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REPORTABLE

IN THE SUPREME COURT OF INDIA   ORIGINAL  JURISDICTION

WRIT     PETITION     (Crl.     )     NO.     65     OF     2010   

Dropti Devi & Anr. …. Petitioners

Versus

Union of India & Ors.                  ….Respondents

JUDGMENT

R.M.     Lodha,     J.      

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 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 exchange’.  

2. It is necessary to state few material facts which have given rise to  

this petition. The first petitioner –  Dropti   Devi –  is the mother  

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of second petitioner – Raj Kumar Aggarwal. In respect of second petitioner an  

order of detention has been  passed on September 23, 2009 by Smt. Rasheda  

Hussain, Joint Secretary to the Government of India, specially empowered  

under Section 3(1) of the COFEPOSA (as amended). The said order reads as  

follows :

“No. 673/02/2009-Cus. VIII Government of India Ministry of Finance

Department of Revenue Central Economic Intelligence Bureau

COFEPOSA Unit

          6th Floor, ‘B’ Wing, Janpath Bhawan, Janpath, New Delhi – 110001

             Dated 23rd September, 2009  

ORDER

Whereas, I Smt. Rasheda Hussain, Joint Secretary to the  Government of India, specially empowered under 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, R/o SU-184, G.F. Near Park Citi  Hostel Pitampura, New Delhi  that with a view to preventing him from  acting in any manner 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 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.

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 premises of Ambika  

Electronics situate at 136, MCD Market, Karol Bagh, New Delhi was raided by  

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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 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  commercial premises  

of Ambika Electronics at Beadanpura, 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 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 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 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 challenging the  

detention order but that was withdrawn.  The first petitioner then filed a writ  

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petition before Delhi High Court being  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 detenue – Raj Kumar Aggarwal shall  

not be arrested till the next date of hearing, i.e. December 22, 2009.

6. On December 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 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.

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, 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  

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.  On that day, the Court directed for  

1  (2002) 5 SCC 285

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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.

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 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 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 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 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 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.

On the joint request of the learned counsel of the parties, the matter is  adjourned to 13th July, 2010.”

10. In the writ petition, notice was issued and it was detagged from  

special leave petition (Crl.) No.  2698 of 2010.

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11. On July 13, 2010, the special leave petition was 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 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 request of the  petitioners/detenue for expeditious disposal of the writ petition to be  filed.”

12. We have heard Mr. Vikram Chaudhari, learned counsel for the  

petitioners and Mr. P.P. Malhotra, learned Additional 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 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.   

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 Supplies of Essential Commodities Act, 1980 and (c)  

Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Act, 1974. In all  

these three enactments,  there are corresponding penal provisions in the form  

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of prosecution. However, in  COFEPOSA viz., the power to detain a person to  

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 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 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  

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 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.

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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 India3  and Satyawati Sharma (Dead) by LRs. v. Union of  

India and another4, 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 reason of the new legal regime  

articulated in FEMA and 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  

31B of the Constitution provided protection to the laws added to the Ninth  

Schedule by amendments  but, as exposited by this Court  in I.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-III of the Constitution, the Court can invalidate such  

law.   According to him, since the 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.

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 prosecutable in law and such act has not been made  2  (1984) 1 SCC 222 3  (2003) 6 SCC 611 4  (2008) 5 SCC 287 5  (2007) 2 SCC 1

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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 Sridhar Vaidya6; Bhut Nath Mete v. The State of West Bengal7; Haradhan  

Saha v. The State of West Bengal and others8; Kanchanlal Maneklal Chokshi v.  

State of Gujarat and others9; Smt. Hemlata Kantilal Shah v. State of  

Maharashtra and another10; State of Punjab v. Sukhpal Singh11 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 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 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 accordingly. He thus, argued that Venkateshan S.1 did  

not come in the way of the petitioners in assailing the constitutional validity of  

part of Section 3 of COFEPOSA.       

6  1951 SCR 167 7  (1974) 1 SCC 645 8  (1975) 3 SCC 198 9  (1979) 4  SCC 14 10  (1981) 4 SCC 647 11  (1990) 1 SCC 35 12  (2011) 5 SCC 244

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20. Learned counsel vehemently contended that since 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 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 to the excerpts from “The Limits  

of Preventive Detention”  by Rinat Kitai –  Sangero 2009 (Pgs. 904-932) and  

submitted that in USA and in England law regarding preventive detention does  

not exist except during war time. He, however, did submit that in United States  

v. Anthony Salerno 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 Salerno and Vincent Cafaro 13  preventive  

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  

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  

13  481 US 739

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procedural rights. In Germany in 1998 law for the prevention of 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 extensively referred to the provisions 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 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 exchange resources of the country continue to exist,  

preventive mechanism laid down in COFEPOSA warrants its continuance  and  

there is nothing unconstitutional about it.

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 III)  

of the Constitution, i.e., Entry nos. 1 and 3 respectively. Parliament is, thus,  

fully competent to enact a 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 detention  

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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 Bench of this Court in  

Attorney General for India and others v. Amratlal 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 Additional Solicitor General  

submitted that constitutionality of Section  3 was not open to challenge again.  

He submitted that in I.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 law again on the principles laid  

down in the case (i.e., I.R. Coelho5 ).  However, if a law held to be violative of  

any rights in Part-III 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 structure of the Constitution.  The  

present case is not covered by the exception carved out in I.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.

25. In support of his submissions, learned Additional Solicitor General  

heavily relied upon the observations made by this Court in Venkateshan S.1.  

14  (1994) 5 SCC 54

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26. Mr. P.P. Malhotra submitted that the objects and reasons of  

COFEPOSA clearly showed  that the purpose of the 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 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 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 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 III that provides for fundamental  

rights is the most important chapter insofar as individuals and citizens are  

concerned.  

28. Article 12 for the purposes of Part III defines ‘the State’.

29. Article 13(2) mandates that the State shall not make any law  

which takes away or abridges the rights conferred by Part III and any law made  

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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 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 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, 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, 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 31B saves challenge to the Acts and 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:

“31B. Validation of certain Acts and Regulations.—Without prejudice  to the generality of the provisions contained in article 31A, 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 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  

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order of any court of tribunal to the contrary, each of the said Acts and  Regulations shall, subject to the power of any competent Legislature to  repeal or amend it, continue in force.”

34. COFEPOSA is specified in the Ninth Schedule at Item 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 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 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  

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 State of Madras15, 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.

15  1950 SCR 88

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38. In Atma Ram Sridhar Vaidya6 , 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 III of the Constitution. He, however,  

clarified that this was, of course, subject to the limitations prescribed in 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 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”.

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’) which enabled  the State and its delegated authority to  

order preventive detention of a person. The Court articulated the concept of  

preventive 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 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 criminal conviction on the other hand  is for an act already done which can only be possible by a trial and legal  evidence. 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 punished to  prove  his guilt  and the standard is proof beyond reasonable doubt whereas in  preventive detention a man is prevented from doing something which it is  necessary for reasons mentioned in Section 3 of the Act to prevent.”

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    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”.

39.1. The Court in para 32 (pg. 208 of the Report)  drew 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 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 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 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 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 :

“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  

16  (1975) 2 SCC 81

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imposes 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 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 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 pass the test of Article 22, it has yet to satisfy  the requirements of other 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 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 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 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 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 premise of the majority in Gopalan’s case to be  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 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 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 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 proceeded to consider the  challenge of Article 19 to the validity of the Act and held that the Act did  

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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 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 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.”

41. In Smt. Hemlata Kantilal Shah10  while dealing with detention of  

the petitioner’s husband under Section 3(1) of COFEPOSA and the diverse  

submissions made on behalf of the petitioner, the Court held that  prosecution  

or the absence of it was not an absolute bar to an order of preventive detention.  

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”.

42. The necessity of preventive detention was succinctly  explained  

by a two-Judge Bench of this Court in Sukhpal Singh11. 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 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 precautionary action is taken to  prevent the recurrence of apprehended events, and punitive detention  

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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 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 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  question is thrown upon the State. The justification is suspicion or  reasonable probability and not criminal 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 depriving the  person of his liberty without the safeguards available 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 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 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 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 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 that a person can  

17  1992 Suppl (1) SCC 496

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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 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 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 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.

45. In Sunil Fulchand 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 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 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  

18  (2000) 3 SCC 409

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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  

being drastic, the restrictions placed on a person to preventively 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 and/or maintenance of public order, must be strictly  

construed. 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 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 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 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”.  

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  

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whereby it quashed and set aside the detention order passed by the Joint  

Secretary, Ministry of Finance, Department of Revenue, Government of India  

under 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 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 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 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 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  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.

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 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 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 that for exercising power under the COFEPOSA Act for  

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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 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 exchange market in India. Preventive detention  law is for effectively keeping out of circulation 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 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 W.B., (1975) 2 SCC 81). The  Constitution Bench while dealing with the constitutional validity of the  Maintenance of Internal Security Act, 1971 (MISA), in Haradhan Saha v.  State of W.B., (1975) 3 SCC 198,  held: (SCC pp. 208-09, paras 32-33)

“32. The power of preventive detention is 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 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 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.

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 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.”

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-

6-2000, cannot be justified”.  

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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 not seen as compatible with rule of law, yet the framers of the  

Constitution placed the same in Part III 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 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, cherished, sacrosanct and important the right of liberty  

given to an individual in the Constitution was and yet legislative power 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 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 III Entry 3.   With  

specific reference to COFEPOSA,  a nine-Judge Bench of this Court in  

Amratlal  Prajivandas14  has held that the enactment was  relatable to Entry 3 of  

List III inasmuch as it provides for preventive detention for reasons connected  

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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 (para 23 pg. 73 of the Report):

“…COFEPOSA is clearly relatable to Entry 3 of List III 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…….”

49. In Amratlal  Prajivandas14 constitutionality of COFEPOSA was  

directly in issue. The Court made the following weighty prefatory remarks in  

paragraph 1 (pg. 62 of 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 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 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 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 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, 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 of these antisocial elements”.

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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 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 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 Kerala, (1973) 4 SCC 225)  — infringe  the basic structure of the Constitution, no serious attempt was made  during the course of arguments 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, 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 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 mean a further enervation of Article 31-B. Be  that as it may, in the absence of any effort 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 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. The Court quoted following observations in R.K.  

Garg v. Union of India & Ors.19:

19 (1981) 4 SCC 675

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“The court must always remember that ‘legislation is directed to practical  problems, that the economic 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 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 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 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 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, 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 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 economic issues.”

(emphasis added)

In the above backdrop, the Court considered the question, whether Parliament  

was not competent to enact COFEPOSA and SAFEMA in paragraph 23 (pgs.  

73-74 of the Report) as follows:  

“23. It is argued for the petitioners that COFEPOSA is not relatable to  Entry 9 of List I of the Seventh Schedule to the Constitution inasmuch as  the preventive detention provided therefor is not for reasons connected  with defence, foreign affairs or security of India. Even Entry 3 of List III, 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 in List III. We are not prepared to agree.  COFEPOSA is clearly relatable to Entry 3 of List III inasmuch as it  provides for preventive detention for reasons connected with the security  

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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  III speaks of “security of a 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. 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 turn seek to dictate the economic priorities of the  borrowing State — it is immaterial whether they do so in the interest of  powerful countries who 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 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 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 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 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 relate  to any of the entries in List II, 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 III or by 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 II. If  so, we need not go further and enquire to which entry or entries do these  Acts relate. It should be held that Parliament did have the competence to  enact them.”

The Court concluded that Parliament did have the competence to enact  

COFEPOSA and SAFEMA.  

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  

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change of legal regime by repeal of FERA and enactment of FEMA (the  

provisions contained in FEMA did not regard its violation a criminal offence)  

the intent and object behind the enactment of preventive detention in  

COFEPOSA had ceased to exist and continuation of  impugned provision in  

COFEPOSA was violative of Article 21 read with Articles 14 and 19 of the  

Constitution.

51. In I.R. Coelho5, this Court  had an occasion to consider  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 Kerala  

& Anr. 20, Indira Nehru Gandhi v. Shri Raj Narain21, Minerva Mills Limited and  

others v. Union of India and others22, Waman Rao and others v.  Union of India  

and others23 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 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 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  

20  (1973) 4 SCC 225 21  (1975) Supp SCC 1 22  (1980) 3 SCC 625 23  (1981) 2 SCC 362 24  (1981) 1 SCC 166

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also addressed with respect to the validity of the Forty-second Amendment  

Act”.

51.1. The Court affirmed the view taken in Waman Rao24  that the Acts  

inserted in the Ninth Schedule after April 24, 1973 would not receive full  

protection.

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:

“(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, 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 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 judgment. However, if a law held to be  violative of any rights in Part III 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 read with Article 14, Article 19 and the  principles underlying thereunder.”

52. Para 151(v)  in I.R. Coelho5    leaves no manner of doubt that  

where 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 the judgment. The constitutional validity of COFEPOSA has  

already been upheld by this Court in Amratlal Prajivandas14  and, therefore, it is  

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not open for challenge again. On this ground alone the challenge 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 under law, such an  

act cannot be made the basis for preventive 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.  

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 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 :

“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 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:

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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, a person,  who deposits  foreign exchange with another person or opens an  account in foreign exchange with another person, shall be deemed to  lend foreign exchange to such other person.

(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 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 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:

“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.

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 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 organised and carried on, it is necessary for the effective  prevention of such activities and violations to provide for detention of  persons concerned in any manner therewith;”

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55. Section 3 of COFEPOSA provides for power to make orders  

detaining certain persons. Sub-section (1) thereof to the 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 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 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--

(i) smuggling goods, or

(ii) abetting the smuggling of goods, or

(iii) engaging in transporting or concealing or keeping smuggled  goods, or

(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 or in abetting  the smuggling of goods,

it is necessary so to do, make an order directing that such person be  detained:”

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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  

detention is provided in Section 10.  Notwithstanding the  provision contained in  

Section 10, Section 10A provides for extension of period of detention in the  

situations contemplated therein and to the extent provided. Section 11  

empowers the Central Government or the State Government, as the case may  

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 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 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.  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.  

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5000/-  for every day 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 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 notice of any contravention under Section 51 of the repealed  

Act after the expiry of a period of two years from the date of 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 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 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 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  

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in FERA and the control of the Government over foreign exchange continues to  

be as complete and full as it was in FERA.  

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 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 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 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 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 and omissions seriously affect national economy. Therefore,  

the relevance of provision for preventative detention of the anti-social elements  

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indulging in smuggling and violation and manipulation of foreign exchange in  

COFEPOSA continues even after repeal of FERA.

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  

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 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 such an act, which is an illegal activity, the law  

can provide for preventive detention if such act is prejudicial to the state  

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 security of the State. Strictly speaking, preventive detention is  

not regulation (many people call it that way), it is something 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. Of course, the  

safeguards that the Constitution and preventive detention laws provide must be  

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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 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 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 learned counsel for the 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 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 naïve to suggest that in today’s  economic 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 challenge to the  

constitutional validity of impugned part of Section 3(1) of COFEPOSA.  

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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 may be pleased to quash the detention  

order bearing No. 673/02/2009 – CUS/VIII dated September 23, 2009”.    

65. The prayer made in the criminal miscellaneous application by the  

petitioners cannot be granted for more than 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 above fact in the present writ petition.

66. The petitioners then filed a writ petition before Delhi High Court.  

That writ petition was dismissed by the High Court on March 18, 2010 on the  

ground that the petition was filed at pre-execution stage. The petitioners filed  

special leave petition (Crl. No. 2698 of 2010) 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 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 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  

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view of the contumacious conduct of the second petitioner.  He is alleged to  

have absconded initially. Then on December 14, 2009 Delhi 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 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 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 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.

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 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  

second petitioner and, therefore, he cannot take advantage of his own wrong.  

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69. Writ petition and criminal miscellaneous application, for the  

reasons indicated above, are liable to be rejected and are rejected.

    …………………….J. (R. M.Lodha)

    …………………….J.         (H. L. Gokhale)

July  2, 2012 New Delhi.

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