Sd/-
( Ashish Chawla ) 8.1.97"
7. The grounds of detention are very detailed and long and run into 35
paragraphs and several pages. They refer to the documents recovered from
business premises of M/s Connectronics and Cables Pvt. Ltd., M/s Wings
Electronics and M/s Mobicon and factory premises of M/s Life Electronics Pvt.
Ltd. situate in Noida and also the godown of M/s Connectronics and Cables Pvt.
Ltd. at Chittaranjan Park, New Delhi. They extensively refer to the statement
of the appellant recorded on 19.12.1996 wherein he admitted that he was doing
business through two firms owned by him, viz., M/s Wings Electronics and M/s
Life Electronics Pvt. Ltd. and that he had started trading centre in the name
and style of M/s Connectronics and Cables Pvt. Ltd. and also the fact that his
son Asheesh Chawla was the Managing Director of this firm. The detention order
refers to the several other statements of the appellant himself which were
recorded on different dates and the admissions made by him. The statement of
Asheesh Chawla, who is the son of the appellant, has been referred to in para
14 of the detention order, wherein it is mentioned that in his written
statement he stated that for the last one year he had been placing orders with
M/s MIRTEX though previously the appellant had been placing the orders. In para
15 of the detention order it is stated that Asheesh Chawla was shown several
invoices and corresponding quotations/proforma invoices wherein difference in
prices was evident in each and every case to which he agreed, but could not
explain the difference. A reading of the whole of the detention order clearly
shows that the detaining authority had placed reliance entirely upon the
statement of the appellant Vinod K. Chawla himself and the documents and
material recovered from the business premises and godowns of the firms which
were admittedly owned by the appellant. There was only a passing reference to
the statement of Asheesh Chawla, wherein he had stated that for the last one
year he had been placing orders with M/s MIRTEX though previously the orders
had been placed by the appellant. The detention order is not at all based upon
the statement of Asheesh Chawla nor any real support is taken by the detaining
authority from his statement in order to come to the conclusion that the
appellant was the owner of the firms which placed orders for import of various
items and invoices whereof were deliberately grossly undervalued in order to
evade customs duty and huge sum of money was remitted through illegal channels.
Another fact which deserves notice is that Asheesh Chawla had merely stated
that orders with M/s MIRTEX used to be placed by the appellant till one year
earlier to the recording of his statement. It is important to note that the
alleged retraction of statement has not been made by the appellant but by his
son Asheesh Chawla. As mentioned earlier, the detention order is not based upon
the statement of Asheesh Chawla but merely makes a passing reference to the
same. Had the appellant retracted from his statement and the said retraction
had not been placed before the detaining authority, the position may have been
different as in such a case it could be urged that the formation of opinion by
the detaining authority and his subjective satisfaction in that regard had been
affected. But such is not the case here. The retraction of the statement by
Asheesh Chawla has no bearing at all as it in no way could affect the formation
of opinion and the subjective satisfaction of the detaining authority.
Therefore, the contention raised by the learned counsel for the appellant has
no substance and is liable to be rejected.
8. We would like to clarify here that the law does not require that every
document or material in possession of sponsoring authority must necessarily be
placed by him before the detaining authority and in every case where any such
document or material is not placed by the sponsoring authority before the
detaining authority, the formation of opinion and the subjective satisfaction
of the detaining authority would get vitiated. This view has been taken
in several decisions of this Court. In Abdul Sathar Ibrahim Manik v. Union of
India & Ors. , it was held as under :
"If the detenu has moved for bail then the application and the order
thereon refusing bail even if not placed before the detaining authority it does
not amount to suppression of relevant material. The question of non-
application of mind and satisfaction being impaired does not arise as long as
the detaining authority was aware of the fact that the detenu was in actual
custody."
In K. Varadharaj v. State of T.N. & Anr. 7,
the detenu was arrested for indulging in the trade of bootlegging. He was
granted bail in the said case by the Court of Principal District and Sessions
Judge on 19.10.2001. Subsequently, a detention order was made under Tamil Nadu
Prevention of Dangerous Activities of Bootleggers, Drug Offenders, Forest
Offenders, Goondas, Immoral Traffic Offenders and Slum Grabbers Act, 1982 on
8.11.2001. The detaining authority did not have before him the application for
grant of bail nor the order passed by the learned Sessions Judge granting bail.
On the contrary, the detaining authority took into consideration a remand order
made by the Court to note the fact that the appellant was in custody. The
detenu challenged the detention order on the ground that the subjective
satisfaction of the detaining authority was vitiated by the fact that the
relevant document ought to have been considered by the detaining authority
before coming to the conclusion that the appellant should be detained, viz.,
his application for bail as well as the order of Sessions Judge made thereon
were not placed before the detaining authority. This Court after referring to
M. Ahamedkutty v. Union of India and Abdul Sathar Ibrahim Manik v. Union
of India & Ors. observed that placing of the application for bail
and the order made thereon are not always mandatory and such requirement would
depend upon the facts of each case and ultimately rejected the contention
raised by the detenu in this regard. This view has been reiterated in a recent
decision of this Court in Sunila Jain v. Union of India & Anr. We
are, therefore, clearly of the opinion that the mere fact that the sponsoring
authority did not place the statement made by Asheesh Chawla on 8.1.1997 in the
Court of ACMM, New Delhi, before the detaining authority, cannot lead to an
inference that the formation of opinion and the subjective satisfaction of the
detaining authority was vitiated in any manner.
9. Learned counsel for the appellant has next submitted that the appellant had
made a representation against his detention on 24.3.1998, which was rejected by
the detaining authority on 21.4.1998 and by the Central Government on 29.4.1998
and in view of this inordinate delay in the disposal of the representation, the
continued detention of the appellant was rendered illegal. Some decisions of
this Court were cited where emphasis has been laid on expeditious disposal of
the representation made by the detenu and it was also observed that unexplained
delay in disposal of the representation renders the continued detention
illegal.
10. The contention raised cannot be judged by any straight jacket formula
divorced from facts. This has to be examined with reference to the facts of
each case having regard to the volume and contents of the grounds of detention,
the documents supplied along with the grounds, the inquiry to be made by the
officers of different departments, the nature of the inquiry, the time required
for examining the various pleas raised, the time required in recording the
comments by the authorities of the department concerned, and so on
.
11. In L.M.S. Ummu Saleema v. B.B. Gujaral & Anr. it was held that
there can be no doubt that the representation made by the detenu has to be
considered by the detaining authority with the utmost expedition but as
observed in Francis Coralie Mullin v. W.C. Khambra , "The time
imperative can never be absolute or obsessive." In Madan Lal Anand v.
Union of India & Ors. , the representation dated 17.1.1989 of the
detenu who was detained under COFEPOSA was rejected after more than a month on
20.2.1989. After referring to L.M.S. Ummu Saleema (supra) it was held that the
detaining authority had explained the delay in disposal of the representation
and accordingly the order of detention cannot be faulted on that ground. In
Kamarunnissa v. Union of India & Anr. the representation made by the
detenu on 18.12.1989 was rejected on 30.1.1990 and it was contended that there
was inordinate delay in consideration of the representation. In the explanation
given in the counter affidavit filed in reply, it was submitted that
considerable period of time was taken by the sponsoring authority in forwarding
its comments. It was contended on behalf of the detenu that the views of the sponsoring
authority were totally unnecessary and the time taken by that authority could
not be taken into consideration. The contention was repelled by this Court and
it was observed that consulting the authority which initiated the proposal can
never be said to be an unwarranted exercise. It was further emphasized that
whether the delay in considering the representation has been properly explained
or not would depend upon the facts of each case and cannot be judged in vacuum.
Similarly, in Birendra Kumar Rai v. Union of India & Ors. , the
petitioner made a representation against his detention on 22.12.1990 which was
rejected by the Central Government after a month on 25.1.1991. It was observed
that the explanation offered for the delay in consideration of the
representation was not such from which an inference of inaction or callousness
on the part of the authorities could be inferred and accordingly the challenge
on the ground of delay was rejected. The subsequent decisions of this Court are
also on the same lines and we do not consider it necessary to refer to them as
the principle is well settled that there should be no inaction or lethargy in
consideration of the representation and where there is a proper explanation for
the time taken in disposal of representation even though it may be long, the
continued detention of the detenu would not be rendered illegal in any manner.
12. The grounds of detention in the present case are a long one running into 35
paragraphs which were accompanied by 82 documents running into 447 pages. The
representation made by the appellant was also a fairly long one. The
representation made by the appellant on 24.3.1998 was received in the Ministry
on 27.3.1998. The comments of the sponsoring authority were called on 30.3.1998
which were received on 17.4.1998. The comments were placed before the Secretary
(R) through the A.D.G. on 22.4.1998 (18th and 19th being holidays). The
decision of the Central Government was taken and communicated on 29.4.1998
(25th and 26th being holidays). The representation was also considered by the
detaining authority in the meantime and was rejected on 21.4.1998. In the
additional affidavit filed on behalf of the sponsoring authority before the
High Court, it was stated that the representation was received by them on
2.4.1998 and the comments were dispatched on 17.4.1998. During this period,
there were holidays on 4th, 5th, 8th to 12th April, and only seven working days
were available. Again there were holidays on 18th, 19th, 25th and 26th April.
Having regard to the facts and circumstances of the case, we are clearly of the
opinion that the entire time taken in consideration and disposal of the
representation made by the appellant has been fully explained and it cannot be
said by any stretch of imagination that there was any inordinate delay or
unexplained delay in considering the representation made by the
appellant. The challenge to the detention order made on the ground of
delay in consideration of the representation made by the appellant has no substance
and deserves to be rejected.
13. It was lastly urged that the searches of the premises of the appellant were
conducted on 20.12.1996 and 30.12.1996 and his statement was also recorded
between 19.12.1996 and 30.1.1997, but he was taken into custody after more than
a year on 12.3.1998 and on account of this long delay the live and proximate
link in the alleged activities of the appellant and the date of his actual
detention was snapped and there was no reasonable cause for detaining the
appellant. The argument raised is wholly misconceived. The detention order was
passed on 12.2.1997 soon after searches were conducted and his statement had
been recorded but as the appellant was evading arrest and was absconding, it
could only be served on 12.3.1998 when he was taken into custody. In the
counter affidavit filed in the High Court on behalf of the respondents it was
averred that continuous efforts were made both by the police authorities as
well as the officers of DRI to arrest the appellant. A notice under Section
7(1)(b) of COFEPOSA was published in Official Gazette on 23.3.1997 and also in
leading English and Hindi newspapers on 4.10.1997. An application under Section
7(1)(a) of the Act was also moved before the Court of ACMM for initiating
proceedings under Section 82 and 83 Cr.P.C. where proclamation was made on
3.12.1997 to appear on 9.1.1998. An order of attachment under Section 83
Cr.P.C. was also issued which was brought to the notice of his family members
and only then the appellant could be apprehended and detained on 12.3.1998.
Reference has also been made to three letters dated 28.2.1997, 17.7.1997 and
5.9.1997 from the Police Headquarters regarding the efforts made to serve the
detenu and copies of those letters were placed on record. Every time the family
members of the appellant reported before the police that the appellant had left
the house on 12.3.1997 to an unknown place and that his whereabouts were not
known. An additional affidavit of Assistant Director of Revenue Intelligence
was also filed before the High Court wherein it was averred that 11 summons
were issued to the appellant during 20.2.1997 and 26.11.1997 and a red alert
was also issued by the DRI on 5.3.1997. These facts conclusively establish that
the detention order which was passed on 12.2.1997 soon after the searches had
been made and the statement of the appellant had been recorded, could not be
served in spite of every possible attempt had been made to serve him as the
appellant was absconding. Where a person himself evades service of detention
order, it is not open to him to contend that in view of the long period which
has elapsed between the offending activities and the actual arrest and
detention, the vital link had snapped and there was no ground for actually
detaining him. An otherwise valid detention order cannot be rendered invalid on
account of the own act of the detenu of evading arrest and making himself
scarce. The contention thus raised has absolutely no merit and has to be
rejected.
14. In view of the discussions made, we are in complete agreement with the view
taken by the High Court. The appeal being wholly devoid of merit, is hereby
dismissed.