CASE ANALYSIS

DIRECTORATE OF ENFORCEMENT V. DEEPAK MAHAJAN

BACKGROUND & FACTUAL MATRIX

The officers of Enforcement Directorate arrested the Respondent, Deepak Mahajan for
offences punishable under FERA. As per the Section 35(2) of FERA, he was produced before
the Additional Chief Metropolitan Magistrate, New Delhi. The Enforcement Officer moved
an application under Section 167(2) of the Code of Criminal Procedure seeking for ‘judicial
remand’ on the ground that it was essential for the purposes of investigation. Deepak
Mahajan moved the court for bail but was denied of the same. He was remanded to judicial
custody for fourteen days and the detention period was therefore extended. The judicial
magistrate’s jurisdiction in authorising such detention of the respondent was challenged but
his plea was rejected. The appeal for the case lied with the Supreme Court.

ISSUES RAISED

ISSUE – 1: Whether the Special Leave Petition is maintainable?

ISSUE – 2: Whether the Magistrate before whom a person arrested under subsection (1) of
Section 35 of the Foreign Exchange Regulation Act of 1973 which is in pari materia with
sub-section (1) of Section 104 of the Customs Act of 1962, is produced under sub-section (2)
of Section 35 of the Foreign Exchange Regulation Act, has jurisdiction to authorise detention
of that person under Section 167(2) of the Code of Criminal Procedure?

ISSUE – 3: Whether Enforcement Directorate under FERA (now FEMA) or Custom’s Act
are competent person to take judicial remand of an arrested person?

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 DETAILED ANALYSIS

Issue 1

The Court held the petition maintainable under Article 136 of the Constitution which lays
down provision for Special Leave Petition. A Special Leave Petition is allowed to any
aggrieved party who brings an appeal against any judgment, order, decree, sentence or
determination of any court or tribunal in the Indian Territory. This is a discretionary
jurisdiction of the Apex Court applicable in special cases where if the court sees that there is
any violation of principles of natural justice, gross miscarriage of justice or any other
extraordinary and special circumstance then it may allow a hearing to the aggrieved party.

In the case in hand, principles of natural justice could have been violated if the Magistrate
does not have power to hear and adjudicate cases under FERA and the Customs Act. The
main issue dealt was whether Directorate of Enforcement or the Customs Officer could be
brought under the ambit of ‘police officer’ in S. 167 of Cr.PC. Since, it is an important
question of law, the Supreme Court was moved under Article 136 and thus, was accepted.

Issue 2

If an arrestee is presented before a Magistrate under S. 167 of CrPC by an Enforcement

Officer or Customs Officer, then the Magistrate cannot authorise the detention of the persons
so produced or presented, either to judicial custody or to the custody of the arrestor or make
subsequent periodical extension of detention or remand in exercise of the powers.
Alternatively, the power to arrest a person coupled with the duty to produce or present him
before a Magistrate under Section 35 of FERA or Section 104 of Customs Act ipso facto does
not attract the operation of clauses (1) and (2) of Section 167.

The question that arose in the case was not what the exact meanings of the words in the
provision. The matter rather demanded to look for grounds so that it can be inferred that the
legislature intended to exclude the jurisdiction of the courts from authorising the detention of

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an arrestee given that he was brought in with a justifiable belief that the said person is guilty
of an offence punishable under the provisions of FERA or the Customs Act. The courts are
well within their scope of power to look into the legislative intention and go behind the words
of the legislation and take other factors into consideration. This is done to give effect to the
legislative intention, to the purpose and spirit of the enactment so that no absurdity or
practical inconvenience results in making the scope and object of the concerned legislation
futile.

The Supreme Court while broadly interpreting S.167 held that it is not a necessary condition
that the arrest should have been effected by a police officer and no one else and that there
must necessarily be records of entries of a case diary. Hence, the ambit of the term ‘police
officer’ was interpreted to include Enforcement Officer or Customs Officer for the purposes
of arrest in particular. The Court opined that with the changing times, the state has to bring in
new machineries for enforcement and literal words of an enactment should not restrict the
intention behind the provision.

Issue 3

It was inferred by the plain reading of Section 35 of FERA or Section 104 of the Custom’s
Act that the enforcement officer or customs officer is not a police officer nor is the person
arrested by any of them is yet an accused triable by a Magistrate having jurisdiction or an
accused to be committed for trial at that stage. Further it could also be inferred that neither
the Officer of Enforcement nor the Customs Officer is empowered with the power of
investigation as contemplated under Chapter XII of the Code or under any specific provisions
of the special laws.

However the Supreme Court in its judgment stated that it is essential to focus attention on the
task of proper application of the concerned law by ascertaining the purposeful meaning of the
language deployed and the spirit with which the legislature has aimed and not merely give a
strict reading to the statute.

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 VERDICT

It was held by the honourable Supreme Court that under Section 167(2) of the Criminal
Procedure Code, the Magistrate has jurisdiction to authorise detention of a person arrested by
any authorised Enforcement Officer under FERA and taken to the Magistrate u/S. 35(2) of
the FERA for compliance of the same. The Court also held that S. 167(1) & (2) of Cr.PC are
applicable to produce and detain the arrested individual under S. 35 of FERA and S. 104 of
the Customs Act.

CONCLUSION

The researcher contends that the judgment rendered in the present case is reasonable,
justifiable and well-founded. Lord Denning in Seaford Court Estates Ltd v. Asher1 stated

“If a defect appears a judge cannot simply fold his hands and blame the draftsman. He
must set to work on the constructive task of finding the intention of Parliament and then
he must supplement the written word so as to give ‘force and life’ to the intention of the
legislature.”2

Similar view was also adopted in India in the case of M. Pentiah v. Muddala
Veeramallappa.3 The term ‘police officer’ was broadly interpreted in the present case so that
justice is delivered and to it was seen that mere strict interpretation of the provision should
not be done if it defies the very existence of the legislation concerned. The intention of the
legislature should also be given due importance. In Workmen of Dimakuchi Tea Estate v.
Management of Dimakuchi Tea Estate,4 the Court held that

“The words of a statute, when there is doubt about their meaning, are to be understood
in the sense in which they best harmonise with the subject of the enactment and the
object which the legislature has in view. Their meaning is found not so much in a strict
grammatical or etymological propriety of language, nor even in its popular use, as in
the subject or in the occasion on which they are used, and the object to be attained.”5

1
Seaford Court Estates Ltd. v. Asher, [1949] 2 KB 481
2
Ibid.
3
M. Pentiah v. Muddala Veeramallappa, AIR 1961 SC 1107
4
Workmen of Dimakuchi Tea Estate v. Management of Dimakuchi Tea Estate, AIR 1958 SC 353.
5
Ibid.

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The honourable on various occasions6 has noted the importance of bringing the intention of
the legislature while interpreting and adjudicating a case rather than going by strict and literal
interpretation of laws. It is pertinent that the Apex Court deploys the very spirit and reason
behind the concerned enactment that the law makers had in mind before passing the law.

6
State of U.P v. C. Tobit, AIR 1958 SC 414; Santasingh v. State of Punjab, AIR 1976 SC 2386; Mukesh K
Tripathi v. Senior Devisional Manager, (2004) 8 SCC 387.

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