Supreme Court of India
DROPTI DEVI & ANR.versusUNION OF INDIA & ORS.
- Citation
- 2012 INSC 259
- Decided
- 2 July 2012
- Disposal
- Dismissed
- Bench
- RAJENDRA MAL LODHA
Holding
Section 3(1) of COFEPOSA is constitutionally valid; preventive detention is permissible even where the underlying activity is not a criminal offence.
Summary
The petitioners challenged the constitutional validity of Section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA), which authorises preventive detention of persons whose activities are prejudicial to the conservation or augmentation of foreign exchange. They argued that after the repeal of the Foreign Exchange Regulation Act, 1973 (FERA) and the enactment of the Foreign Exchange Management Act, 1999 (FEMA), which do not treat violations as criminal offences, the provision could not support preventive detention and violated Articles 14, 19 and 21. The Court examined the nature of preventive detention, the distinction between punitive and preventive measures, and the continued importance of foreign‑exchange conservation for national security. It held that COFEPOSA's Section 3(1) remains constitutionally valid and that preventive detention may be based on illegal activities even if they are not criminal offences. The Court also noted that the petitioners could not challenge the order before its execution and dismissed both the writ petition and the ancillary criminal miscellaneous application.
Issues considered
- The constitutional validity of Section 3(1) of COFEPOSA in the context of FEMA and the repeal of FERA
- Whether preventive detention can be justified for conduct that is not a criminal offence
- Whether the Ninth Schedule protection bars a fresh challenge to COFEPOSA after prior upholding
- Whether a pre‑execution detention order can be challenged under Article 32
Legislation cited
- Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA)s. 10, s. 11, s. 2(e), s. 3(1), s. 8, s. 9
- Customs Act, 1962s. 39
- Foreign Exchange Management Act, 1999 (FEMA)s. 10, s. 13, s. 14, s. 15, s. 2(c), s. 49
- Foreign Exchange Regulation Act, 1973 (FERA)s. 2(b), s. 50, s. 56, s. 6, s. 8
Subjects
preventive detentionCOFEPOSAforeign exchangeconstitutional validityArticle 21Article 14Article 19Ninth ScheduleFEMAFERA
Judgment
[2012] 6 S.C.R. 307
DROPTI DEVI & ANR. A
.v.
UNION OF INDIA & ORS.
(Writ Petition (Crl.) No. 65 of 2010)
JULY 2, 2012
B
[R.M. LODHA AND H.L. GOKHALE, JJ.]
Conservation of Foreign Exchange and Prevention of
Smuggling Activities Act, 1974 - s. 3(1) - Constitutional
validity of, to the extent it empowers the competent Authority C
to make an order of detention against any person with a view
to prevent him from acting in any manner P.rejudicial to the
conservation or augmentation of foreign exchange - Held: If
the activity of any person is prejudicial to the conservation or
augmentation of foreign exchange, the authority is o
empowered to make a detention order against such person
and the Act does not contemplate that such activity should
be an offence - The whole intent and idea behind the Act is
to prevent violation of foreign exchange regulations or
smuggling activities having serious and deleterious effect on E
the national economy - There is no constitutional mandate
that preventive detention cannot exist for an act where such
act is not a criminal offence and does not provide for
punishment - An act may not be declared as an offence
under law but still for such an act, which is an illegal activity,
F
the law can provide for preventive detention if such act is
prejudicial to the State security - Essential concept of
preventive detention is not to punish a person for what he has
done but to prevent him from doing an illegal activity
prejudicial to the security of the State - Thus, the
constitutional validity of impugned part of s. 3(1) upheld. G
Detention order was passed in respect of second
petitioner by the Joint Secretary to the Government of
India, specially empowered under Section 3(1) of the
307 H
308 SUPREME COURT REPORTS [2012] 6 S.C.R.
A Conservation of Foreign Exchange and Prevention of
Smuggling Activities Act, 1974 (as amended), for
indulging in hawala activities. The first petitioner (mother
of detenue) filed a writ petition before the High Court
challenging the detention order. The Division Bench of
B the High Court by an interim order directed that the
detenue would not be arrested till the next date of hearing
and the said order was later made absolute. Thereafter,
the Division Bench of the High Court dismissed the writ
petition holding that if the activity of any person was
c prejudicial to the conservation or augmentation of foreign
exchange, the authorities were empowered to make a
detention order against such person. Aggrieved, the
petitioners filed Special Leave Petition. During the
pendency, the petitioners filed the instant writ petition.
Thereafter, the writ petition was detagged from special
0
leave peti"tion. Thus, the instant writ petition.
The petitioners challenged the constitutional validity
of COFEPOSA on the ground that on repeal of Foreign
Exchange Regulation Act, 1973 and enactment of Foreign
E Exchange Management Act, 1999 (did not regard its
violation of criminal offence) an act where no punitive
detention (arrest and prosecution) is even contemplated
or provided under law, such an act cannot be made the
basis for preventive detention and any law declaring it to
F be prejudicial to the interest of the State so as to invoke
the power of preventive detention is violative of Articles
14, 19 and 21 of the Constitution and must be struck
down.
G Dismissing the writ petition and the criminal
miscellaneous application, the Court
HELD: 1.1. The importance of foreign exchange in the
development of a country needs no emphasis. The
Foreign Exchange Management Act, 1999 regulates the
H
DROPTI DEVI & ANR. v. UNION OF INDIA & ORS. 309
foreign exchange. The conservation and augmentation of A
foreign exchange continues to be its important theme.
Although contraventioh of its provisions is not regarded
as a criminal offence, yet it is an illegal activity
jeopardizing the very economic fabric of the country. For
violation of foreign exchange regulations, penalty can be B
levied and its non-compliance results in civil
imprisonment of the defaulter. The whole intent and idea
behind Conservation of Foreign Exchange and
Prevention of Smuggling Activities Act, 1974 is to prevent
violation of foreign exchange regulations or smuggling c
activities which have serious and deleterious effect on
the national economy. In today's world the physical and
geographical invasion may be difficult but it is easy to
imperil the security of a State by disturbing its economy.
The smugglers and foreign exchange manipulators by
0
flouting the regulations and restrictions imposed by
FEMA-by their. misdeeds and misdemeanours-directly
affect the national economy and thereby endanger the
security of the country. In this situation, the distinction
between acts where punishments are provided and the
acts where arrest and prosecution are not contemplated E
pales into insignificance. It must be remembered that the
person who violates foreign exchange regulations or
indulges in smuggling activities succeeds in frustrating
the development and growth of the country. His acts and
omissions seriously affect national economy. Therefore, F
the relevance of provision for preventative detention of
the anti-social elements indulging in smuggling and
violation and manipulation of foreign exchange in
COFEPOSA continues even after repeal of Foreign
Exchange Regulation Act, 1973. [Para 58] [351-E-H; 352- · G
A-CJ
1.2. The menace of smuggling and foreign exchange
violations has to be curbed. Notwithstanding the many
disadvantages of preventive detention, particularly in a H
310 SUPREME COURT REPORTS [2012] 6 S.C.R.
A country like ours where right to personal liberty has been
placed on a very high pedestal, the Constitution has
adopted preventive detention to prevent the greater evil
of elements imperiling the security, the safety of State
and the welfare of the Nation. [Para 59] [352-D-E]
B
1.3. On the touchstone of constitutional
jurisprudence, as reflected by Article 22 read with Articles
14, 19 and 21, the impugned provision is not rendered
unconstitutional. There is no constitutional mandate that
C preventive detention cannot exist for an act where such
act is not a criminal offence and does not provide for
punishment. An act may not be declared as an offence
under law but still for such an act, which is an illegal
activity, the law can provide for preventive ~etention if
such act is prejudicial to the state security. After all, the
D essential concept of preventive detention is not to punish
a person for what he has done but to prevent hitn from
doing an illegal activity prejudicial to the security of the
State. Strictly speaking, preventive detention is not
regulation (many people call it that way), it is something
E much more serious as it takes away the liberty of a
person but it is accepted as a necessary evil to prevent
danger to the community. The law of preventative
detention arms the State with precautionary action and
must be seen as such. The safeguards that the
F Constitution and preventive detention laws provide must
be strictly insisted upon whenever the Court is called
upon to examine the legality and validity of an order of
preventive detention. If the activity of any person is
prejudicial to the conservation or augmentation of foreign
G exchange, the authority is empowered to make a
detention order against such person and the Act does not
contemplate that such activity should be an offence.
[Paras 60, 61] [352-F-H; 353-A-B, F]
Union of India and Anr. vs. Venkateshan S. and Anr.
H (2002) 5 sec 285: 2002 (3) SCR 268 - relied on.
DROPTI DEVI & ANR. v. UNION OF INDIA & ORS. 311
1.4. It is too naive to suggest that in today's economic A
scenario of abundant foreign exchange and booming
foreign trade, contravention of foreign exchange laws
does not pose any threat to the national interest for which
a person has to be detained. Thus, there is no merit in
challenge to the constitutional validity of impugned part B
of Section 3(1) of COFEPOSA. [Paras 62 and 63] [353-G-~
H; 354-A] .
1.5 The prayer made in the criminal miscellaneous
application by the petitioners to quash the detention order C
cannot be granted. While dismissing the special leave
petition as withdrawn, this Court granted liberty to the
petitioners to avail such remedy as may be available in
law in challenging the order of detention and the grounds
on which detention order has been passed after its
execution. The order of detention has not been executed D
so far in view of the contumacious conduct of the second
petitioner. He is alleged to have absconded initially. Then
on December 14, 2009 High Court, by an interim order
directed that the detenue shall not be arrested till the next
date of hearing, i.e. December 22, 2009. The said interim E
order was continued until the disposal of writ petition by
the High Court and thereafter, that interim order was
continued by this Court in the special leave petition. In
the writ petition also an interim order has been in
operation. In view of the order dated July 13, 2010 passed F
by this Court, the petitioners cannot be permitted to
challenge the order of detention until its execution. Thus,
the leave to make additional prayer for quashing the
detention order by means of criminal miscellaneous
application is rejected. However, it is clarified that after the G
execution of the detention order, the petitioners would be
at liberty to challenge the detention order in accordance
with law. [Paras 65, 66 and 67] [354-C, G-H; 355-A-D]
1.6. Since the criminal miscellaneous application is
rejected, the argument that the impugned order of H
312 SUPREME COURT REPORTS [2012] 6 S.C.R.
A detention was passed way back on September 23, 2009;
the impugned order was preventive in nature and the
maximum period of detention as per law is one year,
which would have lapsed by now and, therefore, no
purpose for the execution of the detention order survives,
B is rejected. The detention order could not be executed
because of the contumacious conduct of the second
petitioner and, therefore, he cannot take advantage of his
own wrong. [Para 68) [355-E-F]
Motor General Traders and Anr. v. State of Andhra
C Pradesh and Ors. (1984) 1 SCC 222: 1984 (1) SCR 594;
John Vallamattom and another v. Union of India (2003) 6 sec
611: 2003 (1) Suppl. SCR 638; Satyawati Sharma (Dead) by
LRs. v. Union of India and Anr. (2008) 5 SCC 287: 2008 (6)
SCR 566; l.R. Coelho (Dead) by LRs. v. State ofT.N. (2007) 2
D SCC 1: 2007 (1) SCR 706; State of Bombay v. Atma Ram
Sridhar Vaidya 1951 SCR 167; Bhut Nath Mete v. The State
of West Bengal (1974) 1 SCC 645: 1974 (3) SCR 315;
Haradhan Saha v. The State of West Bengal and Ors. (1975)
3 SCC 198: 1975 (1) SCR 778; Kanchanlal Maneklal Chokshi
E v. State of Gujarat and Ors. (1979) 4 SCC 14: 1980 (1) SCR
54; Smt. Hemlata Kanti/al Shah v. State of Maharashtra and
Anr. (1981) 4 SCC 647: 1982 (1) SCR 1028; State of Punjab
v. Sukhpal Singh (1990) 1 SCC 35: 1989 (1) Suppl. SCR
420; Rekha v. State of Tamil Nadu Through Secretary to
F Government and Anr.(2011) 5 SCC 244: 2011 (4) SCR 740;;
Attorney General for India and Ors. v. Amratla/ Prajivandas
and Ors. (1994) 5 sec 54: 1994 (1) Suppl. SCR 1; A.K.
Gopa/an v. The State of Madras 1950 SCR 88; Khudiram Das
v. The State of West Bengal and Ors. (1975) 2 SCC 81:1975
G ( 2 ) SCR 832; Additional Secretary to the Government of India
and Ors. v. Smt. Atka Subhash Gadia and Anr. 1992 Suppl
(1) SCC 496: 1990 (3) Suppl. SCR 583; Suni/ Fulchand
Shah v. Union of India and Ors. (2000) 3 SCC 409: 2000 (1)
SCR 945; R.K. Garg v. Union of India and Ors. (1981) 4 SCC
H 675: 1982 (1) SCR 947; Kesavananda Bharati
DROPTI DEVI & ANR. v. UNION OF INDIA & ORS. 313
Sripadagalvaru v. State of Kera/a and Anr. (1973) 4 SCC 225; A
Indira Nehru Gandhi v. Shri Raj Narain (1975) Supp SCC 1:
Minerva Mills Limited and Ors. v. Union of India and Ors.
(1980) 3 SCC 625: 1981 (1) SCR 206; Waman Rao and Ors.
v. Union of India and Ors. (1981) 2 SCC 362: 1981 (2) SCR
1; Maharao Sahib Shri Bhim Singhji v. Union of India and 8
Ors. (1981) 1 SCC 166 - referred to.
United States v. Anthony Salemo and Vincent Cafaro 481
US 739- referred to.
"The Limits of Preventive Detention" by Rinat Kitai c
Sangero 2009 p 904-932 - referred to.
Case Law Reference:
1984 (1) SCR 594 Referred to. Para 16
D
2003 (1) Suppl. SCR 638 Referred to. Para 16
2008 (6) SCR 566 Referred to. Para 16
2007 (1) SCR 706 Referred to. Para 17
1951 SCR 167 Referred to. Para 18 E-
1974 (3) SCR 315 Referred to. Para 18
1975 (1) SCR 778 Referred to. Para 18
1980 (1) SCR 54 Referred to. Para 18 F
1982 (1) SCR 1028 Referred to. Para 18
1989 (1) Suppl. SCR 420 Referred to. Para 18
2011 (4) SCR 740 Referred to. Para 18
G
481 us 739 Referred to. Para 21
1994 (1) Suppl. SCR 1 Referred to. Para 24
1950 SCR 88 Referred to. Para 37
H
314 SUPREME COURT REPORTS [2012] 6 S.C.R.
A 1975 (2) SCR 832 Referred to. Para 40
1990 (3) Suppl. SCR 583 Referred to. Para 43
2000 (1) SCR 945 Referred to. Para 45
8 1982 (1) SCR 947 Referred to. Para 49
1973 (4) sec 225 Referred to. Para 51
(1975) Supp sec 1 Referred to. Para 51
1981 (1) SCR 206 Referred to. Para 51
c
1981 (2) SCR 1 Referred to. Para 51
(1981) 1 sec 166 Referred to. Para 51
2002 (3) SCR 268 Relied on. Para 61
D
CRIMINAL ORIGINAL JURSIDICTION : Writ Petition (Crl)
No. 65 of 2010.
Under Article 32 of the Constitution of India.
E Vikram Chaudhari, Nikhil Jain, Preeti Singh, Gagan Deep
Sharma for the Petitioners.
P.P. Malhotra, ASG, R.P. Bhatt, Ranjana Narayan, Wasim
Quadri, Arvind K. Sharma for the Respondents.
F The Judgment of the Court was delivered by
R.M. LODHA, J. 1. The central issue in this petition under
Article 32 of the Constitution concerns constitutional validity of
Section 3(1) of Conservation of Foreign Exchange and
G Prevention of Smuggling Activities Act, 1974 (for short,
'COFEPOSA') to the extent it empowers the competent
authority to make an order of detention against any person 'with
a view to preventing him from acting in any manner prejudicial
to the conservation or augmentation of foreign exctiange'.
;
H 2. It is necessary to state few material facts which have
DROPTI DEVI & ANR. v. UNION OF INDIA & ORS. 315
[R.M. LODHA, J.]
given rise to this petition. The first petitioner - Dropti Devi - is A
the mother of second petitioner - Raj Kumar Aggarwal. In
respect of second petitioner an order of detention has been
passed on September 23, 2009 by Smt. Rashada Hussain,
Joint Secretary to the Government of India, specially
empowered under Section 3(1) of the COFEPOSA (as B
amended). The said order reads as follows :
"No. 673/02/2009-Cus. VIII
Government of India
Ministry of Finance
Department of Revenue c
Central Economic Intelligence Bureau
COFEPOSA Unit
6th Floor, 'B' Wing, Janpath Bhawan,
Janpath, New Delhi - 110001
Dated 23rd September, 2009 D
ORDER
Whereas, I Smt. Rashada Hussain, Joint Secretary
to the Government of India, specially empowered under E
Section 3(1) of the Conservation of Foreign Exchange &
Prevention of Smuggling Activities Act, 1974 (as
amended), am satisfied with respect to the person known
as Shri Raj Kumar Aggarwal@ Munna, Rio SU-184, G.F.
Near Park Citi Hostel Pitampura, New Delhi that with a
view to preventing him from acting in any manner F
prejudicial to the conservation and augmentation of foreign
exchange in future, it is necessary to make the following
order:-
Now, therefore, in exercise of the powers conferred G
by Section 3(1) of the Conservation of Foreign Exchange
and Prevention of Smuggling Activities Act, 1974 (as
amended), I direct that the said Shri Raj Kumar Aggarwal
@ Munna , be detained and kept in custody in the Central
Jail, Tihar, New Delhi. H
316 SUPREME COURT REPORTS [2012] 6 S.C.R.
A Sd/-
(Rasheda Hussain)
Joint Secretary to the Government of India"
3. The above detention order came to be passed in the
backdrop of the following events. On February 17, 2009 the
8
premises of Ambika Electronics situate at 136, MCD Market,
Karol Bagh, New Delhi was raided by the Office of the
Directorate of Enforcement, New Delhi. In the course of search,
Indian currency amounting to Rs. 8.9 lacs (approximately) was
recovered along with some documents. The enforcement
C authorities took into custody the passport of second petitioner
(hereinafter referred to as 'detenue') as well. On that day itself,
i.e. February 17, 2009 Office of the Directorate of Enforcement
also raided the residential premises of detenue's brother Anil
Kumar Aggarwal at Pitam Pura, New Delhi and another
D commercial premises of Ambika Electronics at Beadartpura,
Karol Bagh, New Delhi and M/s. Bhagwati Electronics, 135
Municipal Market, Karol Bagh, New Delhi belonging to one
Kapil Jindal were also raided. The detenue was also taken
away by the officials of the Directorate of Enforcement to their
E office at Jamnagar House, Akbar Road, New Delhi in the
intervening night of February 17, 2009 and February 18, 2009.
The detenue was interrogated and his statement was recorded.
On February 19, 2009 the detenue retracted from the
statement recorded in the previous night. The detenue was
F summoned on various occasions but he did not appear before
the authorities on the ground of his illness. On May 15, 2009
the detenue appeared before the authorities and his statement
was recorded on that day and subsequently on May 18, 2009.
May 20, 2009 and May 28, 2009. The evidence gathered in
G the course of searches and the follow up action revealed that
the detenue was indulging in hawala activities, the last of such
activity being on April 24, 2009. Hence, the detention order
which has been quoted above.
4. Initially a writ petition was filed before this Court
H challenging the detention order but that was withdrawn. Tfle first
DROPTI DEVI & ANR. v. UNION OF INDIA & ORS. 317
[R.M. LODHA, J.]
petitioner then filed a writ petition before Delhi High Court being A
W.P. (Crl.) No. 1787 of 2009 challenging the detention order
dated September 23, 2009.
5. The Division Bench of the Delhi High Court on
December 14, 2009 by an interim order. directed that the B
detenue - Raj Kumar Aggarwal shall not be arrested till the next
date of hearing, i.e. December 22, 2009.
6. On DE1cember 22, 2009 the Division Bench allowed the
application for impleadment of Raj Kumar Aggarwal as
petitioner no. 2, issued rule and made interim order dated C
December 14, 2009 absolute during the pendency of writ
petition, subject to his joining the investigation as and when
called. The court on that day also issued a direction to the
detenue to remain present in the matter during the course of
hearing. D
7. The Division Bench completed the hearing on February
4, 2010 and reserved the judgment in the matter. On March 18,
2010, the Division Bench dismissed the writ petition. While
dealing with the effect of Foreign Exchange Management Act, E
,1999 (for short, 'FEMA') and the repeal of Foreign Exchange
·' Regulation Act, 1973 (for short, 'FERA') , the Division Bench
relied upon a decision of this Court in Union of India & Anr.
vs. Venkateshan S. and another1 and observed that if the
activity of any person was prejudicial to the conservation or
augmentation of foreign exchange, the authorities were F
empowered to make a detention order against such person.
8. Not satisfied with the judgment of the Delhi High Court
passed on March 18, 2010, the petitioners filed a special leave
petition before this Court and it was mentioned on April 1, 2010. G
On that day, the Court directed for listing the matter on April 9,
2010 and in the meanwhile continued the interim order that was
passed by the High Court operative during the pendency of the
writ petition.
1. (2002) s sec 2as. H
318 SUPREME COURT REPORTS [2012] 6 S.C.R.
A 9. It may be noted here that while the above special leave
petition was pending, the petitioners preferred the present writ
petition. On May 11, 2010 the Court ordered the writ petition
to be heard along with special leave petition (Crl.) no. 2698 of
2010. On May 13, 2010, the special leave petition and the
B present writ petition were listed before the Court. On that day
in the special leave petition following interim order was passed:
"By order dated December 22, 2009, the High Court
directed the Petitioner No. 2 i.e. Mr. Raj Kumar Aggarwal
to join the investigation as and when called. The grievance
c made by the respondents is that Mr. Raj Kumar Aggarwal
has failed to join the investigation, which is disputed by Mr.
Soli J. Sorabjee, learned senior counsel for the petitioners.
Mr. Sorabjee further states that Mr. Raj Kumar Aggarwal
will present himself on 19th May, 2010 at 11 A.M. in the
D office of the Enforcement Director, Delhi Zonal Office,
Jamnagar House, New Delhi and shall also remain present
before the said officer as and when called along with the
requisite documents. Mr. Raj Kumar Aggarwal is directed
to comply with and act according to the statement made
E at the Bar by his learned counsel.
Interim orders shall continue subject to the direction given
above.
In view of the order passed above, learned senior counsel
F for the petitioners seeks permission to withdraw .the
application for extension of interim order granted by this
Court on 1.4.2010. The permission, as prayed for, is
granted and application is disposed of accordingly.
G On the joint request of the learned counsel of the parties,
the matter is adjourned to 13th July, 201 O."
10. In the writ petition, notice was issued and it was
detagged from special leave petition (Crl.) No. 2698 of 2010.
H
DROPTI DEVI & ANR. v. UNION OF INDIA & ORS. 319
[R.M. LODHA, J.]
11. On July 13, 2010, the special leave petition was A
dismissed as withdrawn. The Court passed the following order:
"The Special Leave Petition.is dismissed as withdrawn.
The petitioners are at liberty to avail such remedy as may
be available in law challenging the order of detention and 8
the grounds on which detention order has been passed
after its execution. In which event, the matter shall be
considered on its own merits uninfluenced by the
observations made in the impugned order as well as
dismissal of this petition. The High Court may consider the C
request of the petitioners/detenue for expeditious disposal
of the writ petitio_n to be filed."
12. We have heard Mr. Vikram Chaudhari, learned counsel
for the petitioners and Mr. P.P. Malhotra, learned Additional D
Solicitor General for the respondents.
13. The crux of the argument advanced by Mr. Vikram
Chaudhari is this: Articles 14, 19 and 21 of the Constitution do
not contemplate preventive detention for an 'act' where no
punitive detention (arrest and prosecution) is even contemplated E
or provided under law. Such an 'act' cannot be made the basis
for a preventive detention and such an 'act' could not be termed
as prejudicial so as to invoke the power of preventive detention
and, therefore, Section 3(1) of COFEPOSA to the extent noted
above is unconstitutional. F
14. Elaborating his arguments, Mr. Vikram Chaudhari
submitted that there were three other Central Preventive Acts
apart from COFEPOSA, namely, (a) National Security Act,
1980, (b) Prevention of Blackmarketing and Maintenance of G
Supplies of Essential Commodities Act, 1980 and (c)
Prevention of Illicit Traffic in Narcotk Drugs and Psychotropic
Act, 1974. In all these three enactments, there are
corresponding penal provisions in the form of prosecution.
However, in COFEPOSA viz., the power to detain a person to
H\
320 SUPREME COURT REPORTS [2012] 6 S.C.R.
A prevent him from indulging in any prejudicial activities relating
to conservation or augmentation of foreign exchange is given
although there is no corresponding penal punitive law available.
He referred to various provisions of FEMA, particularly, Chapter
IV that deals with contravention and penalties; Chapter V that ·
B provides for adjudication as well as appeal against the order
of adjudicating authority vide Sections 16 and 17; Chapter VI
that provides for establishment of Directorate of Enforcement;
Section 40 that stipulates that the Central Government may in
any peculiar circumstances suspend either indefinitely or for a
c limited period the operation of all or any of the provisions of
FEMA and Section 49 which provides for repeal of FERA and
sub-section (3) thereof that envisages that no court shall take
cognizance of an offence under the repealed Act and submitted
that there was major shift in the approach of the Legislature
inasmuch as foreign exchange violation has been made a civil
0
compoundable offence only under FEMA.
15. It was argued by learned counsel for the petitioners that
a dichotomy had arisen on repeal of FERA as conviction under
FERA would be no longer a relevant basis for initiation of
E proceedings under the Smugglers and Foreign Exchange
Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA)
whereas on the same set of accusations detention order under
COFEPOSA could be made thereby warranting proceedings
under SAFEMA.
F
16. Relying on the decisions of this Court in Motor General
Traders and another v. State of Andhra Pradesh and others2,
John Vallamattom and another v. Union of lndia 3 and
Satyawati Sharma (Dead) by LRs. v. Union of India and
G another", learned counsel for the petitioners contended that
impugned portion of Section 3 might not have been
unconstitutional at the initial stage when it was enacted but by
2. (1984) 1 sec 222.
3. (2003) 6 sec 611.
H 4. c2008) 5 sec 287.
DROPTI DEVI & ANR. v. UNION OF INDIA & ORS. 321
[R.M. LODHA, J.]
reason of the new legal regime articulated in FEMA and A
replacement of FERA by FEMA, the said provision has
become unconstitutional in the changed situation.
17. Learned counsel for the petitioners submitted that
though Article 31 B of the Constitution provided protection to the
8
laws added to the Ninth Schedule by amendments but, as
exposited by this Court in /.R. Coelho (Dead) by LRs. v. State
of T.N. 5 , constitutionality of such laws can be examined and if
in judicial review, it is found that any of such laws abrogates or
abridges rights guaranteed by Part-Ill of the Constitution, the
Court can invalidate such law. According to him, since the C
impugned provision violates fundamental rights reflected in
Article 21 read with Articles 14 and 19, despite protection
granted to COFEPOSA being part of Ninth Schedule, in the
judicial review the Court has power to declare the said law
unconstitutional. D
18. Mr. Vikram Chaudhari contended that preventive
detention was aimed at preventing a person from committing
prejudicial act which is necessarily an offence capable of inviting
penal consequences. If such prejudicial act was not E
prosecutable in law and such act has not been made part of
criminal penal law, preventive detention of a person from
committing the prejudicial act which is not an offence is
impermissible. In this regard, he sought to draw support from
decisions of this Court in State of Bombay v. Atma Ram F
Sridhar Vaidya 6 ; Bhut Nath Mete v. The State of West
Bengaf; Haradhan Saha v. The State of West Bengal and
others6; Kanchanlal Maneklal Chokshi v. State of Gujarat and
others9 ; Smt. Hemlata Kantilal Shah. v. State of Maharashtra
5. (2001) 2 sec 1. G
6. 1951 SCR 167.
7. (1974) 1 sec 645.
8. (1975) 3 SC 198.
9. (1979) sec 14
H
322 SUPREME COURT REPORTS [2012] 6 S.C.R.
A and another10 ; State of Punjab v. Sukhpal Singh 11 and Rekha
v. State of Tamil Nadu Through Secretary to Government and
Another12 •
19. As regards the decision of this Court in Venkateshan
S.1, learned counsel submitted that in that case the events
8
which led to the detention of the detenue therein had taken
place when FERA was in place and FEMA had not come into
force and in view of the sunset clause the prosecution for
violation of FERA could continue for next two years and,
therefore, the said decision was clearly distinguishable. He
C further submitted that constitutionality of Conservation of
Foreign Exchange (COFE) part of COFEPOSA was not in
issue. The Court proceeded on the assumption that the past
act which was made basis for preventive detention invited
punishment by way of prosecution and decided the matter
D accordingly. He thus, argued that Venkateshan S.1 did not
come in theway of the petitioners in assailing the constitutional
validity of part of Section 3 of COFEPOSA.
20. Learneq counsel vehemently contended that since
E FEMA did not regard its violation a criminal offence, the whole
idea, spirit, intent and object behind the enactment of
preventive detention had ceased to exist and the continuation
of such provision was violative of Article 21 read with Articles
14 and 19 of the Constitution. He, thus, submitted that the
F provision for preventive detention under COFEPOSA was
wholly unsustainable and untenable.
21. Mr. Vikram Chaudhari in his written submissions has
also dealt with legal position with regard to preventive detention
existing in USA, England, Australia and Germany. He referred
G to the excerpts from "The Limits of Preventive Detention" by
Rinat Kitai - Sangero 2009 (Pgs. 904-932) and submitted that
10. (1981) 4 sec 647.
11. (1990) 1 sec 35.
H 12. c2011) s sec 244.
DROPTI DEVI & ANR. v. UNION OF INDIA & ORS. 323
[R.M. LODHA, J.]
in USA and in England law regarding preventive detention does A
not exist except during war time. He, however, did submit that
in United States v. Anthony Salemo and Vincent Cafaro13 the
constitutionality of pre-trial detention on the ground of
dangerousness under the Bail Reform Act of 1984 was upheld
and after Anthony Salemo and Vincent Cafaro 13 preventive B
detention laws were adopted in number of U.S. States but the
said procedure has been used sparingly and in U.K. under the
Prevention of Terrorism (Temporary Provisions) Act, 1984 a
person may be detained upto 7 days. In Australia preventive
detention orders and prohibited conduct orders are two c
mechanisms available under criminal law for addressing
terrorism concerns and dangerous sex offenders. The
preventive detention order permits detention of a person for a
short period of time (upto 48 hours) subject to certain
procedural rights. In Germany in 1998 la~ for the prevention of o
sexual offences and other dangerous criminal acts has been
enacted.
22. Mr. P. P. Malhotra, learned Additional Solicitor General
stoutly defended the constitutional validity of the part of Section
3(1) of COFEPOSA put in issue in the writ petition. He. E
extensively referred to the pr0visions of FERA and FEMA and
the preamble of COFEPOSA and submitted that dealings in
foreign exchange by a person other than authorised persons/
dealers have serious and deleterious consequences. The
foreign exchange is the most precious reserve for national F
economy and necessary for the economic security of the State
and illegal and/or unaccounted transactions through hawala have
vide ramifications and are definitely prejudicial to the
conservation and augmentation of foreign exchange and since
the need for conservation and augmentation of foreign G
exchange resources of the country continue to exist, preventive
mechanism laid .down in COFEPOSA warrants its continuance
and there is nothing unconstitutional about it.
13. 481 us 739. H
324 SUPREME COURT REPORTS [2012] 6 S.C.R.
A 23. Learned Additional Solicitor General submitted that the
legislative power of the Parliament to enact criminal laws and
preventive detention laws was traceable from two distinct
Entries appearing in Seventh Schedule (List Ill) of the
Constitution, i.e., Entry nos. 1 and 3 respectively. Parliament
B a
is, thus, fully competent to enact law of either type (criminal
or preventive detention) or both the types (criminal laws and
preventive detention) to deal with any prejudicial activity. He
submitted that there was no constitutional prescription that the
Legislature must enact a criminal law as well while making a
c detention law to curb any prejudicial activity. It is not imperative
that detention law should co-exist with a criminal law or vice
versa.
24. Mr. P.P. Malhotra submitted that the constitutional
validity of COFEPOSA had already been upheld by a 9-Judge
D Bench of this Court in Attorney General for India and others
v. Amrat/a/ Prajivandas and others14 . In Amratlal Prajivandas14
this Court has held that Parliament was competent to enact
COFEPOSA. Once constitutional validity of COFEPOSA has
been upheld by a 9-Judge Bench of this Court, learned
E Additional Solicitor General submitted that constitutionality of
Section 3 was not open to challenge again. He submitted that
in l.R. Coelho5 a 9-Judge Bench of this Court had observed
that if the validity of a Ninth Schedule law had already been
upheld by this Court, it would not be open to challenge such
F law again on.the principles laid down in the case (i.e., l.R.
Coe/ho 5 ). However, if a law held to be violative of any rights in
Part-Ill was subsequently incorporated in the Ninth Schedule
after April 24, 1973, such a violation/infraction would be open
to challenge on the ground that it was destructive of the basic
G structure of the Constitution. The present case is not covered
by the exception carved out in l.R. Coelho5 and moreover, the
petitioners have miserably failed to make out a case as to how
COFEPOSA or impugned provision was destructive of the
basic structure of the Constitution.
H 14. (1994) 5 sec 54.
DROPTI DEVI & ANR. v. UNION OF INDIA & ORS. 325
[R.M. LODHA, J.]
25. In support of his submissions, learned Additional A
Solicitor General heavily relied upon the observations made by
this Court in Venkateshan S. 1 •
26. Mr. P.P. Malhotra submitted that the objects and
reasons of COFEPOSA clearly showed that the purpose of the
B
enactment was to prevent violation of foreign exchange
regulation and smuggling activities which have increasingly
deleterious serious effect on the security of the State. Section
3 of COFEPOSA has not been amended or repealed by
Parliament. Section 3(1) of COFEPOSA that authorises
detention with a view to prevent activities prejudicial to the c
conservation or augmentation of foreign exchange is valid from
constitutional angle.
27. On 26th day of November, 1949, People of India .
resolved to constitute India into Sovereign Democratic Republic D
and in the Constituent Assembly adopted, enacted and gave
to themselves an instrument of social contract - the Constitution
of India - which became effective from January 26, 1950. The
Constitution of India is fountainhead of all laws and provides
the machinery by which laws are made. Any statutory law, in E
order to be valid, must be in conformity with the constitutional
requirements. There cannot be any departure or deviation from
this principle. For the purposes of the present matter, it is not
necessary to deal with the diverse features of the Constitution
elaborately, suffice, however, to state that Part Ill that provides F
for fundamental rights is the most important chapter insofar as
individuals and citizens are concerned.
28. Article 12 for the purpose~ of Part Ill defines 'the State'.
29. Article 13(2) mandates that the State shall not make G
any law which takes away or abridges the rights conferred by
Part Ill and any law made in contravention of this provision shall
be void to the extent of the contravention.
30. Article 14 states that the State shall not deny to any
H
326 SUPREME COURT REPORTS [2012] 6 S.C.R.
A person equality before the law or the equal protection of the
laws within the territory of India.
31. Article 19 protects certain rights of the citizens. It
provides that all citizens shall have the right - (a) to freedom
of speech and expression; (b) to assemble peaceably and
8
without arms; (c) to form associations or unions or co-operative
societies; (d) to move freely throughout the territory of India; (e)
to reside and settle in any part of the territory of India and (g)
to practice any profession or to carry on any occupation, trade
or business. The above clauses (a), (b), (c), (d), (e) and (g) are,
C however, subject to restrictions set out in Article 19(2)(3)(4)(5)
and (6) respectively.
32. Article 21, which is the most sacrosanct and precious
of all other Articles insofar as an individual is concerned,
D guarantees protection of life and personal liberty. It mandates
that no person shall be deprived of his life or personal liberty,
except according to procedure established by law.
33. Article 31 B saves challenge to the Acts and
E Regulations specified in the Ninth Schedule on the ground of
inconsistency with, taking away or abridging any fundamental
right. It was brought into statute by the Constitution (First
Amendment) Act, 1951. It reads as follows:
"318. Validation of certain Acts and Regu/ations.-
F Without prejudice to the generality of the provisions
contained in article 31 A, none of the Acts and Regulations
specified in the Ninth Schedule nor any of the provisions
thereof shall be deemed to be void, or ever to have
become void, on the ground that such Act, Regulation or
G provision is inconsistent with, or takes way or abridges any
of the rights conferred by, any provisions of this Part, and
notwithstanding any judgment, decree or order of any court
of tribunal to the contrary, each of the said Acts and
Regulations shall, subject to the power of any competent
H Legislature to repeal or amend it, continue in force."
DROPTI DEVI & ANR. v. UNION OF INDIA & ORS. 327
[R.M. LODHA, J.]
34. COFEPOSA is specified in the Ninth Schedule at Item A
No. 104. The amendment in COFEPOSA therein by Central Act
20 of 1976 is specified at Item No. 129 in the Ninth Schedule.
35. Article 22 is in two parts. First part that comprises of
clauses 1 and 2 is applicable to those persons arrested or
8
detained under a law otherwise than a preventive detention law.
The second part that comprises of clauses 4 to 7 applies to
persons arrested or detained under the preventive detention
law. ·
36. In the backdrop of the above constitutional provisions C
and scheme, the issue with regard to constitutional validity of
Section 3(1) of COFEPOSA to the extent it empowers the
competent authority to make an order of detention against any
person with a view to preventing him from acting in any manner
prejudicial to the conservation and augmentation of foreign D
exchange has fallen for consideration.
37. There appears to be consistent line of cases of this
Court beginning from 1950 itself which says that preventive
detention can constitutionally operate. In A.K. Gopalan v. The E
State of Madras 15 , which was decided by this Court within few
months of coming into force of our Constitution, the Court
upheld the constitutional validity of Section 3(1) of the
Preventive Detention Act, 1950 on the touchstone of Articles
13, 14, 19, 21 and 22 of the Constitution.
F
6
38. In Atma Ram Sridhar Vaidya , Chief Justice Hari Lal
Kania said that preventive detention was not by itself
considered an infringement of any of the fundamental rights
mentioned in Part Ill of the Constitution. He, however,clarified
that this was, of course, subject to the limitations prescribed in G
clause (5) of Article 22. Echoing the same sentiment, Patanjali
Sastri, J. stated, "the Constitution itself has authorised
preventive detention and denied to the subject the right of trial
before a court of law and of consulting or being defended by a
15. 1950 SCR 88. H
328 SUPREME COURT REPORTS [2012] 6 S.C.R.
A legal practitioner of his choice, providing only certain procedural
safeguards, the Court could do no more than construe the words
used in that behalf in their natural sense consistently with the
nature, purpose and scheme of the measure thus authorised,
to ascertain what powers are still left to the court in the matter".
B
39. A Constitution Bench of this Court in Haradhan Saha8
was concerned with constitutional validity of Maintenance of
Internal Security Act, 1971 (for short, 'MISA') wnich enabled the
State and its delegated authority to order preventive detention
of a person. The Court articulated the concept of preventive
C detention in contra- distinction to punitive action in the following
words:
"19. The essential concept of preventive detention is that
the detention of a person is not to punish him for something
D . he has done but to prevent him from doing it. The basis of
detention is the satisfaction of the Executive of a
reasonable probability of the likelihood of the detenu acting
in a manner similar to his past acts and preventing him by
detention from doing the same. A crimi~al conviction on
E the other hand is for an act already done which can only
be possible by a trial and legal eviden·ce. There is no
parallel between prosecution in a court of law and a
detention order under the Act. One is a punitive action and
the other is a preventive act. In one case a person is
F punished to prove his guilt and the standard is proof
beyond reasonable doubt whereas in preventive detention
a man is prevented from doing sometfling which it is
necessary for reasons mentioned in Section 3 of the Act
to prevent."
G With regard to the rights guaranteed to a detenue under Article
22(5), the Court said, "Article 22(5) shows that law as to
detention is necessary. The requirements of that law are to be
found in Article 22. Article 22 gives the mandate as to what will
happen in such circumstances".
H
DROPTI DEVI & ANR. v. UNION OF INDIA & ORS. 329
[R.M. LODHA, J.]
39.1. The Court in para 32 (pg. 208 of the Report) drew A
distinction between the power of preventive detention and
punitive detention thus :
"32. The power of preventive detention is qualitatively
different from punitive detention. The power of preventive B
detention is a precautionary power exercised in
reasonable anticipation. It may or may not relate to an
offence. It is not a parallel proceeding. It does not overlap
with prosecution even if it relies on certain facts for which
prosecution may be launched or may have been launched.
An order of preventive detention may be made before or C
during prosecution. An order of preventive detention may
be made with or without prosecution and in anticipation or
after discharge or even acquittal. The pendency of
prosecution is no bar to an order of preventive detention.
An order of preventive detention is also not a bar to D
prosecution."
40. In Khudiram Das v. The State of West Bengal and
others16 , a four-Judge Bench of this Court held that although a
preventive detention law may pass the test of Article 22 yet it E
has to satisfy the requirements of other fundamental rights such
as Articles 14 and 19.
40.1. While dealing with the constitutional validity of MISA,
the four-Judge Bench in Khudiram Das16 stated in para 12
(pgs. 93-95 of the Report) as follows : F
"12. The next question which then arises for consideration
is whether Section 3 of the Act insofar as it empowers the
detaining authority to exercise the power of detention on
the basis of its subjective satisfaction imposes G
·unreasonable restrictions on the fundamental rights of the
petitioner under clauses (a) to (d} and (g) of Article 19, and
is, therefore, ultra vires and void. The view taken by the
16. (1975) 2 sec a1.
H
330 SUPREME COURT REPORTS [2012] 6 S.C.R.
A majority in A.K. Gopalan v. State of Madras, (1950) SCR
88, was that Article 22 is a self-contained code, and
therefore, a law of preventive detention does not have to
satisfy the requirements of Articles 14, 19 and 21. This
view came to be considered by this Court in three
B subsequent decisions to all of which one of us (P.
Jaganmohan, Reddy, J.) was a party. In Rustom Cavasjee
Cooper v. Union of India ((1970) 3 SCR 530) it was held
by a majority of Judges, only Ray, J., as he then was,
dissenting, that though a law of preventive detention may
c pass the test of Article 22, it has yet to satisfy the
requirements of ©ther fundamental rights such as Article
19. The ratio of the majority judgment in R.C. Cooper's
case was explained in clear and categorical terms by
Shelat, J., speaking on behalf of seven Judges in
Shambhu Nath Sarkar"V. State of West Bengal (1973) 1
D
SCC 856 . The learned Judge said : [SCC p. 879 : SCC
(Cri) p. 641, para 39)
"In Gopalan case the majority court had held that
Article 22 was a self-contained code and therefore
E a law of preventive detention did not have to satisfy
the requirements of Articles 19, 14 and 21. The
view of Fazl Ali, J., on the other hand, was that
preventive detention was a direct breach of the right
under Article 19(a)(d) and that a law providing for
F preventive detention had to be subject to such
judicial review as is obtainable under clause (5) of
that Article. In R.C. Cooper v. Union of India the
aforesaid premise of the majority in Gopalan's case
was disapproved and therefore it no longer holds
G the field. Though Cooper's case dealt with the inter-
relationship of Article 19 and Article 31, the basic
approach to construing the fundamental rights
guaranteed in the different provisions of the
Constitution adopted in this case held the major
H
DROPTI DEVI & ANR. v. UNION OF INDIA & ORS.. 331
[R.M. LODHA, J.]
premise of the m!'ljority in Gopalan's case to be A
incorrect."
Subsequently in Haradhan Saha v. State of West Bengal,
(1975) 3 SCC 198, a Bench of five Judges, after referring
to the decisions in A.K. Gopalan's case and R.C. Cooper's B
case and pointing out the context in which R.C. Cooper's
case held that the acquisition of property directly impinged
the right of the bank to carry on business, other than
banking, guaranteed under Article 19 and Article 31 (2) was
not a protection against the infringement of that guaranteed C
right, proceeded on the assumption that the Act which is
for preventive detention has to be tested in regard to its
reasonableness with reference to Article 19. That decision
accepted and applied the ratio in Shambhu Nath Sarkar's
case as well as R.C. Cooper case to both of which Ray,
C.J., was a party. This question, thus, stands concluded D
and a final seal is put on this controversy and in view of
these decisions, it is not open to any one now to contend
that a law of preventive detention, which falls within Article
22, does not have to meet the requirement of Article 14
or Article 19. Indeed, in Haradhan Saha's case this Court E
proceeded to consider the challenge of Article 19 to the
validity of the Act and held that the Act did not violate any
of the constitutional guarantees embodied in Article 19
and was valid. Since this Court negatived the challenge
to the validity of the Act on the ground of infraction of Article F
19 and upheld it as a valid piece of legislation in Haradhan
Saha's case, the petitioner cannot be permitted to
reagitate the same question merely on the ground that
some argument directed against the constitutional validity
of the Act under Article 19 was not advanced or G
considered by the Court in that case. The decision in
Haradhan Saha's case must be regarded as having finally
laid at rest any question as to the constitutional validity of
the Act on the ground of challenge under Article 19."
H
332 SUPREME COURT REPORTS [2012] 6 S.C.R.
A 41. In Smt. Hemlata Kantilal Shah 10 while dealing with
detention of the petitioner's husband under Seqtion 3(1) of
COFEPOSA and the diverse submissions made on behalf of
the petitioner, the Court held that prosecution or ihe absence
of it was not an absolute bar to an. order of preventive detention.
B It was further held: "but, if there be a law of preventive detention
empowering the authority to detain a particular offender in order
to disable him to repeat his offences, it can do so, but it will be
obligatory on the part of the detaining authority to formally
comply with the provisions of Article 22(5) of the Constitution".
c 42. The necessity of preventive detention'was succinctly
explained by a two-Judge Bench of tllis Court in Sukhpal
Singh 11 • In that case, the Court was concerned with detention
of the respondent's father under Section 3(2) of the National
Security Act, 1980 read with Section 14A as inserted by
D National Security (Amendment) Act, 1987. In paragraphs 8 and
9 (pgs. 42 - 44 of the Report) this Court held :
"8 ........... A clear distinction has to be drawn between
preventive detention in which anticipatory and
E precautionary action is taken to prevent the recurrence of
apprehended events, and punitive detention under which
the action is taken after the event has already happened.
It is true that the ordinary criminal process of trial is not to
be circumvented and short-circuited by apparently handy
F and easier resort to preventive detention ..... .
....... To apply what was said in Rex v. Halliday, ex parte
Zadig (1917 AC 260), one of the most obvious means of
taking precautions against dangers such as are
enumerated is to impose some restriction on the freedom
G of movement of persons whom there may be any reason
to suspect of being disposed to commit what is
enumerated in Section 3 of the Act. No crime is charged.
The question is whether a particular person is disposed
to commit the prejudicial acts. The duty of deciding this
H question is thrown upon the State. The justification is
DROPTI DEVI & ANR. v. UNION OF INDIA & ORS. 333
[R.M. LODHA, J.]
suspicion or reasonable probability and not criminal A
charge which can only be warranted by legal evidence. It
is true that in a case in which the liberty of such person is
concerned we cannot go beyond natural construction of the
statute. It is the duty of this Court to see that a law ~epriving
the person of his liberty without the safeguards available B
even to a person charged with crime is strictly complied
with. We have, however, to remember that individual liberty
is allowed to be curtailed by an anticipatory action only in
interest of what is enumerated in the statute."
9 ...... As we have already seen the power of preventive C
detention is qualitatively different from punitive detention.
The power of preventive detention is precautionary power
exercised reasonably in anticipation and may or may not
relate to an offence. It cannot be considered to be a parallel
proceeding. The anticipated behaviour of a person based D
on his past conduct in the light of surrounding
circumstances may provide sufficient ground for
detention .... ".
43. A three-Judge Bench of this Court in Additional E
Secretary to the Government of India and others v. Smt. Alka
Subhash Gadia and another17 , was concerned with a criminal
appeal preferred by Government of India and its authorities
against the judgment of the Bombay High Court which quashed
the detention order of the husband of the first respondent issued F
under Section 3(1) of COFEPOSA. The Court framed the
principle question of law: 'whether the detenue or anyone on
his behalf is entitled to challenge the detention order without
the detenue submitting or surrendering to it'. It was held that
the provisions of Articles 21 and 22 read together make it clear G
that a person can be deprived of his life or personal liberty
according to procedure established by law, and if the law made
for the purpose is valid, the person who is deprived of his life
or liberty has to challenge his arrest or detention, as the case
17. 1992 Suppl (1) sec 496. H
334 SUPREME COURT REPORTS [2012] 6 S.C.R.
A may be, according to the provisions of the law under which he
is arrested or detained. The Court further observed: "what is
necessary to remember for our purpose is that the Constitution
permits both punitive and preventive detention provided it is
according to procedure established by law made for the
B purpose and if both the law and the procedure laid down by it,
are valid".
44. A nine-Judge Bench of this Court in Amratlal
Prajivandas14 was directly concerned with constitutional validity
of COFEPOSA. One of the issues' before the Court was
C whether Parliament was not competent to enact that Act. We
shall refer to this judgment a little later as it has substantial
bearing on the matter under consideration and requires
detailed reference.
D 45. In Sunil Fu/chand Shah v. Union of India and others18 ,
the view of this Court on the question of law under consideration
was not unanimous. Chief Justice Dr. A.S. Anand speaking for
majority noted: "personal liberty is one of the most cherished
freedoms, perhaps more important than the other freedoms
E guaranteed under the Constitution. It was for this reason that
the Founding Fathers enacted the safeguards in Article 22 in
the Constitution so as to limit the power of the State to detain
a person without trial, which may otherwise pass the test of
Article 21, by humanizing the harsh authority over individual
liberty. Since, preventive detention is a form of precautionary
F
State action, intended to prevent a person from indulging in a
conduct, injurious to the society or the security of the State or
public order, it has been recognised as "a necessary evil" and
is tolerated in a free society in the larger interest of security of
the State and maintenance of public order. However, the power
G being drastic, the restrictions placed on a person to prev~ntively
detain must, consistently with the effectiveness of detention, be
minimal. In a democracy governed by the rule of law, the drastic
power to detain a person without trial for security of the State
H 1s. (2000) 3 sec 409.
DROPTI DEVI & ANR. v. UNION OF INDIA & ORS. 335
[R.M. LODHA, J.]
and/or maintenance of public order, must be strictly construed. A
This Court, as the guardian of the Constitution, though not the
only guardian, has zealously attempted to preserve and protect
the liberty of a citizen. However, where individual liberty comes
into conflict with an interest of the security of the State or public
order, then the liberty of the individual must give way to the B
larger interest of the nation".
45.1. In the minority opinion, G.T. Nanavati, J. although
differed with the view of majority on the question of law but
he also noted: "the distinction between preventive C
detention and punitive detention has now been well
recognised. Preventive detention is qualitatively different
from punitive detention/sentence. A person is preventively
detained without a trial but punitive detention is after a
regular trial and when he is found guilty of having
committed an offence. The basis of preventive detention D
is suspicion and its justification is necessity. The basis of
a sentence is the verdict of the court after a regular trial.
When a person is preventively detained his detention can
be justified only so long as it is found necessary".
E
46. In the case of Venkateshan S.1 , a two-Judge Bench
of this Court was concerned with the judgment and order of the
Karnataka High Court whereby it quashed and set aside the
detention order passed by the Joint Secretary, Ministry of
Finance, Department of Revenue, Government of India under . F
Section 3(1) of COFEPOSA on the ground that what was
considered to be a criminal violation of FERA has ceased to
be so on the repeal of FERA which is replaced by FEMA. The
Court considered the two situations of preventive detention
contemplated by COFEPOSA, the objectives of FEMA and the G
repeal of FERA and discussed the matter thus:
"8. Hence, the limited question would be - whether a
person who violates the provisions of FEMA to a large
extent can be detained under the preventive detention Act,
namely, the COFEPOSA Act. As stated above, the object H
336 SUPREME COURT REPORTS [2012) 6 S.C.R.
A of FEMA is also promotion of orderly development and
maintenance of foreign exchange market in India. Dealing
in foreign exchange is regulated by the Act. For violation
of foreign exchange regulations, penalty can be levied and
such activity is certainly an illegal activity, which is
B prejudicial to conservation or augmentation of foreign
exchange. From the objects and reasons of the
COFEPOSA Act, it is apparent that the purpose of the Act
is to prevent violation of foreign exchange regulations or
smuggling activities which are having increasingly
c deleterious effect on the national economy and thereby
serious effect on the security of the State. Section 3 of the
COFEPOSA Act, which is not amended or repealed,
empowers the authority to exercise its power of detention
with a view to preventing any person inter alia from acting
in any manner prejudicial to the conservation or
D
augmentation of foreign exchange. If the activity of any
person is prejudicial to the conservation or augmentation
of foreign exchange, the authority is empowered to make
a detention order against such person and the Act does
not contemplate that such activity should be an offence.
E
9. The COFEPOSA Act contemplates two situations for
exercise of power of preventive detention -:-- (a) to prevent
violation of foreign exchange regulations; and (b) to
prevent smuggling activities. Under Section 2(e) of the
F COFEPOSA Act, "smuggling" is to be understood as
defined under clause (39) of Section 2 of the Customs Act,
1962 which provides that "smuggling" in relation to any act
or omission will render such goods liable to confiscation
under Section 111 or Section 113. Section 111
G contemplates confiscation of improperly imported goods
and Section 113 contemplates confiscation of goods
attempted to be improperly exported. This has nothing to
do with the penal provisions i.e. Sections 135 and 135-A
of the Customs Act which provide for punishment of an
offence relating to smuggling activities. Hence, to contend
H
DROPTI DEVI & ANR. v. UNION OF INDIA & ORb. 337
[R.M. LODHA, J.]
that for exercising power under the COFEPOSA Act for A .
detaining a person, he must be involved in criminal offence·
is not borne out by the said provisions.
10. The other important aspect is that the COFEPOSA Act
and FEMA occupy different fields. The COFEPOSA Act B
deals with preventive detention for violation of foreign
exchange regulations and FEMA is for regulation and
management of foreign exchange through authorised
person and provides for penalty for contravention of the
said provisions. The object as stated above is for
promoting orderly development and. maintenance of foreign C
exchange market in India. Preventive detention law is for
effectively keeping out of cirqulation the detenu during a
prescribed period by means of preventive detention
(Poonam Lata v. M.L. Wadhawan, (1987) 3 SCC 347).
The power of detention is clearly a preventive measure. It D
does not partake in any manner of the nature of
punishment. It is taken by way of precaution to prevent
mischief to the community (Khudiram Das v. State of WB.,
(1975) 2 SCC 81). The Constitution Bench while dealing
with the constitutional validity of the Maintenance of Internal E
Security Act, 1971 (MISA), in Haradhan Saha v. State of
WB., (1975) 3 SCC 198, held: (SCC pp. 208-09, paras
32-33)
"32. The power of preventive detention is F
qualitatively different from punitive detention. The
power of preventive detention is a precautionary
power exercised in reasonable anticipation. It may
or may not relate to an offence. It is not a parallel
proceeding. It does not overlap with prosecution G
even if it relies on certain facts for which
prosecution may be launched or may have been
launched. An order of preventive detention may be
made before or during prosecution. An order of
preventive detention may be made with or without H
338 SUPREME COURT REPORTS [2012] 6 S.C.R.
A prosecution and in anticipation or after discharge
or even acquittal. The pendency of prosecution is
no bar to an order of preventive detention. An order
of preventive detention is also not a bar to
prosecution.
B
33. Article 14 is inapplicable because preventive
detention and prosecution are not synonymous. The
purposes are different. The authorities are different.
The nature of proceedings is different. In a
prosecution an accused is sought to be punished
c for a past act. In preventive detention, the past act
is merely the material for inference about the future
course of probable conduct on the part of the
detenu."
D In light of the above reasoning, the Court while setting aside
the order of the High Court held, "in our view the order passed
by the High Court holding that what was considered to be the
criminal violation of FERA has ceased to be criminal offence
under FEMA, the detention order cannot be continued after 1-
E 6-2000, cannot be justified".
47. The Constitution recognizes preventive detention
though it takes away the liberty of a person without any enquiry
or trial. Preventive detention results in negation of personal
liberty of-an individual; it deprives an individual freedom and is
F not seen as compatible with rule of law, yet the framers of the
Constitution placed the same in Part Ill of the Constitution. While
giving to an individual the most valuable right - personal liberty
- and also providing for its safeguard, the Constitution has
perceived preventive detention as a potential solution to prevent
G the danger to the state security. The security of the State being
the legitimate goal, this Court has upheld the power of the
Parliament and State Legislatures to enact laws of preventive
detention. The Court has time and again given the expression
'personal liberty' its full significance and asserted how valuable,
H cherished, sacrosanct and important the right of liberty given
DROPTI DEVI & ANR. v. UNION OF INDIA & ORS. 339
[R.M. LODHA, J.]
to an individual in the Constitution was and yet legislative power A
to enact preventive detention laws has been upheld in the larger
interest of state security.
48. The power of Parliament to enact a law of preventive
detention for reasons connected with (a) defence, (b) foreign B
affairs, (c) security of India; (d) security of State, (e)
maintenance of public order or (f) the maintenance of supplies
and services essential to the community, is clearly traceable
to Article 22, Article 246 and Schedule Seven, List I Entry 9
and List Ill Entry 3. With specific reference to COFEPOSA, a C
nine-Judge Bench of this Court in Amratlal Prajivandas14 has
held that the enactment was relatable to Entry 3 of List Ill
inasmuch as it provides for preventive detention for reasons
connected with the security of the State as well as the
maintenance of supplies and services essential to the
community besides Entry 9 of List I. In the words of this Court D
(para 23 pg. 73 of the Report):
" ... CO FE POSA is clearly relatable to Entry 3 of List 111
inasmuch as it provides for preventive detention for
reasons connected with the security of the State as well E
as the maintenance of supplies and services essential to
the community besides Entry 9 of List I .... ·.....
49. In Amrat/a/ Prajivandas 14 constitutionality of
COFEPOSA was directly in issue. The Court made the
following weighty prefatory remarks in paragraph 1 (pg. 62 of F
the Report) highlighting the importance of regulation and control
of foreign exchange:
"Till the wind of liberalisation started blowing across the
Indian economic landscape over the last year or·two, the G
Indian economy was a sheltered one. At the time of
Independence, India did not have an industrial base worth
the name. A firm industrial base had to be laid. Heavy
industry was the crying need. All this required foreign
exchange. The sterling balances built up during World War H
340 SUPREME COURT REPORTS [2012] 6 S.C.R.
A II were fast dissipating. Foreign exchange had to be
conserved, which meant prohibition of import of several
unessential items and close regulation of other imports. It
was also found necessary to raise protective walls to
nurture and encourage the nascent industries. These
B controls had, however, an unfortunate fall-out. They gave
rise to a class of smugglers and foreign exchange
manipulators who were out to frustrate the regulations and
restrictions - profit being their sole motive, and success
in life the sole earthly judge of right and wrong. As early
c as 1947, the Central Legislature found it necessary to
enact the Foreign Exchange Regulation Act, 1947 and
Imports and Exports (Control) Act, 1947. Then came the
Import (Control) Order, 1955 to place the policy regarding
imports on a surer footing. In the year 1962, a new
Customs Act replaced the antiquated Sea Customs Act,
D
1878. The menace of smuggling and foreign exchange
violations, however, continued to rise unabated. Parliament
then came forward with the Conservation of Foreign
Exchange and Prevention of Smuggling Activities Act,
1974 (COFEPOSA). It provided for preventive detention
E of these antisocial elements".
The Court in paragraphs 3 to 7 referred to COFEPOSA,
SAFEMA and FERA, the amendments carried out in these
Acts, and the constitutional protection given to COFEPOSA and
F SAFEMA. The preamble and the provisions of COFEPOSA
were noted in paragraphs 9 to 14. The provisions of SAFEMA
were noted in paragraphs 15 to 19. In paragraph 20 (pg. 71 of
the Report) , the Court made following clarificatory observations:
" ...... Though a challenge to the constitutional validity of
G
39th, 40th and 42nd Amendments to the Constitution was
levelled in the writ petitions on the ground that the said
Amendments - effected after the decision in
Kesavananda Bharati v. State of Kera/a, (1973) 4 SCC
225) - infringe the basic structure of the Constitution, no
H
DROPTI DEVI & ANR. v. UNION OF INDIA & ORS .. 34.:1
[R.M. LODHA, J.]
serious attempt was made during the course of arguments A
to substantiate it. It was generally argued that Article 14 is
one of the basic features of the Constitution and hence any
constitutional amendment violative of Article 14 is equally
violative of the basic structure. This simplistic argument
overlooks the raison d'etre of Article 31-B - at any rate, B
its continuance and relevance after Bharati - and of the
39th and 40th Amendments placing the said enactments
in the Ninth Schedule. Acceptance of the petitioners'
argument would mean that in case of post-Bharati
constitutional amendments placing Acts in the Ninth c
Schedule, the protection of Article 31-B would not be
available against Article 14. Indeed, it was suggested that
Articles 21 and 19 also represent the basic features of the
Constitution. If so, it would m~an a further enervation of
Article 31-B. Be that as it may, in the absence of any effort
0
to substantiate the said challenge, we do not wish to
express any opinion on the constitutional validity of the
said Amendments. We take them as they are, i.e., we
assume them to be good and valid. We must also say that
no effort has also been made by the counsel to establish
in what manner the said Amendment Acts violate Article E
14."
Then, in paragraph 21, the Court observed that COFEPOSA
was a law relating to preventive detention and it has, therefore,
to conform to the provisions in clauses (4) to (7) of Article 22. F
The Court quoted following observations in R.K. Garg v. Union
of India & Ors. 19 :
"The court must always remember that 'legislation is
directed to practical problems, that the economic G
mechanism is highly sensitive and complex, that many
problems are singular and contingent, that laws are not
abstract propositions and do not relate to abstract units
and are not to be measured by abstract symmetry'; 'that
19. (1981) 4 sec 675. H
342 SUPREME COURT REPORTS [2012] 6 S.C.R.
A exact wisdom and nice adaptation of remedy are not
always possible' and that 'judgment is largely a prophecy
based on meagre and uninterpreted experience'. Every
legislation particularly in economic matters is essentially
empiric and it is based on experimentation or what one
8 may call trial and error method and therefore it cannot
provide for all possible situations or anticipate all possible
abuses. There may be crudities and inequities in
complicated experimental economic legislation but on that
account alone it cannot be struck down as invalid. The
c courts cannot, as pointed out by the United States
Supreme Court in Secretary of Agriculture v. Central Roig
Refining Co., 94 l.Ed. 381, be converted into tribunals for
relief from such crudities and inequities. There may even
be possibilities of abuse, but that too cannot of itself be a
ground for invalidating the legislation, because it is not
D
possible for any legislature to anticipate as if by some
divine "prescience, distortions and abuses of its legislation
which may be made by those subject to its provisions and
to provide against such distortions and abuses. Indeed,
howsoever great may be the care bestowed on its framing,
E it is difficult to conceive of a legislation which is not
capable of being abused by perverted human ingenuity.
The Court must therefore adjudge the constitutionality of
such legislation by the generality of its provisions and not
by its crudities or inequities or by the possibilities of abuse
F of any of its provisions. If any crudities, inequities or
possibilities of abuse come to light, the legislature can
always step in and enact suitable amendatory legislation.
That is the essence of pragmatic approach which must
guide and inspire the legislature in dealing with complex
G economic issues."
(emphasis added)
In the above backdrop, the Court considered the question,
whether Parliament was not competent to enact COFEPOSA
H
DROPTI DEVI & ANR. v. UNION OF INDIA & ORS. 343
[R.M. LODHA, J.]
and SAFEMA in paragraph 23 (pgs. 73-74 of the Report) as A
follows:
"23. It is argued for the petitioners that COFEPOSA is not
relatable to Entry 9 of List I of ttie Seventh Schedule to the
Constitution inasmuch as the preventive detention provided B
therefor is not for reasons connected with defence, foreign
affairs or security of India. Even Entry 3 of List Ill, it is
submitted, does not warrant the said enactment. So far as
SAFEMA is concerned, it is argued, it is not relatable to
any of the Entries 1 to 96 in List I or to any of the Entries C
in List Ill. We are not prepared to agree. COFEPOSA is
clearly relatable to Entry 3 of List Ill inasmuch as it provides
for preventive detention for reasons connected with the
security of the State as well as the maintenance of supplies
and services essential to the community besides Entry 9
of List I. While Entry 3 of List Ill speaks of "security of a D
State", Entry 9 of List I speaks of "security of India".
Evidently, they are two distinct and different expressions.
"Security of a State" is a much wider expression. A State
with a weak and vulnerable economy cannot guard its
security well. It will be an easy prey to economic colonisers. E
We know of countries where the economic policies are not
dictated by the interest of that State but by the interest of
multinationals and/or other powerful countries. A country
with a weak economy is very often obliged to borrow from
International Financial Institutions who in tLJrn seek to dictate F
the economic priorities of the borrowing State - it is
immaterial whether they do so in the interest of powerful
countries w~o contribute substantially to their fund or in the
interest of their loan. In the modern world, the security of a
State is ensured not so much by physical might but by G
economic strength - at any rate, by economic strength as
much as by armed might. It is, therefore, idle to contend
that COFEPOSA is unrelated to the security of the State.
Indeed in the very preamble to the Act, Parliament states
that the violations of foreign exchange regulations and H
344 SUPREME COURT REPORTS [2012] 6 S.C.R.
A smuggling activities are having an increasingly deleterious
effect on the national economy thereby casting serious
adverse effect on the security of the State. Be that as it
may, it is not necessary to pursue this line of reasoning
since we are in total agreement with the approach evolved
B in Union of India v. H.S. Dhillon, (1971) 2 SCC 779 - a
decision by a Constitution Bench of seven Judges. The test
evolved in the said decision is this in short: Where the
legislative competence of Parliament to enact a particular
statute is questioned, one must look at the several entries
c in List II to find out (applying the well-known principles in
this behalf) whether the said statute is relatable to any of
those entries. If the statute does not re(ate to any of the
entries in List 11, no further inquiry is necessary. It must be
held that Parliament is competent to enact that statute
whether by virtue of the entries in List I and List Ill or by
D
virtue of Article 248 read with Entry 97 of List I. In this case,
it is not even suggested that either of the two enactments
in question are relatable to any of the, entries in List 11. If
so, we need not go further and enquire to which entry or
entries do these Acts relate. It should be held that
E Parliament did have the competence to enact them."
The Court concluded that Parliament did have the competence
to enact COFEPOSA and SAFEMA.
F 50. The constitutionality of COFEPOSA has been already
upheld by a nine-Judge Bench of this Court. Its constitutionality
is again sought to be assailed by the petitioners in the present
matter on the ground that with the change of legal regime by
repeal of FERA and enactment of FEMA' (the provisions
G contained in FEMA did not regard its violation a criminal
offence) the intent and object behind the enactment of
preventive detention in CO FE POSA had ceased to. exist and
continuation of impugned provision in COFEPOSA was
violative of Article 21 read with Articles 14 and 9 of the
Constitution.
H
DROPTI DEVI & ANR. v. UNION OF INDIA & ORS. 345
[R.M. LODHA, J.]
51. In /. R. Coelho5 , this Court had an occasion to consider A
the power of judicial review in relation to the Acts falling under
the Ninth Schedule. After discussing His Holiness
Kesavananda Bharati Sripadagalvaru v. State of Kera/a &
Anr. 20 , Indira Nehru Gandhi v. Shri Raj Narain 21 , Minerva Mills
Limited and others v. Union of India and others22 , Waman B
Rao and others v. Union of India and others2 3 and Maharao
Sahib Shri Bhim Singhji v. Union of India and others24 and
relevant Articles of the Constitution, particularly, Article 31B and
368, in paragraph 131, the Court referred to the decision in
Amratlal Prajivandas14 . With regard to decision in Amratlal c
Prajivandas14 in paragraph 132, the Court held: "It is evident
from the aforenoted passage that the question of violation of
Articles 14, 19 or 21 was not gone into. The Bench did not
express any opinion on those issues. No attempt was made
to establish violation of these provisions. In para 56, while
0
summarising the conclusion, the Bench did not express any
opinion on the validity of the Thirty-ninth and Fortieth
Amendment Acts to the Constitution of India placing
COFEPOSA and SAFEMA in the Ninth Schedule. These Acts
were assumed to be good and valid. No arguments were also
addressed with respect to the validity of the Forty-second E
Amendment Act".
51.1. The Court affirmed the view taken in Waman Raa24
that the Acts inserted in the Ninth Schedule after April 24, 1973
would not receive full protection. F
51.2. In paragraph 151 {pg. 111 of the Report), the Court
recorded its conclusions. Clauses (iii) and (v) thereof are
relevant for the present purposes which read as follows:
G
20. (1973) 4 sec 225.
21. (1975) Supp sec 1.
22. (1980) 3 sec 625.
23. (1981) 2 sec 362.
24. (1981) 1 sec 166. H
346 SUPREME COURT REPORTS [2012] 6 S.C.R.
A "(iii) All amendments to the Constitution made on or after
24-4-1973 by which the Ninth Schedule is amended by
inclusion of various laws therein shall have to be tested on
the touchstone of the basic or essential features of the
Constitution as reflected in Article 21 read with Article 14,
B Article 19, and the principles underlying them. To put it
differently even though an Act is put in the Ninth Schedule
by a constitutional amendment, its provisions would be
open to attack on the ground that they destroy or damage
the basic structure if the fundamental right or rights taken
c away or abrogated pertains or pertain to the basic
structure.
(v) If the validity of any Ninth Schedule law has already
been upheld by this Court, it would not be open to
challenge such law again on the principles declared by this
D judgment. However, if a law held to be violative of any rights
in Part 111 is subsequently incorporated in the Ninth
Schedule after 24-4-1973, such a violation/infraction shall
be open to challenge on the ground that it destroys or
damages the basic structure as indicated in Article 21
E read with Article 14, Article 19 and the principles
underlying thereunder."
52. Para 151 (v} in /. R. Coelho5 leaves no manner of doubt
that where the validity of any Ninth Schedule law has already
F been upheld by this Court, it would not be open to challenge
such law again on the principles declared by the judgment. The
constitutional validity of COFEPOSA has already been upheld
by this Court in Amratlal Prajivandas 14 and, therefore, it is not
open for challenge again. On this ground alone the challenge
G to the constitutional validity of the impugned provision must fail.
Despite this, we intend to consider the forceful submission
made by the learned counsel for the petitioners that on repeal
of FERA and enactment of FEMA (FEMA did not regard its
violation of criminal offence) an act where no punitive detention
(arrest and prosecution) is even contemplated or provided
H
DROPTI DEVI & ANR. v. UNION OF INDIA & ORS. 347
[R.M. LODHA, J.]
under law, such an act cannot be made the basis for preventive A
detention and any law declaring it to be prejudicial to the interest
of the State so as to invoke the power of preventive detention
is violative of Articles 14, 19 and 21 of the Constitution and must
be struckdown.
B
53. FERA was enacted to consolidate and amend the law
regulating certain payments, dealings in foreign exchange and
securities, transactions indirectly affecting foreign exchange and
the import and export of currency for the conservation of the
foreign exchange resources of the country and the proper C
utilization thereof in the interest of the economic development
of the country. Section 2(b) defined 'authorised dealer'. Section
6 provided, inter alia, for authorisation of any person by the
Reserve Bank of India (RBI) to deal in foreign exchange. The
restrictions on dealing in foreign exchange were provided in
Section 8. Sub-sections (1) and (2) of Section 8 read as follows 0
"8. Restrictions on dealing in foreign exchange.-(1)
Except with the previous general or special permission of
the Reserve Bank, no person other than an authorised E
dealer shall in India, and no person resident in India other
than an authorised dealer shall outside India, purchase or
otherwise acquire or borrow from, or sell, or otherwise
transfer or lend to or exchange with, any person not being
an authorised dealer, any foreign exchange: F
Provided that nothing in this sub-section shall apply
to any purchase or sale of foreign currency effected in India
between any person and a money-changer.
Explanation.-For the purposes of this sub-section, G
a person, who deposits foreign exc~ange with another
person or opens an account in foreign exchange with
another person, shall be deemed to lend foreign exchange
to such other person.
H
348 SUPREME COURT REPORTS [2012} 6 S.C.R.
A (2) Except with the previous general or special
permission of the Reserve Bank, no person, whether an
authorised dealer or a money-changer or otherwise, shall
enter into any transaction which provides for the conversion
of Indian currency into foreign currency or foreign currency
B into Indian currency at rates of exchange other than the
rates for the time being authorised by the Reserve Bank".
FERA contained penal provisions. Section 50 provided for
imposition of fiscal penalties while Section 56 made provision
for prosecution and punishment. FERA stood repealed by
C FEMA in 1999.
54. Before we refer to FEMA, a brief look at the
COFEPOSA may be appropriate. COFEPOSA came into
force on December 19, 1974. Its preamble reads as under:
D
"An Act to provide for preventive detention in certain cases
for the purposes of conservation and augmentation of
foreign exchange and prevention of smuggling activities
and for matters connected therewith.
E WHEREAS violations of foreign exchange regulations and
smuggling activities are having an increasingly deleterious
effect on the national economy and thereby a serious
adverse effect on the security of the State;
AND WHEREAS having regard to the persons by whom
F
and the manner in which such activities or violations are
organised and carried on, and having regard to the fact
that in certain areas which are highly vulnerable to
smuggling, smuggling activities of a considerable
magnitude are clandestinely org~nised arid carried on, it
G
is necessary for the effective pre~ention of such activities
and violations to provide for detention of persons
concerned in any manner therewith;"
55. Section 3 of COFEPOSA provipes for power to make
H
DROPTI DEVI & ANR. v. UNION OF INDIA & ORS. 349
[R.M. LODHA, J.]
orders detaining certain persons. Sub-section (1) thereof to the A
extent it is relevant, it reads as follows :
"S.3 - Power to make orders detaining certain persons
1) The Central Government or the State Government or any
officer of the Central Government, not below the rank of a B
Joint Secretary to that Government, specially empowered
for the purposes of this section by that Government, or any
officer of the State Government, not below the rank of a
Secretary to that Government, specially empowered for the
purposes of this section by that Government, may, if C
satisfied, with respect to any person (including a foreigner),
that, with a view to preventing him from acting in any
manner prejudicial to the conservation or augmentation of
foreign exchange or with a view to preventing him from--
D
(i) smuggling goods, or
(ii) abetting the smuggling of goods, or
(iii) engaging in transporting or concealing or
keeping smuggled goods, or E
(iv) dealing in smuggled goods otherwise than by
engaging in transporting or concealing or keeping
smuggled goods, or
(v) harbouring persons engaged in smuggling goods F
or in abetting the smuggling of goods,
it is necessary so to do, make an order directing that such
person be detained:"
G
Sub-section (3) mandates compliance set out therein as
required in Article 22(5). Certain other safeguards as required
under Article 22, particularly, sub-clause (a) to Clause (4) and
sub-clause (c) to Clause (7) of Article 22 of the Constitution
have been provided in Sections 8 and 9. Maximum period of
H
350 SUPREME COURT REPORTS [2012] 6 S.C.R.
A detention is provided in Section 10. Notwithstanding the
provision contained in Section 10, Section 1OA provides for
extension of period of detention in the situations contemplated
therein and to the extent provided. Section 11 empowers the
Central Government onhe State Government, as the case may
B be, to revoke any detention order.
56. As noted above, FERA has been repealed by FEMA.
FEMA was enacted to consolidate and amend the law relating
to foreign exchange with the objective of facilitating the external
trade and payments and for promoting the orderly development
C and maintenance of foreign exchange market in India. Section
2(c) of FEMA defines 'authorised person' which means an
authorised dealer, money changer, off-shore banking unit or any
other person for the time being authorised under sub-section
(1) of Section 10 to deal in foreign exchange or foreign
D securities. RBI may authorise any person to deal in foreign
exchange or in foreign securities as an authorised dealer,
money changer or off-shore banking unit or in any other manner
as it deems fit. Section 10 provides for the complete procedure
for authorisation of any person to deal in foreign exchange.
E Section 13 provides for fiscal penalty to the extent of thrice the
sum involved in such contravention where such amount is
quantifiable or upto two lac rupees where the amount is not
quantifiable and where such contravention is a continuing one,
further penalty which may extend to Rs. 5000/- for every day
F after the first day during which the contravention continues. On
failure of a person to make full payment of the penalty imposed
on him, Section 14 is an enforcement provision. If a person
remains in default in discharge of the penalty awarded to him,
he is liable to civil imprisonment. Section 15 provides for
G compounding of contravention. By Section 49, FERA has been
repealed and sub-section (3) thereof provides :
"Notwithstanding anything contained in any other law for the time
being in force, no court shall take cognizance of an offence
under the repealed Act and no adjudicating officer shall take
H notice of any contravention under Section 51 of the repealed
DROPTI DEVI & ANR. v. UNION OF INDIA & ORS. 351
[R.M. LODHA, J.]
Act after the expiry of a p~riod of two years from the date of A
the commencement of this Act."
57. It is true that provisions of FERA and FEMA differ in
some respects, particularly in respect of penalties. It is also true
that FEMA does not have provision for prosecution and 8
punishment like Section 56 of FERA and its enforcement for
default is through civil imprisonment. However, insofar as
conservation and/or augmentation of foreign exchange is
concerned, the restrictions in FEMA continue to be as rigorous
as they were in FERA. FEMA continues with the regime of
rigorous control of foreign exchange and dealing in the foreign C
exchange is permitted only through authorised person. While
its aim is to promote the orderly development and maintenance
of foreign exchange markets in India, the Government's control
in matters of foreign exchange has not been diluted. The
conservation and augmentation of foreign exchange continues D
to be as important as it was under FERA. The restrictions on
the dealings in foreign exchange continue to be as rigorous in
FEMA as they were in FERA and the control of the Government
over foreign exchange continues to be as complete and full as
it was in FERA. E
58. The importance of foreign exchange in the
development of a country needs no emphasis. FEMA regulates
the foreign exchange. The conservation and augmentation of
foreign exchange continues to be its important theme. Although F
contravention of its provisions is not regarded as a criminal
offence, yet it is an illegal activity jeopardizing the very economic
fabric of the country. For violation of foreign exchange
regulations, penalty can be levied and its non-compliance
results in civil imprisonment of the defaulter. The whole intent G
and idea behind COFEPOSA is to prevent violation of foreign
exchange regulations or smuggling activities which have serious
and deleterious effect on the national economy. In today's world
the physical and geographical invasion may be difficult but it
is easy to imperil the security of a State by disturbing its
H
352 SUPREME COURT REPORTS [2012] 6 S.C.R.
A economy. The smugglers and foreign exchange manipulators
by flouting the regulations and restrictions imposed by FEMA
- by their misdeeds and misdemeanours - directly affect the
national economy and thereby endanger the security of the
country. In this situation, the distinction between acts where
B punishments are provided and the acts where arrest and
prosecution are not contemplated pales into insignificance. We
must remember : the person who violates foreign exchange
regulations or indulges in smuggling activities succeeds in
frustrating the development and growth of the country. His acts
c and omissions seriously affect national economy. Therefore, the
relevance of provision for preventative detention of the anti-
social elements indulging in smuggling and violation and
manipulation of foreign exchange in COFEPOSA continues
even after repeal of FERA.
D 59. The menace of smuggling and foreign exchange
violations has to be curbed. Notwithstanding the many
disadvantages of preventive detention, particularly in a country
like ours where right to personal liberty has been placed on a
very high pedestal, the Constitution has adopted preventive
E detention to prevent the greater evil of elements imperiling the
security, the safety of State and the welfare of the Nation.
60. On the touchstone of constitutional jurisprudence, as
reflected by Article 22 read with Articles 14, 19 and 21, we do
F not think that the impugned provision is rendered
unconstitutional. There is no constitutional mandate that
preventive detention cannot exist for an act where such act is
not a criminal offence and does not provide for punishment. An
act may not be declared as an offence under law but still for
G such an act, which is an illegal activity, the law can provi~e for
preventive detention if such act is prejudicial to the $tate
security. After all, the essential concept of preventive detention
is not to punish a person for what he has done but to prevent
him from doing an illegal activity prejudicial to the secur\ity of
the State. Strictly speaking, preventive detention. is not
H
DROPTI DEVI & ANR. v. UNION OF INDIA & ORS. 353
[R.M. LODHA, J.]
regulation (many people call it that way), it is something much A
more serious as it takes away the liberty of a person but it is
accepted as a necessary evil to prevent danger to the
community. The law of preventative detention arms the State
with precautionary action and must be seen as such. Of course,
the safeguards that the Constitution and preventive detention s
laws provide must be strictly insisted upon whenever the Court
is called upon to examine the legality and validity of an order
of preventive detention.
61. The following features, (i) detention order was issued C
on February 8, 2000 and the detenue was served with the same
on February 15, 2000; (ii) the events had taken place when
FERA was in place as FEMA had come into force only with
effect from June 1, 2000; in view of the sunset clause in FEMA
the prosecution for violation of FERA could continue for next
two years; (iii) High Court had held the continued detention after D
coming into force of FEMA to be bad; (iv) the constitutionality
of Conservation of Foreign Exchange (COFE) part of,
COFEPOSA was not in issue and the facts brought the
prejudicial act within the mischief of FERA inviting penal
consequences, were highlighted by the l~arned counsel for the ' E
petitioners to distinguish Venkateshan S.1 . We are afraid, the
above features hardly render Venkateshan S.1 inapplicable to
the issue raised before us. We are in complete agreement with
the position stated in Venkateshan S.1: "if the activity of any
person is prejudicial to the conservation or augmentation of F
foreign exchange, the authority is empowered to make a
detention order against such person and the Act does not
contemplate that such activity should be an offence".
62. It is too na'ive to suggest that in today's economic G
scenario of abundant foreign exchange and booming foreign
trade, contravention of foreign exchange laws does not pose
any threat to the national interest for which a person has to be
detained.
63. In view of the above, we do not find any merit in H
354 SUPREME COURT REPORTS [2012] 6 S.C.R.
A challenge to the constitutional validity of impugned part of
Section 3(1) 9f'COFEPOSA.
64. Then comes the question upon the prayer made by
means of criminal miscellaneous application for permitting the
. petitioners to make an additional prayer: ''This Hon'ble Court
8
may be pleased to quash the detention order bearing No. 673/
02/2009 - CUSNlll dated September 23, 2009".
65. The prayer made in the criminal miscellaneous
application by the petitioners cannot be granted for more than
C one reason. For, petitioners initially filed a writ petition (Crl. No.
97/2009) under Article 32 of the Constitution before this Court
challenging the detention order dated September 23, 2009.
The said writ petition was dismissed by this Court as withdrawn
on December 4, 2009. The petitioners have not stated the
D above fact in the present writ petition.
66. The petitioners then filed a writ petition before Delhi
High Court. That wi"it petition was dismissed by the High Court
on March 18, 2010 on the ground that the petition was filed at
E pre-execution stage. The petitioners filed special leave petition
(Crl. No. 2698 of 20·10) before this Court challenging the
judgment of the Delhi High Court. During the pendency of
special leave petition, the petitioners filed the present writ
petition wherein the only prayer made is that impugned part of
F Section 3(1) of COFEPOSA be declared unconstitutional.
Presumably, the detention order was not challenged because
special leave petition was already pending. Later on, the
special leave petition was withdrawn by the petitioners. While
dismissing the special leave petition as withdrawn, this Court
granted liberty to the petitioners to avail such remedy as may
G be available in law in challenging the order of detention and the
grounds on which detention order has been passed after its
execution (emphasis supplied). The order of detention in
question has not been executed so far in view of the
contumacious conduct of the second petitioner. He is alleged
H to have absconded initially. Then on December 14, 2009 Delhi
DROPTI DEVI & ANR. v. UNION OF INDIA & ORS. 355
[R.M. LODHA, J.]
High Court, by an interim order directed that the detenue shall A
not be arrested till the next date of hearing, i.e. December 22,
2009. The said interim order was continued until the disposal
of writ petition by the High Court and thereafter that interim order
was continued by this Court in the special leave petition. In the
writ petition also an interim order has been in operation. In view B
of the order dated July 13, 2010 passed by this Court, the
petitioners cannot be permitted to challenge the order of
detention until its execution.
67. In view of the above, the leave to make additional C
prayer for quashing the detention order dated September 23,
2009 by means of criminal miscellaneous application does not
deserve to be granted and is rejected. However, it is clarified
that after the execution of the detention order, the petitioners
shall be at liberty to challenge the detention order in
accordance with law. D
68. Since we have rejected the criminal miscellaneous
application, the argument of the learned counsel for the
petitioners that the impugned order of detention was passed
way back on September 23, 2009; the impugned order was E
preventive in nature and the maximum period of detention as
per law is one year, which would have lapsed by now and,
therefore, no purpose for the execution of the detention order
survives is noted to be rejected. The detention order could not
be executed because of the contumacious conduct of the F
second petitioner and, therefore, he cannot take advantage of
his own wrong.
69. Writ petition and criminaymiscellaneous application,
for the reasons indicated above, !cue liable to be rejected and
are rejected. G
N.J. , Writ Petition and Criminal Miscellaneous application
dismissed.
H
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