1 WP-1374-09.sxw IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION Mhi CRIMINAL WRIT PETITION NO. 1374 OF 2009 Prakash Hiralal Shah ) Age above 58 years, residing at Jetha ) Building, Wardon Road, Bomanji Petit ) Street, Room No.7, Mumbai -36. ).. Petitioner (Orig.accused No.2) 1) The Supdt. of Police (CBI) ) having their office at S.P. CBI, ) Special Criminal Branch, 8th floor, ) CGO Complex, CBD Belapur. ) 2) Dy. Director of Enforcement ) 2nd floor, Mittal Chambers, ) Nariman Point, Mumbai 21. ) 3) Union of India ) Through the Law Secretary ) Ministry of Law and Judiciary, ) Aayakar Bhavan, Mumbai 400 020. ) 4) State of Maharashtra. )..Respondents Mr. D.V.Mirajkar i/b . Madhu M.PatelAdvocate, for the petitioner Mr.Mandar Goswami, Advocate for the respondents Nos. 1 t 3. Mr. V.B.Konde Deshmukh, APP, for the respondent No.4. CORAM: J.H.BHATIA,J. DATE : 20th April, 2011. JUDGMENT: 2 WP-1374-09.sxw 1. Rule. Rule made returnable forthwith. Heard the learned Counsel for the parties. 2. To state in brief, during the year 1984, the Bombay office of the Enforcement Directorate had searched the premises of the petitioner and others. After preliminary investigation, a criminal complaint, being Case No. 15/S/1986 was filed by the Enforcement Director against the petitioner and others. However, later on, the said complaint was withdrawn by the Enforcement Directorate. On 18.9.1994, the Deputy Director of Enforcement, Bombay, had written a letter to the CBI for the purpose of investigation of the alleged contravention of the provisions of Foreign Exchange Regulation Act, 1973 (for short FERA). Treating that letter as an FIR, the CBI investigated the case. Thereafter, the Deputy Director of Enforcement filed second complaint, which is registered as 18/S/1989, on the basis of the investigation made by CBI. Some witnesses for prosecution have been examined before framing of charge. 3. The petitioner, who is accused No.2, filed an application before the learned Magistrate to discharge him on the ground that the CBI had no jurisdiction to investigate the case, as there was no specific notification under the provisions of FERA empowering or authorising the CBI to investigate the case under that 3 WP-1374-09.sxw Act. The trial Court rejected the application. The Sessions Court also dismissed the Revision Application. Hence,he has filed this Writ Petition seeking to quash and set aside the orders passed by the Court below and to discharge him from the case. 4. The complaint was filed under Sections 120B, 420, 468 and Section 56 read with Section 8(3) of FERA Act. Main charge against the accused persons is violation of the provisions of FERA Act and it is alleged that for that purpose they had entered into conspiracy and had forged certain documents. 5. The learned Counsel for the respondent Nos. 1 to 3 i.e. CBI, Enforcement Directorate and the Union of India contended that under the provisions of Section 3 of the Delhi Special Police Establishment Act, 1946, notifications have been issued whereby the officers of Delhi Special Police Establishment may investigate certain offences under the Indian Penal Code and some other Central Acts, including Foreign Exchange Regulation Act, 1973. However, the learned Counsel for the petitioner contended that the said notification is not sufficient as held by the Supreme Court in C.B.I. vs. State of Rajasthan & Ors. AIR 1996 SC 2402. According to him, it is necessary that there should be specific notification under the provisions of FERA. The facts of 4 WP-1374-09.sxw this case are by and large similar to the case before Supreme Court. Their Lordships observed thus in paras 16, 17, 18, 19 and 21 :- "16. On a careful consideration of the facts and circumstances of the case and submissions made by the learned Counsel for the parties, it appears to us that under Section 3 of DSPE Act, the Central Government may, by notification, specify the offences which are to be investigated by the members of DSPE. It is not disputed that notification under Section 3 of DSPE Act has been issued by the Central Government specifying the offences under FERA to be investigated by the members of DSPE. It is also not in dispute that a notification dated October 26, 1977 by the Government of India, Ministry of Home Affairs, Department of Personnel and Administrative Reforms, has been issued in exercise of the powers conferred by sub-section (1) of Section 5 read with Section 6 of the DSPE Act. By the said notification the Central Government, with consent of the various State Governments as mentioned in the said notification including the State Government of Rajasthan, has extended the powers and jurisdiction of the members of DSPE, inter alia, to the State of Rajasthan for the investigation of the offences specified in the schedule to the said notification. In the Schedule under clause (a), offences punishable under the FERA and under clause (b) attempts, abetments and conspiracies in relation to or in connection with any offence mentioned in clause (a) and any 5 WP-1374-09.sxw other offence committed in the course of the same transaction arising out of the same facts have been mentioned. 17. It is, however, to be noted that u/s. 2 of DSPE Act, the Central Government has been empowered to constitute a special police force to be called the DSPE for the investigation in any Union Territory of offences notified under Section 3. Under Section 5(1) of DSPE Act the Central Government may by order extend to any area including Railway areas in a State, not being Union territory, the powers and jurisdiction of the members of the DSPE for the investigation of any of the offences or classic offences specified in a notification under Section 3. Under Section 5(2), when by an order under sub- section (1), the powers and jurisdiction of the members of the said police establishment are extended to any such area, a member thereof may, subject to any order which the Central Government may make in this behalf, discharge the functions of a police officer in that area and shall, while so discharging such functions, be deemed to be a member of a police force of that area and be vested with the powers, functions and privileges and be subject to the liabilities of a police officer belonging to that police force. 18. It is quite evident that members of DSPE are members of special police force constituted under Section 2 of DSPE Act by the Central Government. The question that arises for decision in this case is whether or not a member of 6 WP-1374-09.sxw DSPE which is also a member of special police force constituted by the Central Government, even if authorised under Section 3 and Section 5 of DSPE Act to investigate in respect of offences under FERA in a particular State other than the Union Territory, with the consent of such State Government, can investigate the offences for violation of FERA, more so, when the offence is alleged to have been committed outside Indian Territory. It will be apposite at this stage to refer the provisions of Sections 3, 4 and 5 of FERA : Section 3: Classes of Officers of Enforcement - There shall be the following classes of officers of Enforcement, namely: (a) Directors of Enforcement; (b) Additional Directors of Enforcement; (c) Deputy Directors of Enforcement; (d) Assistant Directors of Enforcement; (e) Such other class of officers of Enforcement as may be appointed for the purposes of this Act. Section 4 - Appointment and powers of officers of Enforcement ;- (1) The Central Government may appoint such persons as it thinks fit to be officers of Enforcement. (2) Without prejudice to the provisions of sub-section (1), the Central Government may authorise a Director of 7 WP-1374-09.sxw Enforcement or an Additional Director of Enforcement or a Deputy Director of Enforcement or an Assistant Director of Enforcement to appoint officers of Enforcement below the rank of an Assistant Director of Enforcement. (3) Subject to such conditions and limitations as the Central Government may impose, an officer of Enforcement may exercise the powers and discharge the duties conferred or imposed on him under this Act. Section 5 - Entrustment of functions of Director or other officer of Enforcement : The Central Government may, by order and subject to such conditions and limitations as it thinks fit to impose, authorise any officer of Customs or any Central Excise Officer or any police officer or any other officer of the Central Government or a State Government to exercise such of the powers and discharge such of the duties of the Director of Enforcement or any other officer of Enforcement under this Act as may be specified in the order. 19. The aforesaid Sections of FERA indicate that for implementing enforcement of the provisions of FERA different classes of officers of Enforcement have been constituted in Section 3. Under S.4(10) of FERA, the Central Government 8 WP-1374-09.sxw has been authorised to appoint such persons, as it thinks fit, to be officers of the Enforcement. Under sub-sec. (2) of S.4 of the FERA, the Central Government may authorise some of the senior officials of the Directorate of Enforcement, as mentioned in that sub-section, to appoint officers of Enforcement below the rank of Assistant Director of Enforcement. Sub-section (3) of section 4 authorises the Central Government to impose conditions and limitations in he exercise of powers and discharge of duties under FERA by an officer of Enforcement. Section 5 authorises the Central Government to entrust the functions of Director or other officers of the Enforcement, with such conditions and limitations as it thinks fit, to any officer of the Customs or any Central Excise Officer or any police officer or any other officer of the Central Government or a State Government to exercise such of the powers and discharge such of the duties of the Director of Enforcement or any other officer of the Enforcement under FERA as may be specified in the order to be issued by the Central Government. In our view, a combined reading of Sections 3, 4 and 5 of FERA makes it quite evident that primarily the officer of Enforcement Directorate as mentioned in Sections 3 and 4 have been empowered to exercise the powers and discharge the duties conferred or imposed on such officers of the Enforcement Directorate under FERA. As it may be expedient in some cases to confer powers and duties under FERA to 9 WP-1374-09.sxw persons outside the Enforcement Directorate, the Legislature in its wisdom has given authority to the Central Government under Section 5 of FERA to authorise any officer of Customs or Central Excise Officer or a police officer or any officer of Central Government or State Government to exercise such of the powers and discharge such of the duties of the Director of Enforcement or any other officer of Enforcement under FERA as may be specified subject to such conditions and limitations as deemed fit by the Central Government. "21.... As already indicated, although officers of Enforcement Directorate are clothed with the powers and duties to enforce implementation of the provisions of FERA, the Central Government has been authrised to impose on other officers including a police officer power and authority to discharge such of the duties and functions as may be specified by it. It is nobody's case that any notification has been issued under FERA authorising the member of DSPE to discharge the duties and functions of an officer of Enforcement Directorate. In our view, in the absence of such notification under FERA, a member of DSPE, despite the aforesaid notifications under Sections 3 and 5 of DSPE Act, cannot be held to be an officer under FERA and therefore is not competent to investigate into the offences under FERA." 6. In view of the above observations, merely because a notification was issued by the Central Government empowering officers of Delhi Special Police 10 WP-1374-09.sxw Establishment to investigate certain offences within the area of Union Territory, or in the extended area, that itself is not sufficient to clothe such offices with the powers and duties of the Enforcement Directorate to enforce implementation of the provisions of FERA. Admittedly, no such notification was issued by the Central Government under the provisions of FERA. 7. The learned Counsel for the respondents contended that in the present case, complaint was filed before the Judgment of the Supreme Court was rendered in CBI vs. State of Rajasthan in 1996 and, therefore, the matter has proceeded accordingly. However, the Supreme Court only interpreted and declared the law as it was. The Supreme Court did not make law for the first time in 1996 nor the Supreme Court has anywhere indicated that the said Judgment would have prospective effect. Taking into consideration the law as interpreted and declared by the Supreme Court in 1996, in my opinion, the present case is squarely covered by CBI vs. State of Rajasthan (supra). As there was no notification under FERA, the CBI could not investigate the case and therefore second case could not be filed on the basis of investigation made by the CBI. 8. For the aforesaid reasons, the petition is allowed. The impugned order is hereby quashed and set aside. The petitioner stands discharged. Bail 11 WP-1374-09.sxw bonds stand cancelled. Rule made absolute accordingly. (J.H.BHATIA,J.)