“Whether in view of the settled principle that HUF cannot be a registered shareholder in a company and hence could not have been both registered and beneficial shareholder, loan/advances received by HUF could be deemed as dividend within the meaning of Section 2(22)(e) of the Income Tax Act, 1961 especially in view of the term “concern” as defined in the Section itself?”=Though, the share certificates were issued in the name of the Karta, Shri Gopal Kumar Sanei, but in the annual returns, it is the HUF which was shown as registered and beneficial shareholder. In any case, it cannot be doubted that it is the beneficial shareholder. Even if we presume that it is not a registered shareholder, as per the provisions of Section 2(22)(e) of the Act, once the payment is received by the HUF and shareholder (Mr. Sanei, karta, in this case) is a member of the said HUF and he has substantial interest in the HUF, the payment made to the HUF shall constitute deemed dividend within the meaning of clause (e) of Section 2(22) of the Act. This is the effect of Explanation 3 to the said Section, as noticed above. Therefore, it is no gainsaying that since HUF itself is not the registered shareholder, the provisions of deemed dividend are not attracted. For this reason, judgment in C.P. Sarathy Mudaliar, relied upon by the learned counsel for the appellant, will have no application. That was a judgment rendered in the context of Section 2(6- A)(e) of the Income Tax Act, 1922 wherein there was no provision like Explanation 3. We, thus, do not find any merit in this appeal, which is accordingly dismissed.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                       CIVIL APPEAL NO. 12274 OF 2016
                 (ARISING OUT OF SLP (C) NO. 22059 OF 2015)


|GOPAL AND SONS (HUF)                       |.....APPELLANT(S)            |
|VERSUS                                     |                             |
|CIT KOLKATA-XI                             |.....RESPONDENT(S)           |

                               J U D G M E N T

A.K. SIKRI, J.

                 The appellant/assessee, in the instant appeal,  has  raised
following question of law for determination:
“Whether in view of the settled principle that HUF cannot  be  a  registered
shareholder in a company and hence could not have been both  registered  and
beneficial shareholder, loan/advances received by HUF  could  be  deemed  as
dividend within the meaning of Section 2(22)(e) of the Income Tax Act,  1961
especially in view of the term “concern” as defined in the Section itself?”


The aforesaid question has arisen, which pertains to Assessment  Year  2006-
07, under the following circumstances:

The assessee herein had filed the return in respect of the  said  Assessment
Year declaring his total income at Rs. 1,62,745/-.   The  Assessing  Officer
(for short, 'AO') carried out  the  assessment  resulting  into  passing  of
assessment orders dated 31st December, 2008 whereby the net  income  of  the
assessee  was  calculated  at  Rs.  1,30,31,280/-.   Obviously,  number   of
additions were made which contributed to the enhancement of  income  to  the
aforesaid figure, in  contrast  with  the  paltry  income  declared  by  the
assessee.  Here, we are concerned only with one addition which was  made  on
account of deemed dividend within the meaning of  Section  2(22)(e)  of  the
Income Tax Act, 1961 (hereinafter referred to as the 'Act').  Suffice it  to
state that  other  additions  were  deleted  by  the  Income  Tax  Appellate
Tribunal (ITAT) and the  position  affirmed  by  the  High  Court,  but  the
Revenue has not challenged those deletions.

Insofar as addition under Section 2(22)(e) of the Act is  concerned,  a  sum
of Rs. 1,20,10,988/- was added on this account.  The  assessee  is  a  Hindu
Undivided Family (HUF).  During the previous year to  the  Assessment  Year,
the assessee had received certain advances from one  M/s.  G.S.  Fertilizers
(P) Ltd. (hereinafter referred to as the 'Company').   The  Company  is  the
manufacturer and distributor of various grades of NPK Fertilizers and  other
agricultural inputs. In the audit report and annual return for the  relevant
period, which was filed by it before the Registrar of  Companies  (ROC),  it
was found that the subscribed share capital of  the  said  Company  was  Rs.
1,05,75,000/- (i.e., 10,57,500 shares of  Rs.  10/-  each).   Out  of  this,
3,92,500 number of shares were subscribed by the assessee which  represented
37.12% of the total shareholding of the Company.  From  this  fact,  the  AO
concluded that the assessee was  both  the  registered  shareholder  of  the
Company and also the beneficial owner of shares,  as  it  was  holding  more
than 10% of voting power.  On this basis, after noticing  that  the  audited
accounts of the Company was  showing  a  balance  of  Rs.  1,20,10,988/-  as
“Reserve & Surplus” as on 31st March, 2006, this amount was included in  the
income of the assessee as deemed dividend.

In the appeal filed by the assessee, the aforesaid addition was affirmed  by
the Commissioner of Income Tax  (Appeals)  (for  short  'CIT(A)').   Though,
this addition was questioned by the assessee on various  grounds,  we  would
take note of the submission which is advanced before us as the challenge  is
confined only on the basis of said  submission.   The  assessee  had  argued
that being a  HUF,  it  was  neither  the  beneficial  shareholder  nor  the
registered shareholder.   It was further argued that the Company had  issued
shares in the name of Shri Gopal Kumar Sanei, Karta of the HUF, and  not  in
the name of the assessee/HUF as shares could not be directly allotted  to  a
HUF.    On that basis, it was submitted that provisions of Section  2(22)(e)
of the Act cannot be attracted.

      We would like to reproduce that portion of  Section  2(22)(e)  of  the
Act at this stage, which is relevant for the instant appeal:

“S.2(22) of the Income Tax:- Dividend includes:
xxx   xxx   xxx
(e)   any payment by a company, not being a company in which the public  are
substantially interested, of any sum (whether as representing a part of  the
assets of the company or otherwise) [made after the 31st day of  May,  1987,
by way of advance or loan to a  shareholder,  being  a  person  who  is  the
beneficial owner of shares (not being shares entitled to  a  fixed  rate  of
dividend whether with or without a right to participate in profits)  holding
not less than ten per cent of the voting power, or to any concern  in  which
such shareholder is a member or a partner and in which he has a  substantial
interest (hereafter in this clause referred to as  the  said  concern)]   or
any payment by any such company on behalf, or for  the  individual  benefit,
of any such shareholder, to the extent to which the company in  either  case
possesses accumulated profits;

but “dividend” does not include—

xxx   xxx   xxx

Explanation 3.— For the purposes of this clause,

(a)   “concern” means a Hindu undivided family, or a firm or an  association
of persons or a body of individuals or a company;

(b)   a person shall be deemed to have a substantial interest in a  concern,
other than a company, if he is,  at  any  time  during  the  previous  year,
beneficially entitled to not less than twenty per  cent  of  the  income  of
such concern.”


Taking note of the aforesaid provision, the CIT(A)  rejected  the  aforesaid
contention of the assessee.  The CIT(A) found  that  examination  of  annual
returns of the Company with Registrar of  Company  (ROC)  for  the  relevant
year showed that even if shares were issued by the Company in  the  name  of
Shri. Gopal Kumar Sanei, Karta of HUF,  but the  Company  had  recorded  the
name of the assessee/HUF as  shareholders  of  the  Company.   It  was  also
recorded that the assessee as shareholder was having 37.12%  share  holding.
That was on the basis of shareholder register  maintained  by  the  Company.
Taking aid of the provisions of the Companies Act, the CIT(A) observed  that
a shareholder is a person whose name is recorded  in  the  register  of  the
shareholders maintained by the Company and, therefore, it  is  the  assessee
which was registered shareholder.  The CIT(A)  also  opined  that  the  only
requirement to attract the provisions of Section  2(22)(e)  of  the  Act  is
that the shareholder should be beneficial shareholder.  On this  basis,  the
addition made by the AO was upheld.

Undeterred, the assessee approached the next higher  forum,  i.e.,  ITAT  in
the form of appeal under Section 253 of the Act.   In  this  endeavour,  the
assessee succeeded as appeal of the assessee was allowed  holding  that  the
ingredients  of  Section  2(22)(e)  of  the  Act  were  not  satisfied  and,
therefore, addition of the aforesaid nature could not be made.
                 For  this  purpose,  the  ITAT  referred  to  the  judgment
rendered by its Mumbai Bench in the case of Binal Sevantilal  Koradia  (HUF)
Vs. Department of Income Tax[1].  In fact, the only  exercise  done  by  the
ITAT in the said order was to quote from the  aforesaid  judgment  with  the
observations that the issue is squarely covered by the  said  decision.   In
Koradia (HUF), it was held by the Tribunal that HUF cannot  be  said  to  be
shareholder  or  a  beneficial  shareholder.   Since  these  are  the   twin
conditions to attract the provisions of Section 2(22)(e) of  the  Act,  both
have to be satisfied. As per the ITAT,  since  HUF,  in  law,  cannot  be  a
registered shareholder or a beneficial shareholder,  provisions  of  Section
2(22)(e) would not be attracted.

As noticed above, the High Court, in the impugned judgment rendered  in  the
appeal preferred by the Revenue, has reversed  the  judgment  of  the  ITAT,
thereby restoring the addition which was made by the AO.  The order  of  the
High Court reveals that it has done nothing but to extract the  language  of
Section 2(22)(e) of the Act and sustained the addition made by AO  with  one
line observation, viz., 'the assessee did not dispute that the  Karta  is  a
member of HUF which has taken the loan from the Company and, therefore,  the
case is squarely within the provisions of Section  2(22)(e)  of  the  Income
Tax Act'.

The arguments before us remain the same. Mr. S.B. Upadhyay,  learned  senior
counsel appearing for the assessee,  argued  that  the  ITAT  had  correctly
explained the legal position that HUF cannot be either beneficial  owner  or
registered owner of the shares and, therefore, no  addition  could  be  made
under Section 2(22)(e) of the Act.  For  buttressing  this  submission,  the
learned counsel relied upon the following observations in judgment  of  this
Court in CIT, Andhra Pradesh Vs. C.P. Sarathy Mudaliar[2]:

“....It is well settled that an HUF cannot be a shareholder  of  a  company.
The shareholder of a company is the individual  who  is  registered  as  the
shareholder ion the books of the company.  The HUF,  the  assessee  in  this
case, was not registered as a shareholder in books of the company nor  could
it have been so registered.  Hence there is no  gain-saying  the  fact  that
the HUF was not the shareholder of the company.”


Learned Additional Solicitor General, on the other hand, after  reading  the
relevant portions of the orders of AO and  CIT(A),  submitted  that  on  the
facts of this case, the Revenue was justified in making the addition.

Section 2(22)(e) of the Act creates a fiction, thereby bringing  any  amount
paid otherwise than as a dividend into the net  of  dividend  under  certain
circumstances.  It gives an artificial definition of  'dividend'.   It  does
not take into account that dividend which is actually declared or  received.
 The dividend taken note of by this provision is a deemed dividend  and  not
a real dividend.  Loan or payment made by the company to its shareholder  is
actually not a dividend.  In fact, such a loan to a shareholder  has  to  be
returned by the shareholder to the company.  It does not  become  income  of
the shareholder.   Notwithstanding  the  same,  for  certain  purposes,  the
Legislature has deemed such a loan or payment  as  'dividend'  and  made  it
taxable at the hands of the said shareholder.   It  is,  therefore,  not  in
dispute that such a provision which is a deemed  provision  and  fictionally
creates certain kinds of receipts  as  dividends,  is  to  be  given  strict
interpretation.  It follows that unless all the conditions contained in  the
said provision are fulfilled, the receipt cannot  be  deemed  as  dividends.
Further, in case of doubt or where two views  are  possible,  benefit  shall
accrue in favour of the assessee.

A reading of clause (e) of Section 2(22) of the  Act  makes  it  clear  that
three types of payments can be brought to tax as dividends in the  hands  of
the share holders. These are as follows:
(a)   any payment of any sum (whether as representing a part of  the  assets
of the company or otherwise) by way of advance or loan to a shareholder.

(b)   any payment on behalf of a shareholder, and

(c)   any payment for the individual benefit of a shareholder.

[See: Alagusundaran Vs. CIT; 252 ITR 893 (SC)]


Certain conditions need to be fulfilled in order to attract tax  under  this
clause. It  is  not  necessary  to  stipulate  other  conditions.   For  our
purposes, following conditions need to be fulfilled:
      (a)  Payment is to be made by way of advance or loan  to  any  concern
in which such shareholder is a member or a partner.
       (b)   In  the  said  concern,  such  shareholder  has  a  substantial
interest.
      (c)  Such advance or loan should have been made after the 31st day  of
May, 1987.

Explanation 3(a) defines “concern” to mean HUF or a firm or  an  association
of persons or a body of individuals or a company.  As per Explanation  3(b),
a person shall be deemed to have a substantial interest in a HUF if  he  is,
at any time during the previous year,  beneficially  entitled  to  not  less
than 20% of the income of such HUF.

In the instant case, the payment in question is made to the  assessee  which
is a HUF.  Shares are held by Shri. Gopal Kumar Sanei, who is Karta of  this
HUF.  The said Karta is, undoubtedly,  the  member  of  HUF.   He  also  has
substantial interest in the assessee/HUF,  being  its  Karta.   It  was  not
disputed that he was entitled to not less than 20% of  the  income  of  HUF.
In view of the aforesaid position, provisions of  Section  2(22)(e)  of  the
Act get attracted and it is not even necessary to determine  as  to  whether
HUF can, in law, be beneficial shareholder or registered  shareholder  in  a
Company.

It is also found as a fact, from the audited annual return  of  the  Company
filed with ROC that the money towards  share  holding  in  the  Company  was
given by the assessee/HUF.  Though, the share certificates  were  issued  in
the name of the Karta, Shri Gopal Kumar Sanei, but in  the  annual  returns,
it is the HUF which was shown as registered and beneficial shareholder.   In
any case, it cannot be doubted that it is the beneficial shareholder.   Even
if we  presume  that  it  is  not  a  registered  shareholder,  as  per  the
provisions of Section 2(22)(e) of the Act, once the payment is  received  by
the HUF and shareholder (Mr. Sanei, karta, in this case) is a member of  the
said HUF and he has substantial interest in the HUF,  the  payment  made  to
the HUF shall constitute deemed dividend within the meaning  of  clause  (e)
of Section 2(22) of the Act.  This is the effect of  Explanation  3  to  the
said Section, as noticed above.  Therefore, it is no gainsaying  that  since
HUF itself is not the  registered  shareholder,  the  provisions  of  deemed
dividend are not attracted.  For  this  reason,  judgment  in  C.P.  Sarathy
Mudaliar, relied upon by the learned counsel for the  appellant,  will  have
no application.  That was a judgment rendered in the context of Section 2(6-
A)(e) of the Income Tax Act,  1922  wherein  there  was  no  provision  like
Explanation 3.

We, thus, do not find  any  merit  in  this  appeal,  which  is  accordingly
dismissed.
                             .............................................J.
                                                                (A.K. SIKRI)


                             .............................................J.
                                                       (ABHAY MANOHAR SAPRE)
NEW DELHI;
JANUARY 04, 2017.
-----------------------
[1]
      ITA No. 2900/Mum/2011, AY 2007-08 dated 10.10.2012
[2]   1972 SCR 1076

“Article 22(5) When any person is detained in pursuance of an order made under any law providing for preventive detention, the authority making the order shall, as soon as may be, communicate to such person the grounds on which the order has been made and shall afford him the earliest opportunity of making a representation against the order.”

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                       CRIMINAL APPELLATE JURISDICTION

                      CRIMINAL APPEAL NO. 2281 OF 2014


|GAUTAM JAIN                                |.....APPELLANT(S)            |
|VERSUS                                     |                             |
|UNION OF INDIA & ANR.                      |.....RESPONDENT(S)           |

                                   W I T H

                  WRIT PETITION (CRIMINAL) NO. 203 OF 2015


                               J U D G M E N T


A.K. SIKRI, J.

                 Detention order dated 23.09.2009 was passed by   respondent
No.2 against the  appellant  under  Section  3(1)  of  the  Conservation  of
Foreign  Exchange  and  Prevention  of  Smuggling   Activities   Act,   1974
(hereinafter referred to as the 'Act') whereby the  appellant  was  directed
to be detained.  Initially, this order was challenged by  the  appellant  at
pre-execution stage by filing writ petition in this Court under  Article  32
of the Constitution of India.  Said petition was entertained  and  initially
execution of the detention  order  was  stayed.   However,  ultimately  vide
order dated 01.10.2013, the writ petition was dismissed  as  withdrawn  with
liberty to the appellant to  avail  his  legal  remedies.   Thereafter,  the
appellant appeared  before  the  officials  of  Enforcement  Directorate  on
18.11.2013 when he was served with the order  of  detention.   He  was  also
detained and lodged in the Central Jail, Tihar  in  execution  of  the  said
order of detention.
                 On 21.11.2013 and  22.11.2013,  the  appellant  was  served
with the Grounds of Detention as well  as  copies  of  certain  relied  upon
documents with translation thereof.  According to  the  appellant,  complete
set of documents, which were  relied  upon  by  the  respondents,  were  not
supplied.   He  made  a  representation  on  03.12.2013  to  the   detaining
authority  requesting  revocation  of  the  detention  order   or   in   the
alternative supply complete documents/information,  which  was  followed  by
another representation dated 06.12.2013.  According to the appellant,  these
representations were not considered.  He filed  the  writ  petition  in  the
High Court of Delhi inter alia for issuance of Writ of Habeas Corpus with  a
direction to the respondents to set the appellant to liberty  forthwith  and
for quashing of the detention order dated  23.09.2009.   This  petition  was
contested by the respondents.

The  High  Court  has  dismissed  the  writ  petition  vide  judgment  dated
18.03.2014.  It may be commented at this stage itself that though  the  High
Court has accepted the plea of the appellant that there was failure  on  the
part of the respondents to furnish  certain  documents  qua  one  particular
allegation in the detention order, it has still upheld the  detention  order
invoking the principle of segregation of grounds enumerated  in  Section  5A
of the Act. In nutshell, the High Court has  come  to  the  conclusion  that
there were various grounds which formed the basis  of  the  detention  order
and even if the documents pertaining  to  one  particular  ground  were  not
furnished,  that  ground  could  be  ignored  applying  the   principle   of
segregation  and  on  remaining  grounds  the  detention  order  was   still
sustainable.

In the instant appeal preferred against the aforesaid judgment of  the  High
Court,  the  plea  taken  by  the  appellant  is  that  the   principle   of
severability of grounds, which is enshrined in Section 5A  of  the  Act,  is
not applicable to the case at hand as the detention order was passed on  one
ground only, in support of which few instances were  given  in  the  Grounds
for Detention annexed with the detention order which cannot  be  treated  as
different grounds.  It is, thus, argued that those  instances  forming  part
of detention order were, in fact, only  further  particulars  or  subsidiary
facts rather than basic facts which are integral  part  of,  and  constitute
the grounds of the detention order.  It is this aspect of the  matter  which
needs examination in the present case.

With the aforesaid introductory note, we may now take stock of the order  of
detention as well as Grounds of Detention in support of the said order.

Detention order dated 23.09.2009 records that respondent No.2  is  satisfied
that the detention order needs to be passed with respect  to  the  appellant
with a view to preventing him from acting in any manner prejudicial  to  the
conservation and augmentation of foreign exchange  in  future.   Grounds  of
Detention, in support of the said order, run into 46 pages  which  enumerate
various activities in which  the  appellant  was  indulging  in  making  and
receiving Hawala payments upon the instruments received from abroad by  him;
and the  appellant  was  making  such  Hawala  payments  from  his  business
premises at Chandni Chowk as well as residential premises  at  Ashok  Vihar.
On receiving an information to this effect, searches were conducted  at  the
business  place  of  the  appellant.    Indian  currency  in  the   sum   of
Rs.2,04,00,000/- as well as various incriminating documents were  found  and
seized.  Likewise, from the residential premises  of  the  appellant,  apart
from similar incriminating documents, Indian currency of Rs.64,35,000/-  was
seized.  During the searches, statements of various persons  were  recorded,
particulars whereof are given along with  utterances  by  those  persons  in
nutshell.  'Grounds of Detention' also  refer  to  the  summons  which  were
issued to the appellant pursuant to which his  statement  was  recorded  and
gist of  the  said  statement  is  incorporated  in  the  grounds.   Various
admissions recording Hawala transactions  given  by  the  appellant  in  his
statement are also mentioned.  Retraction of the  statement  is  also  taken
note of, stated to have been considered by the Department but  found  to  be
an afterthought.

As mentioned above, in the writ petition filed  by  the  petitioner  in  the
High Court, plea taken by the appellant to  challenge  the  detention  order
was failure on the part of the respondents to  supply  certain  relied  upon
documents contained in pages 1 to 25, mentioned  in  the  statement  of  one
Pooran Chand Sharma, recorded on 03.09.2009.  In the Grounds  of  Detention,
statement of Pooran Chand Sharma is referred to from  paragraphs  37  to  41
wherein it is also mentioned that searches conducted  against  Pooran  Chand
Sharma on 03.09.2009 had  revealed  that  the  appellant  had  continued  to
remain involved  in  prejudicial  Hawala  dealings  even  in  August,  2009.
According to the appellant, non-supply of these documents, which  were  very
material, deprived the appellant of his valuable  right  to  make  effective
and purposeful representation before the  Advisory  Board  and  the  Central
Government and, thus, vitiated the detention  order,  more  so,  when  these
were not supplied in support of specific request made in this behalf.

The  aforesaid  factual  position  was  not  disputed  by  the  respondents.
However, the respondents argued that the  documents  in  question  were  not
material and, therefore, non-supply thereof did not act to the prejudice  of
the appellant.  This plea of  the  respondents  is  negatived  by  the  High
Court, as is clear from the following discussion:
“7.  In view of the aforesaid categorical and  affirmative stand in  grounds
of detention, it is  not  possible  to  accept  the  stand  in  the  counter
affidavit and the additional affidavit that the documents or material  found
during the search of Pooran Chand Sharma, except  his  statement  dated  3rd
September, 2009, retraction  dated  4th  September,  2009  and  department?s
letter dated 9th September, 2009 were not  taken  into  consideration.   The
said  assertion  is  contrary  to  specific  words  and  statement  made  in
paragraphs 37, 38 and 41 of the detention order and should  not  and  cannot
be accepted.  On  being  questioned,  learned  counsel  for  the  respondent
submitted that he does not have a copy of the documents  or  material  found
during the course of search in the place  of  Pooran  Chand  Sharma  on  3rd
September, 2009. We were, however, shown copy of statement of  Pooran  Chand
Sharma dated 3rd September, 2009.  Pooran Chand Sharma was  confronted  with
a specific document and in response had stated that  the  entry  related  to
transaction  between  Pooran  Chand  Sharma  and  the  petitioner.  It   is,
therefore, clear that the said document i.e. the document seized during  the
search which was confronted to Pooran Chand Sharma and Pooran  Chand  Sharma
had implicated the  petitioner.  This  was  a  relied  upon  document.  Even
otherwise it would be a relevant  document.  The  said  document  cannot  be
treated as a mere narration of facts or  casual  reference  to  the  factual
matrix in the grounds of detention. The document with the entry  formed  the
basis of the assertions made in paragraphs 37, 38 and 41 of the  grounds  of
detention. ”


Notwithstanding the same, the High Court has taken the view that  paragraphs
relating to seizure details in case of Pooran Chand Sharma  implicating  the
appellant  constitute  a  separate  ground,  which  was  severable  on   the
application of the principle of segregation,  as  the  detention  order  was
based on multiple grounds.  Thereafter, the  High  Court  order  points  out
various grounds  mentioned  in  the  detention  order  holding  them  to  be
different grounds.   The  contention  of  the  appellant  that  'Grounds  of
Detention' in the instant case are composite and not  separate  is  rejected
with the aid of certain decisions rendered by this Court.

Mr. Chaudhri, learned senior counsel appearing for the appellant,  submitted
that there was only one ground of detention on the basis of which  order  in
question was passed, namely,  'preventing  him  (i.e.  the  appellant)  from
acting in any manner prejudicial to the  conservation  and  augmentation  of
foreign exchange in future' and the Grounds of Detention  which  were  given
in support thereof were, in fact, various  instances  to  support  the  said
ground.   In  order  to  buttress  this  submission,  he  referred  to   the
provisions of Section 3 of the Act  and  argued  that  it  spells  out  many
'grounds' on which order of detention can be passed.  Section 3 of  the  Act
reads as under:
“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 a 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) betting 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.:

(2)  When any order of detention is made by a  State  Government  or  by  an
officer empowered by a State Government, the State Government shall,  within
ten days, forward to the Central Government  a  report  in  respect  of  the
order.

(3)  For the purposes of clause (5) of Article 22 of the  Constitution,  the
communication to a person detained in pursuance of a detention order of  the
grounds on which the order has been made shall be made as  soon  as  may  be
after the detention, but  ordinarily  not  later  than  five  days,  and  in
exceptional circumstances and for reasons to  be  recorded  in  writing  not
later than fifteen days, from the date of detention. ”

 Submission  is  that  the  order  was  passed  only  on  one  ground,  viz.
activities of  the  appellant  were  prejudicial  to  the  conservation  and
augmentation  of  foreign  exchange.   According  to  him,   other   grounds
mentioned in Section 3 are those referred to in clauses (i) to (v)  of  sub-
section (1) like smuggling of goods, abetting the smuggling of goods,  etc.,
but none of these grounds is invoked while passing the detention order.   He
also submitted that in the 'Grounds of Detention' itself it  was  stated  by
the detaining authority that the  so-called  activities  enumerated  therein
'cumulatively indicate' the activities of  the  appellant  and  others  with
whom he was associated in Hawala dealings.   This  was  the  position  taken
even in the counter affidavit filed by the respondents in  the  High  Court.
Therefore, the 'Grounds of Detention' need to be read cumulatively  even  as
per the respondents, which  would  clearly  show  that  these  grounds  were
composite and not separate.  It was argued that in such  circumstances,  the
principle  of  severability  could  not  be  applied.   In  support  of  his
submission, he referred to the judgment of this Court in A. Sowkath  Ali  v.
Union of India & Ors.[1] where the issue of applicability of  the  principle
of severability based on Section 5-A of the Act, which was  invoked  by  the
State, was discussed, and earlier judgments of this  Court  relied  upon  by
both the parties were  taken  note  of,  as  is  clear  from  the  following
discussion contained therein: (SCC Headnote)
“24. Reliance is placed on Prakash Chandra Mehta v. Commr. and Secy.,  Govt.
of Kerala [1985  Supp  SCC  144].  This  was  a  case  where  retraction  of
confession made by the  detenu  was  not  referred  to  in  the  grounds  of
detention. This Court in view of Section 5-A held that the  detention  order
should not vitiate on the ground of non-application of  mind  if  subjective
satisfaction was arrived at on the  basis  of  other  independent  objective
factors enumerated in the grounds. The Court held:

“If even ignoring the facts stated in  the  confession  by  the  detenu  the
inference can still be drawn from  other  independent  and  objective  facts
mentioned in the grounds, then the order of detention cannot  be  challenged
merely by the rejection of the  inference  drawn  from  confession.  In  the
present case the authorities came to the conclusion that  the  detenus  were
engaged in smuggling relying  on  several  factors,  viz.,  the  search  and
seizure in detenu's  room  and  recovery  of  gold  biscuits,  the  detenu's
failure to explain the importation of those  gold  biscuits,  the  secretive
manner in which the gold biscuits were kept,  the  connection  with  various
dealers and the statements of the employees of the dealers that the  detenus
used to come with gold bars etc. These materials were  in  addition  to  the
statements and confessions made by the detenus  under  Section  108  of  the
Customs Act. So even if those statements which were retracted as such  could
not be taken into consideration, there are other facts  independent  of  the
confessional statement as mentioned hereinbefore which can  reasonably  lead
to the satisfaction that the authorities have come to. In view of Section 5-
A of the COFEPOSA  Act  there  was  sufficient  material  to  sustain  other
grounds  of  detention  even  if  the  retraction  of  confession  was   not
considered by the authorities.”

25. Next reliance is on Madan Lal Anand v. Union  of  India  [(1990)  1  SCC
81]. This case also is with reference to  non-placement  of  retraction  and
with reference to Section 5-A and relying  on  Prakash  Chandra  case  [1985
Supp SCC 144] it was held: (SCC p. 91, para 29)



“29. In the instant case, even assuming that  the  ground  relating  to  the
confessional statement made by the detenu under Section 108 of  the  Customs
Act  was  an  inadmissible  ground  as  the  subsequent  retraction  of  the
confessional statement was not considered by the detaining authority,  still
then that would not make the detention order bad, for in the  view  of  this
Court, such order of detention shall be deemed to have been made  separately
on each of such grounds. Therefore, even excluding the inadmissible  ground,
the order of detention can be justified. The High Court has  also  overruled
the contention of the detenu in this regard and, in our opinion, rightly.”

26. Learned counsel for the petitioner on the other hand places reliance  on
Vashisht Narain Karwaria v. State of U.P. [(1990)  2  SCC  629]  This  Court
held: (SCC pp. 633-34, para 11)

“11. Mr Dalveer Bhandari relying on Section 5-A of the Act  urged  that  the
order of detention should not be deemed to be invalid or inoperative  merely
on the  ground  that  some  extraneous  materials  were  placed  before  the
detaining  authority  since  those  alleged  extraneous  materials  have  no
bearing on the validity of this impugned order which  can  be  sustained  on
the material set out in the grounds of detention  itself.  Placing  reliance
on decision of this Court in Prakash Chandra  Mehta  v.  Commr.  and  Secy.,
Govt. of Kerala wherein it  has  been  observed  that  the  ‘grounds’  under
Article 22(5) of the Constitution do not mean mere  factual  inferences  but
mean factual inferences plus factual material submitted that in the  present
case the factual material set out in the grounds of detention alone  led  to
the passing of the order with a view to preventing the  detenu  from  acting
in any manner prejudicial to the maintenance of public order. We are  unable
to see any force in the above submission. What Section 5-A provides is  that
where there are two or more  grounds  covering  various  activities  of  the
detenu, each activity is a separate ground by  itself  and  if  one  of  the
grounds  is  vague,  non-existent,  not  relevant,  not  connected  or   not
proximately connected with such person  or  invalid  for  any  other  reason
whatsoever, then that will not vitiate the order of detention.”

This case considered  the  aforesaid  decisions  relied  on  behalf  of  the
State.”

                 Mr. Chaudhri submitted that the instant case falls  in  the
category mentioned in Vashisht Narain Karwaria v. State of U.P. & Anr.[2]

After taking note of the aforesaid judgments, the Court, in A. Sowkath  Ali,
recorded its conclusion in para 27 as under:
“27. Firstly, we find that the question of severability  under  Section  5-A
has not been raised by the State in any of the counter-affidavits, but  even
otherwise it is not applicable on the facts of the present case. Section  5-
A applies where the detention is based on more than one  ground,  not  where
it is based on a single ground. Same is also the decision of this  Court  in
the unreported decision of Prem Prakash v. Union of India [Crl. A.  No.  170
of 1996 dated 7-10-1996 (see below at p. 163)] decided on 7-10-1996  relying
on K. Satyanarayan Subudhi v. Union of India  [1991  Supp  (2)  SCC  153]  .
Coming back to the present  case  we  find  really  it  is  a  case  of  one
composite ground. The different numbers of the ground of detention are  only
paragraphs narrating the facts with the details of  the  document  which  is
being relied on but factually, the detention order is based on  one  ground,
which is revealed by Ground (1)(xvi) of the grounds of  detention  which  we
have already quoted hereinbefore. Thus on the facts of this case Section  5-
A has no application in the present case.”

Learned counsel also relied upon the judgment of this Court in Khudiram  Das
v. The State  of  West  Bengal  &  Ors.[3],  wherein  meaning  to  the  term
'grounds' is assigned and explained.  Para 15  thereof,  which  was  heavily
relied upon by the learned counsel, reads as under:
“15. Now, the proposition can hardly be disputed that  if  there  is  before
the District Magistrate material against the detenu which  is  of  a  highly
damaging character and  having  nexus  and  relevancy  with  the  object  of
detention, and proximity with the  time  when  the  subjective  satisfaction
forming the basis of the  detention  order  was  arrived  at,  it  would  be
legitimate for the Court to infer that such material  must  have  influenced
the District Magistrate in arriving at his subjective  satisfaction  and  in
such a case the Court would refuse to  accept  the  bald  statement  of  the
District Magistrate that he did not take  such  material  into  account  and
excluded it from consideration. It is elementary that the  human  mind  does
not function in compartments. When it receives  impressions  from  different
sources, it is the totality of the impressions which goes  into  the  making
of the  decision  and  it  is  not  possible  to  analyse  and  dissect  the
impressions and predicate which impressions went  into  the  making  of  the
decision and which did not.  Nor  is  it  an  easy  exercise  to  erase  the
impression  created  by  particular  circumstances  so  as  to  exclude  the
influence of such impression in the decision making process.  Therefore,  in
a case where the material before the District Magistrate is of  a  character
which would in  all  reasonable  probability  be  likely  to  influence  the
decision of any reasonable human being, the Court would  be  most  reluctant
to accept the ipse dixit of the District  Magistrate  that  he  was  not  so
influenced and a fortiori, if such material is not disclosed to the  detenu,
the order of detention would be vitiated, both on the ground  that  all  the
basic facts and materials which influenced the  subjective  satisfaction  of
the District Magistrate were not communicated to the detenu as also  on  the
ground that the detenu was denied an  opportunity  of  making  an  effective
representation against the order of detention.

Mr. Chaudhri also made another passionate plea,  with  the  aid  of  Article
22(5) of the Constitution of  India.   He  argued  that  when  there  is  an
infringement of Constitutional mandate contained in  Article  22(5)  of  the
Constitution, the provisions of Section 5A of the  Act  cannot  be  resorted
to.  According to him, in such circumstances, the detention order  would  be
void ab initio and, therefore, question of sustaining such an  order  taking
umbrage of Section 5A of the Act would not arise.

Learned counsel for the respondents, on the  other  hand,  extensively  read
out the discussion contained in the impugned  judgment  and  submitted  that
the High Court rightly applied, on the facts of this case, the principle  of
severability which is statutorily recognised under Section 5A of the Act.

A glimpse of the nature of issue  involved,  and  the  arguments  which  are
advanced by both the parties thereupon, makes it crystal clear that  insofar
as the legal position is concerned, there is no dispute,  nor can  there  be
any dispute in this behalf.   Both the parties are at ad-idem  that  if  the
detention order is based on more  than  one  grounds,  independent  of  each
other, then the detention order will  still  survive  even  if  one  of  the
grounds found is non-existing or legally unsustainable (See Vashisht  Narain
Karwaria).  On the other hand, if the detention  order  is  founded  on  one
composite ground,  though  containing  various  species  or  sub-heads,  the
detention order would be vitiated if such ground is found  fault  with  (See
A. Sowkath Ali).  Thus, in the instant case, outcome of the  appeal  depends
upon the question as to whether detention  order  is  based  on  one  ground
alone or it is a case of multiple grounds on which  the  impugned  detention
order was passed.

In order to have proper analysis of the detention order,  we  will  have  to
first understand the meaning that is to  be  attributed  to  the  expression
'grounds' contained in Section 5A of the Act.  In Vakil Singh  v.  State  of
J. & K.  &  Anr.[4],  following  meaning  was  assigned  to  the  expression
'grounds':
“29.  We have reproduced the particulars of the  grounds  of  detention,  in
full, earlier  in  this  judgment.  Read  as  a  whole  they  appear  to  be
reasonably clear and self-sufficient  to  bring  home  to  the  detenue  the
knowledge of the grounds of his detention. The  abbreviation  F.I.U.  occurs
four times in these grounds, but each time  in  conjunction  with  PAK,  and
twice in association with the  words  “Pak  Officers”.  The  collocation  of
words and the context in which F.I.U occurs makes its  purport  sufficiently
intelligible. “Grounds” within the contemplation of Section 8(1) of the  Act
means ‘materials’ on which the order of detention is primarily based.  Apart
from conclusions of facts, “grounds” have a factual constituent, also.  They
must contain the pith and substance of  primary  facts  but  not  subsidiary
facts or evidential details. This requirement as  to  the  communication  of
all essential constituents of the grounds was complied with in  the  present
case.  The  basic  facts,  as  distinguished  from  factual  details,   were
incorporated in the material communicated to the detenue. He  was  told  the
name of the  notorious  PAK  agent  and  courier  (Mian  Reham  resident  of
Jumbian) through whom he was supplying  the  information  about  the  Indian
Army. He was informed about the places in Pakistan which  he  was  visiting.
He was further told that in lieu of the supply of this  information  he  had
been receiving  money  from  Pakistan.  Nothing  more  was  required  to  be
intimated to enable him to  make  an  effective  representation.  The  facts
which were not disclosed were not basic facts, and their non-disclosure  did
not affect the petitioner's right of making a representation. As recited  in
the communication under cover of which the grounds of detention were  served
on the detenue,  those  factual  details  were  withheld  by  the  detaining
authority because in its opinion, their disclosure would have  been  against
public interest.”


Once again, this very aspect found duly explained in Hansmukh  v.  State  of
Gujarat & Ors.[5] in the following words:
“18. … From these decisions it is clear that while the expression  “grounds”
in Article 22(5), and for that matter, in  Section  3(3)  of  the  COFEPOSA,
includes not only conclusions of fact but also  all  the  'basic  facts'  on
which those conclusions are founded,  they  are  different  from  subsidiary
facts or further particulars of these basic facts.  The distinction  between
'basic facts' which are essential factual constituents of the 'grounds'  and
their further particulars or subsidiary details  is  important.   While  the
'basic facts' being integral  part  of  the  'grounds'  must,  according  to
Section 3(3) of COFEPOSA “be communicated to the detenu, as soon as may  be,
after  the  detention,  ordinarily  not  later  than  five  days,   and   in
exceptional circumstances and for reasons to be  recorded  in  writing,  not
later than 15 days from the  date  of  detention”,  further  particulars  of
those grounds  in  compliance  with  the  second  constitutional  imperative
spelled out from Article 22(5) in Khudi Ram's case, (AIR 1975 SC  550),  are
required to be communicated to the detenu, as soon as  may  be  practicable,
with reasonable expedition. It follows, that if  in  a  case  the  so-called
“grounds of detention” communicated to the detenu lack the basic or  primary
facts on which the conclusions of fact stated therein are founded, and  this
deficiency is not made good  and  communicated  to  the  detenu  within  the
period specified in Sec. 3(3) the omission will be fatal to the validity  of
the detention.  If, however, the  grounds  communicated  are  elaborate  and
contain all the “basic facts” but are not comprehensive enough to cover  all
the details or particulars of the “basic  facts”,  such  particulars,  also,
must be supplied to the  detenu,  if  asked  for  by  him,  with  reasonable
expedition, within a reasonable time.  What is “reasonable  time  conforming
with reasonable expedition”, required for the  supply  of  such  details  or
further particulars, is a question of fact  depending  upon  the  facts  and
circumstances of the particular case.   In  the  circumstances  of  a  given
case, if the time taken for supply of such additional  particulars,  exceeds
marginally, the maximum fixed  by  the  statute  for  communication  of  the
grounds it may still  be  regarded  “reasonable”,  while  in  the  facts  of
another  case,  even  a  delay  which  does  not  exceed  15  days,  may  be
unjustified, and amount  to  an  infraction  of  the  second  constitutional
imperative pointed out in Khudi Ram's case (supra).”


Another judgment, elucidating law on the subject, is  State  of  Gujarat  v.
Chamanlal Manjibhai Soni[6].  Following discussion therefrom on this  aspect
is quoted below:
“2.  The High Court seems to think that Section 5-A contemplates that  there
should be only one ground which relates to the violation  of  Section  3  of
the Act and if that ground is irrelevant and the other grounds which  relate
to some other subject-matter are clear and specific, the detention will  not
stand vitiated.  In our opinion, the argument of the  High  Court  with  due
respect amounts to begging the question because the detention under  Section
3 of the Act is only for the purpose of preventing  smuggling  and  all  the
grounds whether there are one or more, would be relatable  only  to  various
activities of smuggling and we cannot conceive of any other separate  ground
which could deal with matters  other  than  smuggling  because  the  act  of
smuggling covers several  activities  each  forming  a  separate  ground  of
detention and the Act deals with no other act except smuggling.  Indeed,  if
the interpretation of the High Court in respect of Section 5-A is  accepted,
then Section 5-A will become otiose.  While construing Section 5-A the  High
Court observed thus:

“But in the present  case  the  subjective  satisfaction  is  based  on  one
ground, that is, for preventing the present petitioner from smuggling  goods
and in support of that ground various statements have been relied  upon  and
the totality of consideration of all these statements has  resulted  in  the
subjective satisfaction of  the  detaining  authority  when  it  passed  the
impugned order of  detention.   Now  for  these  totality  of  circumstances
considered by the detaining authority, if one  irrelevant  or  unsustainable
element has entered in the process of subjective satisfaction,  the  process
of  arriving  at  subjective  satisfaction  being  comprehensive,  the  said
element would disturb the entire  process  of  subjective  satisfaction  and
consequently, even if one statement which could not have  been  relied  upon
appeared before the mind's eye of the detaining authority, it  could  easily
be seen that its subjective satisfaction would be  vitiated  and  its  final
decision would rest upon a part of the material which is irrelevant.”

The  process  of  reasoning  adopted  by  the  High  Court   is   absolutely
unintelligible to us.  It is  manifest  that  whenever  the  allegations  of
smuggling are made against a person who is sought to be detained by  way  of
preventing further smuggling, there is bound to be one act or  several  acts
with the common object of smuggling goods which is sought  to  be  prevented
by the Act.  It would, therefore, not be correct to say that the  object  of
the Act constitutes the ground of detention.  If this  is  so,  in  no  case
there could be any other ground for detention, except the one which  relates
to smuggling.  In our opinion, this is neither the object  of  the  Act  nor
can such an object be spelt out from the language in which  Section  5-A  is
couched.  What the Act provides is that where there are a number of  grounds
of detention covering various activities of  the  detenu  spreading  over  a
period or periods, each activity is a separate ground by itself and  if  one
of the grounds is irrelevant,  vague  or  unspecific,  then  that  will  not
vitiate the order of detention.  The reason for  enacting  Section  5-A  was
the fact that several High Courts took the view that where  several  grounds
are mentioned in an order of detention and  one  of  them  is  found  to  be
either vague or irrelevant then the entire  order  is  vitiated  because  it
cannot be predicated to what  extent  the  subjective  satisfaction  of  the
authority could have been influenced by the vague or irrelevant ground.   It
was to displace the basis of these decisions  that  the  Parliament  enacted
Section 5-A in order to make it clear that even if one  of  the  grounds  is
irrelevant but the other grounds are  clear  and  specific  that  by  itself
would not vitiate the order of detention...”


From the above  noted  judgments,  some  guidance  as  to  what  constitutes
'grounds', forming the basis of detention order, can  be  easily  discerned.
In the first instance, it is to be mentioned  that  these  grounds  are  the
'basic facts' on which conclusions are founded and these are different  from
subsidiary facts or further particulars of  these  basic  facts.   From  the
aforesaid, it is clear that each 'basic fact' would constitute a ground  and
particulars in support thereof or the details would be subsidiary  facts  or
further particulars of the said basic facts which will be integral  part  of
the 'grounds'.  Section 3 of the Act does not use the  term  'grounds'.   No
other provision in the Act  defines  'grounds'.   Section  3(3)  deals  with
communication of the detention order and states that 'grounds' on which  the
order has been made shall be communicated to the  detenue  as  soon  as  the
order of detention is passed and fixes the  time  limit  within  which  such
detention order is to be passed.  It is here  the  expression  'grounds'  is
used and it is for this reason that detailed grounds on which the  detention
order is passed are supplied to the detenue.   Various  circumstances  which
are given under sub-section (1) of Section 3 of the Act,  on  the  basis  of
which detention order can be passed, cannot be  treated  as  'grounds'.   On
the contrary, Chamanlal Manjibhai Soni's case clarifies that there  is  only
one purpose of the Act, namely, preventing smuggling and all other  grounds,
whether there are one or more would be relatable to the  various  activities
of smuggling.  This shows that  different  instances  would  be  treated  as
different 'grounds' as they constitute basic facts making  them  essentially
factual constituents of the 'grounds' and the further particulars which  are
given in respect of those instances are the subsidiary details.   This  view
of ours gets strengthened from the discussion in Vakil  Singh's  case  where
'grounds' are referred to as 'materials on which the order of  detention  is
primarily based'.  The Court also pointed  out  that  these  'grounds'  must
contain the pith and substance of primary facts but not subsidiary facts  or
evidential details.

When we apply the aforesaid test to the facts of this case, we are  inclined
to agree with the conclusion of the High Court that the order  of  detention
is based on multiple grounds inasmuch as various different acts, which  form
separate grounds,  are  mentioned  on  the  basis  of  which  the  detaining
authority formed the opinion that it was  desirable  to  put  the  appellant
under detention.  The High Court  has  dissected  the  order  of  detention,
which we find is the correct exercise done by the High Court,  in  paras  11
and 12 of the impugned judgment and, therefore, we reproduce the same:
“11.  We would, therefore, at this  stage  like  to  refer  to  the  grounds
mentioned in the detention order. Detention  order  in  paragraph  1  states
that the petitioner has  been  indulging  in  making  and  receiving  hawala
payments upon instructions received from abroad from his  business  premises
in Chandni Chowk and residence at SFS Flat, Ashok Vihar. In paragraph 2,  it
is stated that both the premises were searched on  15th  October,  2008  and
Indian Currency of Rs.2,04,00,000/- along  with  three  mobile  phones  were
seized from business premises and  Indian  currency  of  Rs.64,35,000/-  and
documents were seized from his residential premises. Statement of Shankar  @
Mitha Lal, employee of the petitioner was recorded under Section 37  of  the
Foreign Exchange Management Act, 1999 (FEMA, for short) wherein,  he  stated
that the main work of the petitioner was receiving and  making  payments  in
India on instructions from Sultan Bhai, Maama @  Manu,  Mithu  Bhai,  Hirani
and Jabbar Bhai, based in Dubai. Shankar decodified  the  figures  mentioned
in the bunch of
documents as seized. He had further stated that the  petitioner  was  making
and receiving hawala payment to tune of Rs.2 crores per day on  instructions
from Dubai and received and made payments to the tune of  Rs.180  crores  in
the last three months. Detention order also mentions  and  draws  inferences
from the statements of Ram Chand Gupta, Amit Jain, Ajay Misra,  Pawan  Kumar
Pandey and Vikesh Kumar recorded under Section 37 of FEMA.

The detention order mentions gist  of  the  statement  of  daughter  of  the
petitioner i.e., Ms. Krishma Jain again recorded under Section  37  of  FEMA
regarding Rs.64.35 lakhs  seized  from  the  residence  of  the  petitioner.
Statements made by the petioner on 16th December, 2008  and  22nd  December,
2008 under Section 37 of  FEMA  which  gives  details  of  foreign  exchange
arranged from abroad for different persons  in  India  and  de-codifying  of
various details, have been alluded with significance. Detention  order  also
mentions statements of Rajiv Kumar,  Jitender  Kumar  Verma  and  Raj  Kumar
Bindal under Section 37 of FEMA and retractions made  by  different  persons
whose statements were recorded under Section 37 of FEMA,  etc.  Searches  in
different premises on 17th December, 2009 and the seizure including  seizure
of cash made in the said  searches  and  the  statements  of  Kapil  Jindal,
Kanhaiya Lal, Raj Kumar Aggarwal, Kanti Lal  Prajapati,  Anil  Aggarwal  etc
find elucidation  and  reliance.  Detail  of  various  mobile  phones  stand
recorded.  The order refers to searches  made  by  the  Department  on  24th
April, 2009 at the places of Muralidhar resulting in  seizure  of  documents
and cash.  Statement of Bharat Kumar recorded on different dates. It  states
that summons were issued to the petitioner for appearance  but  he  did  not
appear. ”


In fact, in this very manner, the matter was approached and  dealt  with  by
this Court, thereby upholding the detention order, in Prakash Chandra  Mehta
v. Commissioner and Secretary, Government of Kerala & Ors.[7], as  is  clear
from the following discussion therein:
“71. Section 5-A stipulates that when the detention order has been  made  on
two or more grounds, such order of detention shall be deemed  to  have  been
made separately on  each  of  such  grounds  and  accordingly  that  if  one
irrelevant or one inadmissible ground  had  been  taken  into  consideration
that would not make the detention order bad.

                          xx          xx         xx

75. In the instant case, the ground of detention is the satisfaction of  the
detaining authority that with a view to preventing the  detenu  from  acting
in any manner prejudicial to the conservation  or  augmentation  of  foreign
exchange or with a view to preventing the detenu from, inter  alia,  dealing
in smuggled goods otherwise than by engaging in transporting  or  concealing
or keeping the smuggled goods, or engaging in transporting or concealing  or
keeping smuggled goods the  detention  of  the  detenu  is  necessary.  This
satisfaction was arrived at as inferences from several factors.  These  have
been separately mentioned. One of them is the  contention  but  this  ground
was taken into consideration without taking  note  of  the  retraction  made
thereafter. But the inference of the satisfaction  was  drawn  from  several
factors which have been enumerated before. We have to examine  whether  even
if the facts stated in the confession are completely ignored, then  too  the
inferences can still be drawn from other  independent  and  objective  facts
mentioned in this case, namely, the fact of seizure after search of 60  gold
biscuits from the suitcase of the daughter in the  presence  of  the  father
which indubitably belonged to the father and admitted by him  to  belong  to
him for which no explanation has been given and secondly the seizure of  the
papers connected with  other  groups  and  organisations.  Pratap  Sait  and
others to whom gold has been sold by the father are  relevant  grounds  from
which an inference can reasonably be  drawn  for  the  satisfaction  of  the
detaining authority for detaining the detenus for  the  purpose  of  Section
3(1)(iii) and 3(1)(iv). We are  of  the  opinion  that  the  impugned  order
cannot be challenged merely by the rejection of  the  inference  drawn  from
confession. The same argument was presented in  a  little  different  shade,
namely, the fact of retraction should have been considered by the  detaining
authority and the Court  does  not  know  that  had  that  been  taken  into
consideration, what conclusion the detaining authority  would  have  arrived
at. This contention cannot be  accepted.  We  are  not  concerned  with  the
sufficiency of the grounds. We are  concerned  whether  there  are  relevant
materials on which  a  reasonable  belief  or  conviction  could  have  been
entertained by the detaining authority on the grounds mentioned  in  Section
3(1) of the said Act. Whether other grounds  should  have  been  taken  into
consideration or not is not relevant at the stage  of  the  passing  of  the
detention order. This contention, therefore, cannot be accepted. If that  is
the position then in view of Section 5-A of the  Act  there  was  sufficient
material to sustain this ground of detention.”

The Court thereafter discussed its earlier judgment in  Chamanlal  Manjibhai
Soni (already noted above) in identical manner in  the  case  of  Madan  Lal
Anand v. Union of India & Ors.[8]

We, thus, reject the contention of the appellant that, in the instant  case,
the detention order is based only on one ground.  Once it is found that  the
detention order contains many  grounds,  even  if  one  of  them  is  to  be
rejected, principle of segregation contained in Section 5A gets attracted.

Other argument of the learned senior counsel  for  the  appellant  was  that
once there  is  an  infringement  of  Article  22(5)  of  the  Constitution,
provisions of Section 5A of the Act would be  inapplicable.   Article  22(5)
of the Constitution of India reads as under:
“Article 22(5) When any person is detained in pursuance  of  an  order  made
under any law providing for preventive detention, the authority  making  the
order shall, as soon as may be, communicate to such person  the  grounds  on
which the order has been made and shall afford him the earliest  opportunity
of making a representation against the order.”

                 This provision commands communication  of  the  grounds  on
which the order of detention has been passed and to afford him the  earliest
opportunity of making a representation against the order.   In  the  instant
case, the documents containing the statement of  Pooran  Chand  Sharma  were
not given and for this very reason, the High Court rightly held that such  a
ground cannot be relied upon by the respondents in  support  of  the  order.
However, that would not mean that if there are other grounds  on  which  the
detention order can be sustained, principle  of  severability  would  become
inapplicable.  If this  is  accepted,  it  would  mean  that  provisions  of
Section 5A of the Act cannot be applied at  all.   While  rejecting  such  a
contention,  it  would  be  sufficient  to  point  out  that  constitutional
validity of Section 5A of the Act was challenged in this Court and  repelled
in the case of Attorney General for India & Ors. v. Amratlal  Prajivandas  &
Ors.[9] after discussing the provisions  of  Section  5A  in  the  light  of
Article 22(5) of  the  Constitution.   Therefore,  this  contention  is  not
available to the appellant.

As a result, the appeal stands dismissed.

      WRIT PETITION (CRIMINAL) NO. 203 OF 2015
This writ petition filed under Article  32  of  the  Constitution  of  India
challenges detention order bearing  F.  No.  673/13/2015-Cus.VIII  34  dated
27.04.2015 passed by respondent No. 2 on the  same  ground  which  has  been
dealt with elaborately in Criminal Appeal No. 2281 of 2014.  It is for  this
reason that the petition was tagged along with  the  said  appeal.   Learned
counsel for the petitioner, apart from arguing  on  the  maintainability  of
the writ petition, adopted the arguments advanced by  Mr.  Chaudhri,  senior
counsel in the aforesaid appeal.  For the reasons  given  above,  this  writ
petition also stands dismissed.



                             .............................................J.
                                                                (A.K. SIKRI)



                             .............................................J.
                                                       (ABHAY MANOHAR SAPRE)

NEW DELHI;
JANUARY 04, 2017.
-----------------------
[1]
      (2000) 7 SCC 148
[2]   (1990) 2 SCC 629
[3]   (1975) 2 SCC 81
[4]   (1975) 3 SCC 545
[5]   (1981) 2 SCC 175
[6]   (1981) 2 SCC 24
[7]   1985 (Supp.) SCC 144
[8]   (1990) 1 SCC 81
[9]   (1994) 5 SCC 54

in Mcleod Russel India Limited Vs. Regional Provident Fund Commissioner, Jalpaiguri and Others, reported in (2014) 15 SCC 263, wherein it has been held in paragraph 11 that ".....the presence or absence of mens rea and/or actus reus would be a determinative factor in imposing damages under Section 14-B, as also the quantum thereof since it is not inflexible that 100 per cent of the arrears have to be imposed in all the cases. Alternatively stated, if damages have been imposed under Section 14-B, it will be only logical that mens rea and/or actus reus was prevailing at the relevant time."

                                                              NON-REPORTABLE

                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                       CIVIL APPEAL NO. 96-97 OF 2017
            [@ SPECIAL LEAVE PETITION (C) NOs. 1879-1880 OF 2015]

      ASSISTANT PROVIDENT FUND COMMISSIONER,
      EPFO AND ANR.                                     Appellant(s)

                                VERSUS

      THE MANAGEMENT OF RSL TEXTILES INDIA PVT. LTD.
      THR. ITS DIRECTOR.                                Respondent(s)

                               J U D G M E N T

KURIAN, J.
      Leave granted.
1.    The appellants are before this Court, aggrieved by the final  impugned
Judgment and order dated 13.11.2013 in Writ Appeal No. 1639 of 2011 in  Writ
Petition No. 9850 of 2010 and Writ Appeal No. 1640 of 2011 in Writ  Petition
No. 26957 of 2010 passed by the High Court of judicature at Madras.

2.    The High Court has taken a view that  in  the  absence  of  a  finding
regarding mens rea/actus reus on the part  of  the  employer,  action  under
Section 14B of the Employee's Provident Fund  and  Miscellaneous  Provisions
Act, 1952 cannot be sustained.

3.    This issue is  now  wholly  covered  against  the  appellants  in  the
decision rendered by this Court in Mcleod Russel India Limited Vs.  Regional
Provident Fund Commissioner, Jalpaiguri and Others, reported  in  (2014)  15
SCC 263, wherein it has been held in paragraph 11  that  ".....the  presence
or absence of mens rea and/or actus reus would be a determinative factor  in
imposing damages under Section 14-B,  as also the quantum thereof  since  it
is not inflexible that 100 per cent of the arrears have  to  be  imposed  in
all the cases.  Alternatively stated, if damages  have  been  imposed  under
Section 14-B, it will be only logical that mens rea and/or  actus  reus  was
prevailing at the relevant time."

4.    In the impugned Judgment, at paragraph 23, it  has  been  specifically
held by the High Court that "In this case, there is no finding  rendered  by
the original authority or the appellate authority with regard  to  mens  rea
or actus reus,  except  saying  financial  crises  cannot  be  a  reason  to
escape."

5.    In view of the above, these appeals are dismissed.
      No costs.
                                                   .......................J.
                                                           [ KURIAN JOSEPH ]


                                                   .......................J.
                                                   [ ROHINTON FALI NARIMAN ]

      New Delhi;
      January 03, 2017.

If on the basis of false and fraudulent documents a claim is made which leads to award of compensation in land acquisition matter, the interest of the State is certainly compromised or adversely affected. The matter cannot then be termed as a civil dispute simplicitor. The crime was therefore rightly registered.= Onkargiri Gosavi, predecessor of the plaintiffs of RCS No.81/1993 was not title holder and so there was no question of passing of the tile to the plaintiff, Gunwani and others. No sale-deed was executed by Gunwani and other plaintiffs in favour of the three persons like Karbhari, Prakhash Nannaware and Dilip Bhalerao. On the basis of some mention in the settlement document filed in the aforesaid suit, the title could not have been passed in favour of these three persons. Thus no weight could have been given to the so called lease document executed by these three persons in favour of Salunke. Further in the lease document also it was not mentioned that rent of 99 years was given by Salunke to these three persons. All these circumstances can be used to draw inference against Salunke. The old CTS record shows that initially Nawab of Hyderabad was shown as owner and thereafter name of Onkargiri Gosavi was entered. There is no document of title with Onkargiri Gosavi and there is nothing to hold that, title was passed to Onkargiri Gosavi. These circumstances cannot be ignored but the Land Acquisition Officer has ignored these circumstances. The revenue record or the CTS record can never confer title and there was no document of title with Salunke. In spite of these circumstances, the final award was made in his favour.

                                                              Non-Reportable

                        IN THE SUPREME COURT OF INDIA

                       CRIMINAL APPELLATE JURISDICTION

                       CRIMINAL APPEAL NO.985 OF 2016




Jairam S/o Nathu Salunke                                        ….Appellant



                                   Versus



 State of Maharashtra & Anr.                          …. Respondents



                               J U D G M E N T

Uday U. Lalit, J.

This appeal arising from  S.L.P  (Crl.)  No.8553  of  2015   challenges  the
Judgment and Order dated 30.03.2015 passed by the High Court  of  Bombay  at
Aurangabad   in  Criminal  Application  No.1358  of  2012.   Said   Criminal
Application was filed for quashing of FIR of Crime No.264 of  2011  and  the
consequential charge-sheet leading to the registration  of  RCC  No.1100  of
2012  in  the  Court  of  Judicial  Magistrate,  First  Class,   Aurangabad.




Crime No.264  of  2011  was  registered  with  City  Chowk  Police  Station,
Aurangabad pursuant to FIR registered  on  20.09.2011  at  the  instance  of
Purushottam  Kulkarni,  Assistant   Director,   Town   Planning,   Municipal
Corporation, Aurangabad. It was alleged that  four   accused  namely  Jairam
Salunke- the appellant, Sitaram Shankar Gaikwad, Suresh C. Kapale, the  then
Special Land Acquisition Officer,  Aurangabad  and  A.F.  Ansari,  the  then
Director Planning, Office of Land Acquisition, Aurangabad had  entered  into
a conspiracy, pursuant to which fabricated documents  were  created  and  in
land acquisition proceedings concerning land bearing City Survey No.  20722,
situated within the limits of Aurangabad Corporation,  compensation  to  the
tune of Rs.23.48 lacs was received by the appellant without there being  any
entitlement. After due investigation, charge-sheet was filed  on  29.06.2012
against aforementioned  four  accused  for  the  offences  punishable  under
Sections 406, 409 read with Section 120(B) of IPC. The basic allegations  in
the charge sheet were:-

“ It was found in investigation that the accused  did  not  properly  verify
the documents  pertaining  to  land  bearing  No.  20722,  during  the  land
acquisition proceedings and without calling for search  report  and  relying
upon the fabricated documents submitted by accused No. 1 and  in  conspiracy
with each other caused loss to the Corporation to the tune of Rs.  2348993/-
by  taking  compensation  of  the  said  amount  and  thereby  cheated   the
corporation.”



Soon thereafter Criminal Application Nos.1358 of 2012 and 1361 of 2012  were
filed by the appellant and said Suresh C.  Kapale,  the  then  Special  Land
Acquisition Officer respectively.  It  was  principally  submitted  that  :-



 Regular Civil Suit No.81 of 1993  was  filed  by  Shanti  Gunwani  and  six
others against  Vishwanath  Nikalje  for  injunction,  contending  that  the
plaintiffs had purchased eight residential plots from one Onkargiri  Gosavi,
admeasuring  about  6249  sq.m  which  land  was  part  of   CTS   No.20722,
Aurangabad.


In June 1995, there was a compromise  between  the  parties  whereunder  the
defendant accepted the ownership of the  plaintiffs.   The  compromise  deed
also made reference to the fact that from and out of land purchased by  said
Shanti Gunwani  and six others, a portion admeasuring  50000  sq.  feet  was
made over by them in favour of Karbhari  Gaikwad,  Prakash   Nannaware   and
Dilip       Bhalerao       (‘three       persons’,        for        short).


The appellant had taken on lease for a period of 99 years that plot of  land
from                  said                  three                   persons.


In the circumstances, the appellant was entitled to and was rightly  granted
compensation in respect of  the land by  accused Suresh C. Kapale, the  then
Special Land Acquisition Officer.

With these assertions, it was contended that  the  transaction  in  question
was purely of civil nature; that the appellant was entitled to  and  rightly
granted compensation and as such case for quashing  under  Section  482  Cr.
P.C. was  made out.

Both these applications were heard together by the High Court and  dismissed
by its judgment and Order dated 30.03.2015. The contentions were  considered
in the light of the record by the High Court as under:-

“The aforesaid record  shows  that  Onkargiri  Gosavi,  predecessor  of  the
plaintiffs of RCS No.81/1993 was not  title  holder  and  so  there  was  no
question of passing of the tile to the plaintiff,  Gunwani  and  others.  No
sale-deed was executed by Gunwani and other  plaintiffs  in  favour  of  the
three persons like Karbhari, Prakhash Nannaware and Dilip Bhalerao.  On  the
basis of some mention in the settlement  document  filed  in  the  aforesaid
suit, the title could  not  have  been  passed  in  favour  of  these  three
persons. Thus no weight could  have  been  given  to  the  so  called  lease
document executed by these three persons in favour of  Salunke.  Further  in
the lease document also it was not mentioned  that  rent  of  99  years  was
given by Salunke to these three persons.  All  these  circumstances  can  be
used to draw inference against  Salunke.  The  old  CTS  record  shows  that
initially Nawab of Hyderabad was shown  as  owner  and  thereafter  name  of
Onkargiri Gosavi was entered. There is no document of title  with  Onkargiri
Gosavi and there is nothing to hold that,  title  was  passed  to  Onkargiri
Gosavi. These circumstances cannot  be  ignored  but  the  Land  Acquisition
Officer has ignored these circumstances.  The  revenue  record  or  the  CTS
record can never confer title and  there  was  no  document  of  title  with
Salunke. In spite of these circumstances, the final award was  made  in  his
favour.

     The appellant as well as said Suresh C. Kapale filed a  joint  petition
namely  S.L.P.  (Crl.)  Nos.8553-8554  of  2015  challenging  the  aforesaid
judgment and order of the High Court, in which notice  was  issued  by  this
Court on 01.10.2015. During the pendency  of  the  matter,  said  Suresh  C.
Kapale died, as a result of which the petition qua him namely S.L.P.  (Crl.)
No.8554 of 2015 was dismissed as abated vide Order dated 09.09.2016.



Mr. Manish Pitale, learned Advocate appearing for  the  appellant  submitted
that at the initial stage the  matter  was  looked  into  by  the  Assistant
Commissioner of Police who had opined that the dispute was purely  of  civil
nature and yet the crime was registered. It was further submitted  that  the
allegations that the land in the question did not belong  to  the  appellant
could only be resolved by the Civil Court and as such the case was  fit  for
exercise of jurisdiction under Section 482 Cr. P.C.



We have gone through the record and considered rival submissions.  The  High
Court found three infirmities namely  that  Onkargiri,  predecessor  of  the
plaintiffs in Regular Civil Suit No.81 of 1993 did not have any title;  that
no sale deed was  executed  by  the  plaintiffs  in  favour  of  said  three
persons; and that the document of lease  stated  to  be  in  favour  of  the
appellant  did  not  mention  any  rent  at  all.  In  the  face  of   these
observations it cannot be said that the dispute in question  was  purely  of
civil nature. If on the basis of false and fraudulent documents a  claim  is
made which leads to award of compensation in land  acquisition  matter,  the
interest of the State is certainly compromised or adversely  affected.   The
matter cannot then be termed as a civil dispute simplicitor. The  crime  was
therefore rightly registered.

   Affirming the view taken by the High Court, we do not find any reason  to
quash the criminal proceedings.  The  appellant  is  certainly  entitled  to
present his view on merits which will be gone into  and  considered  by  the
concerned Court at the appropriate stage. We  thus  find  no  merit  in  the
matter and dismiss the present appeal.




                                                             ..………………………..J.
(Dipak Misra)




                                                             …………..……………..J.
(Uday Umesh Lalit)
New Delhi
January 3, 2017

(i) Whether the timelines set down in the amended legislation are capable of being achieved with the existing infrastructure including judicial personnel and staffing pattern of the Debt Recovery Tribunals and Debt Recovery Appellate Tribunals; (ii) The underlying basis, if any, upon which the revised timelines have been stipulated and whether any scientific study has been conducted on the availability of infrastructure; (iii) Whether, and if so, what steps the Union government intends to adopt to enhance the infrastructure of Debt Recovery Tribunals and the Appellate Tribunals in terms of physical infrastructure, judicial manpower and non- judicial personnel required for the efficacious functioning of the Tribunals; (iv) The specific plan of action including time-schedules within which the existing infrastructure would be upgraded so as to achieve the time frame for disposal indicated in the amended legislation; and (v) Empirical data on the pendency of cases for more than ten years and the list of corporate entities where the amount outstanding is in excess of Rs.500 crore. 6 The affidavit shall be filed within a period of four weeks from today. We clarify that this direction for the filing of a further affidavit shall not in any manner affect the functioning of the Committee which has already been constituted by the Union government and whose report is awaited.

                                                                  REPORTABLE


                        IN THE SUPREME COURT OF INDIA
                         CIVIL ORIGINAL JURISDICTION

                    WRIT PETITION (CIVIL) NO. 573 OF 2003




CENTRE FOR PUBLIC INTEREST                   .....PETITIONER
LITIGATION

                                   VERSUS



HOUSING & URBAN DEVELOPMENT               .....RESPONDENTS
CORPORATION LTD & ORS




                               J U D G M E N T





Dr D Y CHANDRACHUD, J

            Prior to the establishment of Debt Recovery Tribunals, as on  30
September 1990, more than fifteen lakh cases filed by  public  sector  banks
and about three hundred and four cases filed by financial institutions  were
pending before various courts.  The amounts involved were to the  extent  of
Rs. 5,622 crores in dues of public  sector  banks  and  Rs.  391  crores  of
financial institutions.  Following the Reports of the  Narasimhan  Committee
and the Tiwari Committee, Parliament enacted the Recovery of  Debts  Due  to
Banks  and  Financial  Institutions  Act,  1993  for   providing   for   the
establishment  of  tribunals  and  appellate   tribunals   for   expeditious
adjudication and recovery of dues due to banks and financial institutions.

2     At present, thirty four Debt Recovery  Tribunals  and  five  Appellate
Tribunals are functioning in the country.  In financial year  2015-16  these
Tribunals disposed of about 16,000 original applications involving  a  total
amount of Rs. 34,000 crores.  Since their inception until 31  October  2015,
the Tribunals had disposed of 1,34,433 original applications leading to  the
recovery of an amount of Rs. 70,725 crores.   The Tribunals are also  vested
with the jurisdiction to entertain  securitization  applications  under  the
Securitisation and Reconstruction of Financial  Assets  and  Enforcement  of
Security Interest Act, 2002.

3     This Court has been apprised, in the submissions filed  by  the  Union
government, that more than 70,000 cases involving an  amount  of  Rs.5  lakh
crores approximately are pending before  the  Debt  Recovery  Tribunals,  of
which many are pending for more than ten years.   Though  the  Act  of  1993
provides for the disposal of recovery applications within  one  hundred  and
eighty days, cases have remained pending for years together.   In  order  to
deal with the large pendency of cases, the Enforcement of Security  Interest
and Recovery of Debt Laws and  Miscellaneous  Provisions  (Amendment)  Bill,
2016 was introduced in the Lok Sabha on 11 May 2016.  The Bill was  referred
to a Joint Committee of both Houses of Parliament.  The Committee  presented
its Report to the Lok Sabha on 22 July 2016.  Eventually,  a  law  has  been
enacted by both the Houses of Parliament and published in the  E-gazette  on
16 August 2016.

4      Legislative  changes  to  provide   for   expeditious   disposal   of
proceedings before  the  Debt  Recovery  Tribunals  may  not  by  themselves
achieve the intended object so long as the infrastructure  provided  to  the
Tribunals is not commensurate with the burden of  the  work  and  nature  of
judicial duties.  Recently, the Chairperson of the Debts Recovery  Appellate
Tribunal at Allahabad addressed a letter on 9 December  2016  to  the  Chief
Justice  of  India  recording  that  he  was  constrained  to   tender   his
resignation  from  the  post  of  Chairperson  since,  in  the  absence   of
infrastructure and facilities, the  functioning  of  the  adjudicating  body
over which he presided had become impossible.   This  is  symptomatic  of  a
trend whereby the Debt Recovery Tribunals  and  Appellate  Tribunals  suffer
from a lack of adequate infrastructure, manpower and resources.  Having  due
regard to the important adjudicatory function which is  entrusted  to  these
Tribunals, the efficacy of parliamentary legislation will depend in a  large
measure on the efficiency with which the Tribunals discharge their duties.

5     We accordingly direct the Union Government to file an affidavit
specifically dealing with the following issues :

(i)   Whether the timelines set down in the amended legislation are  capable
of being  achieved  with  the  existing  infrastructure  including  judicial
personnel and staffing pattern of  the  Debt  Recovery  Tribunals  and  Debt
Recovery Appellate Tribunals;

(ii)  The underlying basis, if any, upon which the  revised  timelines  have
been stipulated and whether any scientific study has been conducted  on  the
availability of infrastructure;

(iii) Whether, and if so, what steps the Union government intends  to  adopt
to enhance the infrastructure of Debt Recovery Tribunals and  the  Appellate
Tribunals in terms of physical infrastructure, judicial  manpower  and  non-
judicial  personnel  required  for  the  efficacious  functioning   of   the
Tribunals;

(iv)  The specific plan of action including time-schedules within which  the
existing infrastructure would be upgraded so as to achieve  the  time  frame
for disposal indicated in the amended legislation; and

(v)   Empirical data on the pendency of cases for more than  ten  years  and
the list of corporate entities where the amount outstanding is in excess  of
Rs.500 crore.

6     The affidavit shall be filed  within  a  period  of  four  weeks  from
today.  We  clarify  that  this  direction  for  the  filing  of  a  further
affidavit shall not in any manner affect the functioning  of  the  Committee
which has already been constituted by the Union government and whose  report
is awaited.


                      ………......................... CJI
                                                               [T.S.
THAKUR]


                                 ..........................................J

      [A.M. KHANWILKAR]


                                 ..........................................J
                                                         [Dr DY CHANDRACHUD]

New Delhi;
January 03, 2017.