JATIN C JHAVERI v. UNION OF INDIA INSC 381

Name of Case Jatin C. Jhaveri vs Union of India

Facts During the night of July 27-28, 1993, Customs Officers at Mumbai Airport confiscated a grey suitcase and a black briefcase checked in by Ajit Dodia, who was to board a flight for Hong Kong. The suitcase held US $289,250 and the briefcase US $114,300. Questioning Ajit Dodia revealed that he was traveling with Jatin Jhaveri, a diamond trader, and that his brother, Jitendra Dodia, worked for Jatin Jhaveri. Ajit claimed that Jatin had driven him to the airport and arranged the trip.

Jitendra stated that he and Jatin Jhaveri had packed the currency. However, Jatin Jhaveri was unavailable for two months after the seizure. On October 12, 1993, Jatin Jhaveri admitted to planning to accompany Ajit Dodia and handing over a suitcase to him for delivery in Hong Kong. However, he denied ownership of the seized currency and claimed no connection to the briefcase.

This led to proceedings under Clauses (d), (e), and (i) of Section 113 of the Customs Act, 1962, proposing penalties and confiscation of the currency. An addendum was later issued under the Foreign Exchange Regulation Act (FERA) for confiscation.

Issue Whether the confiscation of foreign currency and penalties imposed on Jatin Jhaveri and others were justified under the Customs Act, 1962, and FERA.

Holding The Hon'ble Supreme Court upheld the impounding of the foreign currency and the penalties ordered by the Special Director of Enforcement, Mumbai. It set aside the orders of the Appellate Tribunal, FERA, and the High Court. Thus:

The impounding of US $403,550 (US $289,250 from the suitcase and US $114,300 from the briefcase) was upheld. Penalties of Rs. 10 lakhs on Jatin Jhaveri, Rs. 3 lakhs on Ajit Dodia and Rs. 2 lakhs on Jitendra Dodia. Jatin Jhaveri was ordered to pay back with 10 percent annual interest to the erstwhile refund amounting to Rs. 1,83,09,525 earlier refunded to him within six weeks. Reasoning The Court further observed thus:

Suspicious Activity: Jatin Jhaveri failed to present himself at Customs Officers that night when he was required, and no answer was made of his travel overseas, as earlier intended. Evasion of Claim of Ownership: Jatin continually disclaimed owning the money. This did not enhance his character. Failure in Documentary Proved: Jatin handed over all baggage clearances to Ajit Dodia; therefore, apparently, no papers existed, allowing him to ship the currency. Illegality of the Currency: No evidence had been brought before the Court that the currency had been lawfully imported into India. The Court held that the acts of Jatin were manifestly done to avoid customs inspection and legal obligation. The Court held that seizure of the currency and imposition of penalties were lawful under the law.